Collaborative Distribution Introduction
The Department of Transport estimates that for most road transport operations fuel accounts for at least 30% of operating costs. With rising fuel bills, a need to reduce emissions from transport, a wish to reduce congestion and a shortage of skilled HGV drivers, there is an increased focus in the food and grocery sector of finding ways to reduce road miles. Collaborative distribution is seen as an important way of meeting this goal.
Excess capacity
All grocery networks carry at least some spare capacity that could in theory be used by other parties. There are a number of reasons why spare capacity exists:
- the imbalance between inbound and outbound flows driven by supplier locations, consumer demand and the different network configurations of grocery and non-grocery distribution networks
- grocery being principally regionalised and non-grocery retailers and UK based suppliers being principally based around national distribution / production centres.
Mixing up the transportation networks of grocery and non-grocery retailers with their combined supplier bases creates greater opportunities for the imbalance of flows to be addressed and empty loads eliminated.
Collaborative Green Distribution
The IGD/ECR work on UK Collaborative Green Distribution shows there are significant opportunities for the UK Food and Grocery industry to work together more closely.
There are a number of steps to widespread adoption of collaborative transport, starting within companies and between trading partners, before extension across trading networks. A key aim of the IGD/ECR work in this area is to see whether further transport efficiencies can be achieved by optimising transport across a network of retailers and suppliers in a collaborative way.
There are three pilot studies in collaborative transport underway in the ECR programme, covering different elements of the logistics system:
- Collaborative Multi-partner trunking
- Shared conurbation deliveries
- Shared deliveries to far flung places
Challenges
The ECR UK ‘Blue Book’ on Collaborative Green Distribution identifies several barriers which must be overcome to ensure greater collaboration:
- Technical - the UK has standardised on wooden pallets for dry goods into retailers, although there is a proliferation of standards of delivery platforms from retailers into their outlets. Merchandising Units, roll cages, and dolly sizes all vary between retailers. This means the planning of any shared delivery mechanism into store is extremely difficult. This becomes even more difficult when different temperature regimes are included.
- Commercial - there is no standard commercial model for how the carriage of someone else’s product should be managed: whether the service should be provided at marginal or recovered cost plus overhead rates; how product liability would be handled; how service trade off’s would be managed etc.
- Store Flexibility - Morning deliveries are the norm, which creates a peak both in store deliveries and warehouse processes and ultimately inbound transportation into Retail Distribution Centres (RDCs).
- Delivery Processes - Retailers has very different store delivery processes and requirements. Levels of delivery checking, store based support, documentation, returns and value-added services at point of delivery vary greatly across retailers.
- Focus and Resource - Many large retailers and suppliers have outsourced large parts of their transportation networks and therefore do not have large teams to look at collaborative transport opportunities. Third party logistics providers, who service both retailers and suppliers, may be best placed to spot and implement collaborative transport opportunities, but they are not always clearly encouraged to do so.
In summary, if the industry can find the right platform and overcome some of the barriers, there is a significant prize to be had in both environmental and economic terms.
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