The green mile

Fuel prices may have fallen away since their peak of last year, but the need to transport raw materials, components and finished goods in the most efficient manner is still topping manufacturers' agendas. And rightly so – a half-full vehicle usually translates into half the efficiency and twice the cost per product mile. So getting the best mileage from the transport operation is vital, both in terms of cost and environmental impact. One of the routes to market that has boomed in recent years has been the palletised network. It could be argued that this is economy of scale at its cost-effective best. One such network, Palletforce, confirms it has seen an increase in business from manufacturers. "We are currently talking to manufacturers who are driving up efficiency and reducing their environmental impact," says Palletforce's Dave Holland. Palletforce is a network of 100 depots, with about 90 member transport firms. Earlier this year, the organisation opened a new £30m distribution hub in Staffordshire, from where it manages deliveries for customers to locations throughout the UK and Europe. Another, Pall-Ex, says that cutting environmental impact is firmly at the core of its business. "It's deeply concerning to see the high level of carbon emissions caused as a direct result of poorly filled vehicles on our roads," says Pall-Ex's commercial director Tony Mellor. "Manufacturers seriously need to consider the consequences of their freight making such journeys – not only on the environment, but also on their own profits." Pallet networks, he says, present a viable distribution alternative, particularly in these straitened times. "We can often help customers to save significant amounts in shipping and delivery costs when compared to conventional haulage," he claims. In the past six months, he's seen a "definite increase" in the number of manufacturers using his organisation and one of his largest customers has reported an annual CO2 saving of 890 tonnes since entrusting its distribution to Pall-Ex. Mellor is keen to point out that environmental efficiency starts back at base – for Pall-Ex, green goals run through every area of the business. "We've implemented a range of measures including recycling of paper, computer equipment, printer cartridges and mobile phones – even broken pallets are used for wood chippings. Our fleet of 40 forklift trucks all run on compressed gas, which limits emissions and leads to cleaner air for workers to breathe and no pollutants to contaminate freight." Some manufacturers outsource their entire distribution requirements to a pallet network, others use the service to supplement their own transport operation. Either way, the flexibility that these networks can offer is undoubtedly one of their main attractions. Take English Wines Group, based in Tenterden, Kent. The company makes a variety of wines under the Chapel Down brand, as well as its own brand of beer, Curious Brew. The group has grown rapidly and boasts major retailers, wholesalers and independent restaurants among its clientele. Flexibility and reliability were the key criteria for the company when it looked for a distribution partner. English Wines sales and marketing director Guy Tresnan wanted a local distribution firm that would be flexible to its needs and close enough to offer a fast, efficient service. He selected Hythe-based Laser Transport International, part of the Palletways network. Laser Transport collects product from the Tenterden winery and transports it to a Palletways hub in Lichfield, West Midlands or Edinburgh, dependent on final destination. The goods are sorted for onward delivery by other Palletways members covering the required areas. Barcoding and web-based tracking enable English Wines to monitor all consignments throughout the process. "Our delivery requirements are not always consistent – we tend to be busier in the last quarter of the year and our pallet need varies on a weekly basis," explains Tresnan. "Using a pallet network is the most cost-effective way of fulfilling orders." Not all pallet networks have the same offer, however. Palletways urges manufacturers to pick one that can add value to transport solutions, such as helping to identify inefficiencies. It also makes the valid point that when manufacturers are experiencing high export growth thanks to the weak pound, companies should choose a pallet network with a European capability. This means that both UK and European-bound goods can be loaded on the same vehicle, leading to cost and environmental benefits. Sharp tactics Gillette, part of the Procter & Gamble group, stores its finished goods at a distribution centre in Reading, close to the site housing its R&D and shaving-foam production. The company has been able to cut its transport costs by 30% since deploying a software solution that helps to assess delivery combinations. The system – called LoadBuilder – was created by Swisslog at the behest of Gillette's operations manager Marc Ragot. The key to LoadBuilder is its ability to assess shipment combinations, by volume and by weight, to maximise the capacity of transit vehicles and minimise the number of pallets used. Swisslog says this solution helps users to reduce their carbon footprint. Gillette has gained significant benefits since implementing the solution – in addition to the 30% cut in transport costs, the company has seen improvements in accurate order stack data for transport planning and it now has on-screen assessments for outbound customer loads. Ragot says: "Swisslog developed the LoadBuilder module for our UK distribution to reduce transport costs and provide flexibility in meeting customers' delivery requirements. The development has been so successful that a web version is now available to Gillette's UK customers." Most manufacturers use a mix of own and third party vehicles. For Andy Smith, senior consultant with logistics and supply chain management consultancy Davies & Robson, getting