In the world of logistics, hi-tech IT systems are becoming increasingly important, finds Malcolm Wheatley.
Order a barrel of lubricating oil from lubricant manufacturer Fuchs, or a barrel of beer from drinks supplier Matthew Clark, and there’s a common link between the trucks that will turn up to deliver them.
Both, it turns out, use vehicle routing optimisation software from Hertford-based Optrak, a specialist provider of vehicle routing software. Employing a variation of the so-called Clark & Wright ‘savings’ optimisation algorithm first developed in the 1960s, the software maximises productive vehicle utilisation while minimising resources – fuel, driver time, and distance travelled.
“From a mathematical perspective, the problem is a lot more difficult than you’d think,” says Optrak managing director Tim Pigden. “There are a lot of factors to take into account. For instance, time-of-day delivery slots, vehicle loadings, and which vehicles can go to which destinations.”
And solving such problems delivers more than just intellectual satisfaction. Customer satisfaction is a big plus as well as bottom line-boosting savings in fuel, driver time and vehicle usage.
“Roughly speaking, the savings add up to around 10- 15%,” says Pigden. “And with that, you’re getting a much better adherence to constraints, in terms of customer delivery windows and so on. Plus, route planning takes 30 minutes, and not three or four hours.”
Track and trace
No wonder then, that in the world of logistics, computers and clever software are fast becoming as important as trucks and warehouses.
At Premier Foods, for instance, a track-and-trace solution from specialist supply chain auto-ID provider Zetes has enhanced Premier’s SAP-based warehouse management system by adding over 500 barcode scanning devices. These automatically track and trace the movement of goods right across Hovis’ 10 UK manufacturing sites and UK-wide network of distribution centres.
At specialist fresh fish provider Seachill the requirement was for an auto-ID solution that would enable automation of the dispatch area and speed up its shipping and dispatching processes. Employing over 600 people at its Grimsby production plant, the company ships and delivers hundreds of pallets of fresh fish a week – many of them to supermarket chain Tesco.
“Tesco’s short lead times were proving to be a challenge,” says Steve Wallace, Seachill’s IT manager. “We’d get orders late in the day, leaving a very small window to get products scanned and out the door. Dispatch was having a hard time handling the influx of data during shipping peaks, making it very clear that we needed to research potential scanning and shipping automation solutions.”
The answer? Another Zetes solution, Visidot, which employs industry standard Data Matrix 2D barcode labels, together with automatic scanning and data-capture processes that are linked to the company’s servers and enterprise system.
“Per-pallet scan times have effectively gone down from seven minutes to under a minute, as well as providing us with absolute accuracy and essentially eliminating all shipping errors,” sums up Wallace.
Do it yourself
Third-party logistics providers too have got in on the act, and are increasingly using fancy IT solutions to both add new capabilities and differentiate themselves from competitors in what is an increasingly competitive and crowded marketplace. What’s more, many of these are self-built.
Take Unipart Logistics. Inside the logistics industry, it’s well-known that automotive companies such as Jaguar Land Rover, Hand and Kia have outsourced huge chunks of their aftermarket spare parts operations to Unipart – including warehousing, order picking, and even post-manufacture packing and inspection processes.
At Jaguar Land Rover, for instance, the remit is global, with Unipart tasked with supplying the automotive giant’s almost 900 dealers worldwide from a network of 14 distribution centres, repositioning inventory overnight in order to keep stockholdings at optimum levels.
But what’s less well-known, says Unipart sales director Paul Brooks, is that this remit calls for Unipart – and not Jaguar Land Rover – to be the party responsible for forecasting end user demand, and designing inventory holdings accordingly.
Even less well-known, he adds, is that the company has developed its own forecasting and inventory management software in order to be able to do this, not having found the capabilities that it needed in the offerings of the major ERP vendors such as Oracle or SAP. And it seems this ‘do-it-yourself’ approach is not unusual.
“The major logistics providers have had to develop a lot of their own systems in order to meet their own particular requirements,” says Julie Fraser, principal industry analyst at analyst firm Cambashi. “Enterprise software companies have tended to focus on manufacturers with their own fleets, and turn out to have relatively few customers among logistics service providers.”
Market gap
Indeed, it seems that in most cases, the major ERP providers can’t actually offer track and trace at a sufficiently granular level to appeal to logistics service providers, with a number turning to specialist software companies such as Inatech for ‘bolt on’ solutions.
“The capability has to be real-time, with realtime integration, and be able to communicate, in real-time, with customers via e-mails or SMS text messages. As well as keeping call-centre staff and senior management in the loop,” says Inatech senior consultant Ravi Kumar Narasinga. “The original data source is the same, but the integration requirements are very different and challenging.”
Bradford-based Advanced Supply Chain is another logistics service provider with extensive custom-built IT systems, explains chief executive Mike Danby. With expertise stretching from postmanufacture fashion and garment logistics through to international handling, Advanced’s IT systems enable the business to offer fulfilment to customers in the UK, automatically triggering replenishment orders from suppliers as far away as China.
“Because we’re experts in logistics, we can design IT systems that allow us to achieve pick accuracies of 99.95% – which is effectively perfect,” says Danby. “This means that customers such as Makro – for whom we handle all UK ambient distribution – don’t have to have people in-store checking incoming goods receipts.”
Do the sums, he urges, and substantial labour savings soon emerge, all from seemingly innocuous-sounding improvements in IT systems.
“The big enterprise software companies continue to aim their offerings at manufacturers and distributors, and not logistics service providers,” sums up Cambashi’s Fraser.
The result? Opportunities for niche players such as Optrak, Zetes and Inatech, and a logistics market in which firms such as Unipart and Advanced define what constitutes excellence.
