When one of the UK’s largest food manufacturers underwent significant change following brand rationalisation, mergers and acquisitions, and modified production, the result was fragmentation leading to increasingly cumbersome and inflexible transport operations.
Separate legacy contracts were in place with multiple hauliers covering different sites and brands, and this led to diverse terms and conditions and inconsistencies in priorities, KPIs and renewal dates for each contract.
Dealing with more than a dozen service providers was inefficient and costly. There was little co-ordination, no oversight and lack of supply chain integration.
The client approached EV Cargo with a list of key goals:
• Ensure ingredients and supplies such as packaging were delivered to the company’s five UK manufacturing facilities.
• Ensure primary out-bound transfer of products from the factories to two regional distribution centres.
• Ensure secondary out-bound deliveries from the distribution centres to customers including major multiples, other retailers, and wholesalers.
The client also identified the potential for significant savings and performance improvements across the operation.
In response, EV Cargo devised a comprehensive managed transport plan, including provision for each site, implemented during Q1/Q2.
To oversee the initial phase we established a dedicated steering group comprising experienced commercial and operational personnel based at our National Operations Centre in Leicestershire. This team was responsible for day-to-day management and administration of the entire operation, working closely with the client and all other stakeholders to co-ordinate orders and allocate work between the core fleet, EV Cargo partner hauliers and third parties running legacy contracts and back-haul operations for major customers.
We operated as lead logistics provider to manage all transport operations across a fully integrated service with a single, centralised point of contact for the client. The operation was similar to a conventional 4PL service, but our consultancy, advice and solution design allied was unique within the UK grocery sector.
Integrating our control tower management system, we provided full end-to-end visibility from production to customer. Powered by technology at every stage, it oversees the entire process inclusing warehousing, picking, transport and final mile delivery to drive efficiencies, improve accountability and add value across all aspects.
By challenging expectations at all levels, EV Cargo drove change and generated results. Added value and enhanced efficiency from core fleet and existing suppliers was achieved by integrating and exploiting the synergies of existing traffic flows. A mutual gain-share mechanism provided a financial incentive to save costs and improve service over and above budgeted levels but included penalties for under achievement.
A key component of the service was the integration of the network with a seamless
interface between the client, warehousing, customers, suppliers, hauliers and
other stakeholders. This greatly simplified transport and provided the client with an
optimised national service that was adaptable, scalable, and flexible to meet changing demands on a daily, seasonal or regional basis.
Our 4PL strategy was undoubtedly instrumental in affecting the following results:
Empowered to implement a control tower approach which provided oversight of the complete operation, we identified opportunities for cost savings and reduction of road miles and emissions. Centralised route and load planning ensured more vehicles were fully loaded when moving between factories, distribution centres and customer sites.
By co-ordinating the operations of multiple hauliers across the transport function, we introduced new levels of consistency and “integrated thinking” to drive efficiency. Data was drawn together from various sources including the client, EV Cargo Solutions’ core fleet operation and party hauliers to create a single dataset providing a complete view of the operation and underlying KPIs.
The most significant benefit is that the client now has complete and consistent visibility across its entire transport operation. This allows it to focus on service improvement and cost reduction and provides insight into the impact of transport on areas of the business such as the factories and distribution centres. The business can now make informed decisions and implement proactive issue management based on hard evidence available through the robust and transparent processes introduced by EV Cargo. For example, devising a cost/deliverable matrix helped understand the contributors to variations in “per-pallet” costs so that less expensive processes could be introduced.
The control tower approach with improved visibility, centralised co-ordination and single dataset promotes accountability by making it easier to identify strong and weak performance.
The changes that were introduced led to cost savings of approximately £500,000 during the first calendar year, equal to approximately 6.7% of the transport budget. Around 2,000 journeys and 500,000 road miles were removed from the network and we estimate these annual figures will rise to 3,640 loads and 750,000 road miles once all factory operations and distribution centres are fully integrated by the end of the project.
Annual savings will rise to 8.3% in year two by the end of which total savings will have reached £1.1m.