Articles, Blog

Fleet Management & Fleet Planning

December 30, 2019

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

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1 Comment

  • Reply Sathya Sunkisala July 20, 2019 at 6:44 am

    O k

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