this mix right is vital. "Many issues are related to the mix of use between the core, in-house fleet and the use of network deliveries or third party contractors." To improve vehicle utilisation, there are several areas he focuses on when assessing a client's logistics operation. "Firstly, measure the utilisation and efficiency of transport," he recommends. "Measure empty miles, vehicle fill rates, drops per route, routes per day, and make sure some targets are set." He also urges companies to ensure they are sweating their assets: "Make sure your own vehicles are working hard, and look to get smaller deliveries or those to outlying areas by network carriers – parcel or pallets – or sub-contractors." This may seem obvious, but over time the profile of deliveries can change significantly. "What was appropriate last year isn't necessarily appropriate now," says Smith. "Many firms have seen their customer delivery profiles change in the past few months, so it's vital to ensure the delivery method is still the most appropriate." Look at drop density and drop sizes, Smith suggests, and even consider increasing lead times for certain customers. Do not compromise service levels in the name of efficiency, of course, but do see if delivery frequencies could be reassessed for some contracts. "It may have been next-day delivery for historical reasons, but 24-hour lead times may no longer be critical for that customer," says Smith. "Reliability is often more important than frequency." But you won't know that until you ask. Also, he says, look at the specification of core vehicles: are they the right size to minimise volume and time constraints? And look at the way you route and schedule your vehicles, combining deliveries to minimise mileage. "Don't waste mileage and don't waste space on the vehicle," he urges. Vehicle sizing was something that operations director Ian Ramsay decided to focus on when he joined manufacturing firm Whitecroft Lighting. The Ashton-under-Lyne, Greater Manchester company had already switched to vehicle outsourcing more than 20 years ago, but Ramsay wanted to improve service levels and reduce the company's carbon footprint. "I inherited five vehicles that weren't designed for the task, plus we were using a number of different pallet sizes, which meant that we could never load the vehicles to full capacity," he says. He put the contract out to tender and evaluated several options. Ryder Logistics came up with an unusual solution, as he describes: "Ryder's operations team came up with a novel idea of supplying 18-tonne trucks fitted with a unique German-built lifting floor, which virtually doubles interior load space," he explains. "This, coupled with a switch to standardised pallet sizes, means we can now carry more cargo on four trucks than we could with the previous five – it's a significant reduction in our delivery carbon footprint by virtue of the lower fuel-to-fitting delivery ratio." In March, logistics organisation Wincanton announced an extension to its 13-year partnership with food giant HJ Heinz. Wincanton is responsible for the warehousing and transportation of all Heinz brands, which include HP and Amoy. Wincanton's business unit director for manufacturing, Richard Burnett, says that his firm has been using a cost-per-serve model "in anger" at Heinz, which has led to significant improvements: "We introduced this model last year for Heinz, and it's very different to the typical cost-per-serve model – this goes right down to SKU level. This is a highly accurate method by which we can demonstrate the cost per product line, its dwell time in the warehouse and the cost to deliver to customer." Improvements include an increase in vehicle fill rates. Burnett confirms that most manufacturing customers have their eye firmly on the bottom line: "Everything is driven by cost at the moment. Prior to this recession, environmental issues were a genuine concern and were very important. They still are to a certain extent, but cost absolutely has become the key." That's not to say, of course, that potential customers will ignore Wincanton's green credentials – far from it. So the company is practising what it preaches and has embarked on its own efficiency drive, called Wincanton One Fleet. "We have to drive greater optimisation across our own fleet. One Fleet is what that is all about, optimising our entire fleet of vehicles, whatever the customer or sector, leveraging movements and optimising flows," says Burnett. He's in charge of a central team that co-ordinates flows between contracts. "Transport is just a function – it's about getting the most efficient flows between geographic areas. Whether the fleet is being used in retail or in manufacturing is almost irrelevant. One Fleet goes beyond silos and sectors and makes us focus on running all our vehicles in the most efficient manner." His advice to manufacturers looking to improve vehicle fill rates? "Collaboration. It's clearly not easy – if it was, everyone would be doing it – but there needs to be far more joined-up thinking between manufacturers to share vehicle flows." Davies & Robson's Andy Smith picks up this point. He has helped companies to join up their thinking, both within their own organisation and with suppliers. A manufacturing firm in Bristol, for example, delivers a particular product to Leeds; rather than returning empty, it now picks up a delivery from another group site in Manchester for delivery to a customer in Birmingham. 'Triangulation' is what he calls this. He's also helped that third leg to become a cost saver; after a customer delivery, one manufacturing firm now collects inbound raw materials from a supplier on its way back to the plant. Smith helped the manufacturer to negotiate a new ex-factory gate price for these raw materials and says this is an opportunity that few companies have yet maximised. What's clear is that costs and carbon are inextricably linked. Improve one and you save on the other.