Transportation planning is more than just securing the lowest cost freight provider. Organisations that consider all of the issues and effectively address then can ensure real competitive advantage can be gained.
In the good old days, all most organisations had to do regarding their transport planning was to look at a few factors such as the bulkiness of what had to be transported and how long the customer was prepared to wait for their goods. As time progressed, finding lots of cheap land to build a warehouse on was the next big issue. Today, life is not so simple with an ever increasing number of transport factors which has a significant impact on an organisation’s profitability:
- With road freight so cheap, does it matter where my production facility/warehouse is located?
- Would a 3rd Party Logistics Provider provide a better result?
- What is the current and future access to ports, roads and facilities?
- What is the long term outlook for sustainable transport?
- Will changing taxation have a design impact now and in the future?
- Will driverless vehicles make transport even cheaper?
- Will skilled resources be available now and in the future to drive trucks and manage warehouses?
Considered, long-term planning takes all of these factors in to account and can help build a sustainable, realistic strategy that can help ensure:
- Warehouses and production facilities are sited for the long-term taking in to account population changes and organisational growth prospects
- Labour supply is secured minimising excessive labour costs
- Access to transportation networks on a local and international scale provide congestion free access increasing service levels and customer satisfaction
- Environmental sustainability is considered saving potential costly changes to facilities, distribution networks and operating procedures in the future
Considering the broad factors that are key inputs in to transportation planning, deciding on how to build or optimise a transport strategy or approach can be daunting. Irrespective of a green-field implementation or redesign of existing transport capability, GRA’s approach is to firstly understand what is driving the need to re-evaluate and what are the critical issues facing the organisation as well as the organisation’s key desired outcomes.
We can analyse transaction data, growth and range projections, product characteristics and inventory profiles to build a picture of what will be stored and how it should move into and out of a warehouse, and to forwarders, freight providers and customers today and tomorrow. We create options and explain the relative merits of them all. We can provide a high-level picture of where facilities should be placed as well as detailed routing plans including how to deal with `the last mile’ challenge.
We evaluate and consider:
- Growth, seasonality and service promise/customer behaviour (eg in by 3, despatch the same day)
- Inbound order patterns or material flow
- Environmental requirements in handling and storage
- Technology (WMS and picking technology (PLT, PTV, RF)
- Value add processes (for example consolidation)
- Environmental requirements (for example air quality, noise, safety, carbon tax)
- Safety and security
The following are outcomes of this approach:
- Clearly enunciated design options that:
- highlight the trade-offs between operating and capital expenses
- Consider the expected volume and throughput, including high and low estimates
- Match technology and environment to product and customer
- A definition of costs associated with the options
- A considered assessment of capability
- A recommendation of an outsource/insource plan or hybrid approach
The benefits of this approach include:
- Confidence in a design process that is best matched to the business need and nature of the product
- A clear business case that outlines the compelling story for the design
- A potential increase in product availability and customer service
- Reduction in operating costs – typically in the range of 5%
– BACK TO CONSULTING
“Many thanks for the review; it certainly exceeded our expectations, and we look forward to implementing many, if not all, of the recommendations.”
– Glenn Turner, Finance Director, Renault Nissan
- 20-40% inventory investment reduction
- increased service levels ranging up to 99.9%
- 10%-15% reduction in supply chain operating costs
- 5%-20% spend management savings
- the ability to fund business initiatives from operating cash flow (OCF) improvements
- improved return on capital employed (ROCE)
- a minimum 3:1 ROI (10:1 to 30:1 typical)