okay now we're going to talk about fleet management and this is a really easy
spot to to make some improvement how many companies represented here would
have their own transport fleets in-house okay yep or you have a dedicated
contractor may be doing delivery services for you yep but few of those
okay so this will give you some tips on what to look at those guys so why is
poor fleet management an issue but you end up with high-cost poor service
basically you end up with locked in contractors you have a lack of
flexibility so what happens particularly where you've got a distribution fleet
that's been in place for a number of years
it ends up operating to meet the fleet structure or fleet owner rather than the
needs of the business so let's have a look at some of that
and you know inefficient fleets come around for a number of reasons none
people don't have inefficient supply chains because they've you know woken up
and had a bad day and decided to screw things up it generally happens because a
business changes over time and it might be you know two years five years twenty
years and no one's bothered to actually restructure the warehouse network or the
delivery fleet or whatever and so very often you'll inherit something which is
really inefficient so it might be historical you know it was never
designed I mean how many companies actually design their distribution that
were with a distribution fleet frontstretch you normally inherit
something and you're just trying to improve it maybe they've acquired
businesses that the rest of businesses maybe the range has changed customers
have change maybe something in the regulatory environment we did a lot of
work up in Southeast Asia and some time ago for example the government in
Bangkok decided to restrict large vehicles coming into the city area
there's a basically a circle whereby through certain hours of the day only
small trucks can go inside that circle 600 francs
that would really turn you a distribution on my TV and things like
that happen so they have to come in through transshipment centers on the
outskirts of the city and then deliver with smaller vehicles and maybe you've
changed your sourcing so all sorts of things can impact how you're doing the
distribution so again let's just talk through a
couple of case studies and then a little bit of theory so here is one on Thailand
Polyana we have a project going on there next week on distribution so this
particular company was distributing industrial products all over Thailand
and the example I'm talking about was their branch just down here in Chonburi
there's very interesting talking to the branch manager about how though doing
their distribution and the story went something like this on Monday we deliver
north into Bangkok all the outskirts of on Tuesday we deliver up here on
Wednesday we go down here on Thursday we do the long-distance ones down to chart
and on Friday we do emergency orders
have an emergency on a Monday so that worried me but also it was the sex
rels you know so what if I'm here and I want to delivery on a Tuesday night
those those your dough very rigid or not sort of old-fashioned so they had no
concept of let's get all the customer orders together and day by day II will
show you one you know and you don't need fancy systems for jiggling
you can do it on a white board if there aren't too many deliveries I'll actually
remember working 20 years ago with one of their big grocery retailers that is
no more and they were scheduling about a hundred vehicles on a white board with
maybe magnetic slacks you know here's all the deliveries right it on the slap
shuttle around through the day the system just does that faster
and so all these guys did they had about 12 vehicles in this branch was just lump
all of that in together and make a little bit more sense of when they're
doing the deliveries this is far more efficient
and this one yeah this is going to be some of the hardest distribution ever so
ready mix concrete and the orders come in maybe a few days in advance
depending on the weather we might adjust the orders depending on the weather this
morning we might be planning to pour at 6 o'clock but now we're not can we knock
it back what do you do with a remix truck that's already mixing and it's on
the way to apparently they try to sell it to another customer or they take it
to a quarry which is very expensive and pour it before it goes hard I'm so
fascinated with this I'm talking to
cement and we're going to go out and do a site visit taking the Academy members
out in July to do the site visit for their customer service and see how they
handle all of that because it just blows my mind I don't know how they do that
so this is a little bit of theory that we're talking about and what you need to
understand in a delivery operation is he going to have a bit of science around
how you use the vehicles and if you understand these concepts you can do
this on white board basically what happens is the delivery from the
warehouse has a stem distance this is basically the distance that I have to
drive to get into my area of distribution and this is used to be
known as the traveling salesmen algorithm so it was invented decades ago
in the u.s. how can I make my traveling salesman more efficient so this guy's
