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- Transport Collaboration Introduction
- Excess capacity
- Steps to implementing Collaborative Transport
- Barriers to collaboration
Transport Collaboration Introduction
The Department of Transport (DfT) estimates that for most road transport operations fuel accounts for at least 30% of operating costs. With rising fuel bills, a need to increase the efficiency of transport operations, a requirement to reduce emissions from transport and a wish to reduce congestion, there is an increased focus in the food and grocery sector of finding ways to reduce road miles. Transport collaboration is seen as an important way of meeting this goal.
Excess capacity
All grocery logistics 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. This can also be described as reducing the amount of "empty running", the non productive movement of vehicles.
Steps to implementing Collaborative Transport
Work completed by IGD/ECR UK looking at transport collaboration shows that there remain significant opportunities for the UK Food and Grocery industry to work together more closely. This is supported by DfT figures which estimate that one in four vehicles still travels back from their delivery empty.
As part of their Sustainable Distribution work programme, ECR identified seven steps to successful collaboration:
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Seven steps to successful collaboration
- Produce a summary of lanes and volumes - Preparing a simple document to summarise and introduce a companies distribution operation, this document can then be used to identify potential partnerships.
- Identify potential collaborative lanes - The organisations meet (with their summary network and volume documents) to look at potential partnership opportunities which should reduce empty running / improve efficiency.
- Agree rates on a lane by lane basis - The two parties agree the rate for each of the potential partnership lanes.
- Agree KPI's and review mechanism - Following a successful proposal, this step involves agreeing the process and measures against which the partnership initiative will be reviewed.
- Run pilot - This involves finalising the details to run a pilot, such as; service agreement, equipment, start and end date and contact details.
- Review pilot - While it is important to formally reviewing the pilot, good practice is to continually review and make amendments throughout the pilot.
- Roll out - Once the pilot is complete, collaborative transport for the specific lane becomes a business as usual activity.
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It should be noted that while for illustrative purposes the steps are shown as discrete activities, they can in fact overlap.
Barriers to collaboration
The ECR UK Guide to Transport Collaboration identifies several barriers which must be overcome to ensure greater collaboration:
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Barriers to overcome
- 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 vehicle types and 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 have 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 encouraged or incentivised to do so.
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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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