Times are changing: it is now possible to see vehicles blazoned with advertising for Nestlé’s Kit Kat, loading up with supplies of United Biscuits’ Hobnobs and Jaffa cakes. The era of collaboration really is with us.
When the Cornish potato season starts in June, trucks making deliveries of Walkers Crisps will return to the company’s Leicestershire production plants loaded with freshly dug spuds.
In one of its biggest logistic exercises in recent years, PepsiCo, owners of Walkers, has trimmed 400,000 km per year off its fleet mileage by integrating deliveries as front haul on trucks on their way to collect potatoes from farms.
The move, which involved investment in 30 new tractors and some 70 trailers to carry the very different loads, is one of scores of improvements made by retailers and suppliers as part of a five-year programme of transport collaboration led by the Institute of Grocery Distribution (IGD).
The programme was set up to overcome the non-standard operational practices and the rigid separation of the traditional roles of manufacturer and retailer that were seen to be blocking the supply chain. The participants also wanted to exploit the synergies that come from new information technologies and planning tools.
As a result some 40 blue chip companies have removed 204 million heavy goods vehicle (HGV) miles from the UK’s roads since 2007 according to data recently published by IGD as part of its Efficient Consumer Response programme.
Food and grocery companies are some of the largest users of road transport, responsible for one in four of all HGV miles travelled in the UK and the savings in road miles mean the equivalent of around 3,500 lorries have been taken out of the UK transport system.
The IGD acts as a forum for companies involved in making ECR improvements. It has also developed an interactive tool to help businesses identify technologies to improve their transport systems and recorded more than 100 case studies to show how companies have made their deliveries more efficient. An online savings calculator helps firms capture and record their logistics savings.
“The participating companies used a variety of techniques to reduce their road miles, such as reviewing and analysing their operations for more efficient routes and changing the location and configuration of depots, where necessary,” explains Richard Jones IGD senior supply chain analyst. “They have also transferred more of their transport from road to rail.”
One of the main thrusts involved sharing trucks, sometimes with competitors. It is now possible to see vehicles blazoned with advertising for Nestlé’s Kit Kat, loading up with supplies of United Biscuits’ Hobnobs and Jaffa cakes.
Nestlé UK delivered over 15 loads per day from its factories in the north of England to its distribution centre in Leicestershire. Only 80 per cent of these loads could be tied to a return journey, so everyday two or three trucks would return to the north empty. United Biscuits trucks travelled daily to Yorkshire from its national distribution centre close to Nestlé’s centre, some of these presented opportunities for ‘round tripping’ vehicles, explains IGD.
By sharing their transport facilities the companies proved to the industry that it was possible for rivals to collaborate in creating environmental and cost savings, and that truck livery does not have to be an obstacle to collaboration.
However, collaborators such as Nestlé and United Biscuits must take care not to fall foul of British competition law. For this reason IGD has a lawyer on hand to make sure that arrangements to share logistics are not anti-competitive. “We are not about helping one business perform better than another,” emphasises Jones.
IT has played an important role in helping companies to optimise their distribution networks. PepsiCo recently expanded its main centre following a network analysis using a software package. Software that provides information on road conditions, tracks vehicles and reroutes them when necessary also makes for much more efficient operations. Computers may help with the large amount of data thrown up by logistics operations, but they don’t always provide the right solution, warns IGD.
“IGD’s ECR UK programme is focused on meeting consumer needs better, faster, at less cost and in a more sustainable way,” says Jones. “These aims are aligned with cutting road-use; as it means the industry will be able operate more sustainably and for less cost.
“Even if you’re not part of ECR, you can still review your own organisation to improve how your supply chains work. There are plenty of examples of best practice and many case studies available for free on the ECR website: http://www.igd.com/ecr-sustainabledistribution.”
John Lamb is a former editor of Computer Weekly, Information Week UK and Information Economics Journal.