going to go to Canberra that's it stem distance and then I
wanting to call on 20 potential customers which sequence should we do
them in and then drive back bearing in mind you can only visit the customers
between nine and two or whatever it is exactly the same when we're delivering
product so we've got we need to understand the stem business for the
customer we've got some fixed cost and variable costs related to running the
fleet we've got our inter drop distance
and basically what we need to do is to start grouping these customers together
and taking account of the time and distance and the various costs so what
you're trying to achieve is a very high density of drops within the drop zone so
that we're not traveling too much between customers and you know what
happens in a lot of companies and particularly when delivery routes have
grown up over time I did put it on silent otherwise not
what happens when delivery routes graph over time these people say oh look we're
over here anyway we can add that customer here and it's only a slight
incremental cost and we can add that one in here and sending it slightly phonetic
across because we go pass them anyway and all of the route ends up being built
around small incremental costs and your cost of distribution is just going up
and up more all the time so this this can be a key component of understanding
your customer they would want to know what's the fixed and variable cost of
doing each delivery as an example I've probably done this with most of the milk
companies the bread companies the chicken companies and spent a lot of
time sitting with drivers you know delivering bread and so on I mean a
bread delivery driver might do 50 or 60 drops when he's delivering breads are
small stores and so on the difficulty they have is the time window of when
they're doing their deliveries so we might stop start at 4:00 in the morning
and they've got to finish it in what do you reckon is the one thing that you can
do with your customers negotiating with your customers to make that whole thing
far more efficient we think the biggest constraint is
yes open the closing time dot times yeah so traffic you're right we don't want to
be delivering in peak hour but the one thing that will make the biggest
difference is this person who says I've got to have my delivery between 6:30 and
7:00 in the morning could you make it 6:30 to 7:30
you do that with all your customers and just open those windows a little bit and
then use a routing system to do this bingo you're going to save 10 or 15% in
distribution cost that is the biggest constraint and in some industries of
course what happens is everybody wants their delivery between 6 and 10 well
that becomes a little bit more difficult and then you've got to negotiate and say
well if we could drop in in the afternoon with the reduce the cost a bit
there are useless information when are the peak periods for selling bread
what time before and after school 1 our windows that's when all the bread goes
flying off the shelves nightmare for bread deliveries from Mexico I once did
some work with the bread delivery company where we looked at a Kaos
distribution system so basically we had full truckloads of bread out on the
streets and then you know come 3:30 4 o'clock as shots were running out and if
you just call it in hundred loaves to Cole's north rods
so consequences of having inappropriate fleets you know you're going to end up
with a lot of excess cost lack of flexibility excess resources you
know if if nobody has looked at this in your business it's well worth having a
look whether you're managing that fleet itself or if you've got you know
carriers doing it for you I'll be saying how you how you're planning all these
dots show me how that you know the sequences work our Wilfred always both
partners go in there not doesn't work like that
and if you were to sort of say how do you go
about this you know looking at your distribution like this the three main
elements the customer where are they the order profile and their time windows
that's the big one the vehicles what's their capacity what's their fixed and
variable costs what are the access constraints and the network
what's your serviced offer collection versus delivery and your death by
locations that's pretty much what you've got to look at when you're looking at
distribution and easily 15 percent opportunity there if you've never looked
at it
some key things to look at is the service offer right keep coming back to
this you know what's the service of your customer want but you want to give to
them if that changes it changes everything
so are you able to differentiate service um bunch of different types of customers
the drop size and the frequency drives that cost let's come up time and time
again this morning and we'll continue to this afternoon and think about capacity
and time utilization so that delivery window is the key if we can open up that
delivery window or can you use larger trucks and again I'm going to keep
reminding you the goal here is to do less frequent larger deliveries know be
customers don't want that once you know what the trade-offs are in your own
business you can give them incentives to get them to do that
you