Manufacturers and third-party logistics providers (3PLs) need to collaborate even more closely if they want to realise significant mutual growth. Chris Fenton, managing director of Industrial & Transport for Wincanton plc, explains why.
Like manufacturing, logistics is an industry reliant on having the correct infrastructure, tools and people in place. As partners in the UK supply chain, manufacturers and logistics providers are also reliant on each other.
For this reason, I am sure many manufacturers will have welcomed Theresa May’s vision for an Industrial Strategy that empowers British business – I know I did. While all the details have yet to be specified, the focus on skills, infrastructure upgrades and creating the right institutions to bring together sectors all offer promise.
There will no doubt be much debate over the coming weeks and months, but at this point it’s worth reflecting that this sign of intent on the part of the government marks the beginning of a conversation.
In my view cross-industry discussion, particularly between all stakeholders in the UK supply chain, could deliver wider growth for the economy. It’s time we lifted our gaze and looked holistically at the supply chain to see where it can be improved, transformed, and crucially, made more productive.
The latest Purchasing Manufacturers Index (PMI) data shows manufacturing is on an upward trend. Rates of growth for production and new orders recently were among the best seen in more than two years, with companies seeing the benefit of new work from both the UK and overseas – the latter aided by the boost to competitiveness from the weak sterling exchange rate.
The fall of the pound brings with it challenges, however, as the price for manufacturers of importing raw materials inevitably increases. Where, then, do the opportunities lie to offset rising costs and safeguard this growth? The answer has to be technology and collaboration.
By working across a wide range of businesses and sectors, third-party logistics providers (3PLs) are ideally placed to facilitate collaboration and integration of technology across supply chains. They’re also an increasingly valued source of guidance for their customers; helping them to improve the cost to serve and implement new, more advantageous supply chain practices.
In the medium term, 3D printing, the Internet of Things (IoT) and artificial intelligence (AI) could well provide avenues for growth – and all are currently being explored by big name manufacturers.
In the short term, however, the focus has to be on better use of assets and resource. One way 3PLs can help with this is by identifying customers that can benefit from sharing assets – even if those customers are competitors.
Some markets don’t operate in a 24/7 cycle, so there are times when vehicles, warehouse space and personnel have untapped capacity. As an example, at Wincanton we re-deploy a large number of construction vehicles during the December off-season to help service the peak in demand faced by our retail customers in the run-up to Christmas. As a result, we’re delivering economies of scale and ensuring that vehicle assets work harder. It’s a simple solution but it works.
Ultimately, the concept of a business owning high levels of its own fleet, resourced to peak, is being challenged. Gone are the days when every business can responsibly run with 100% of its own fleet, with vehicles returning back to base empty following a delivery. Transport must now be approached as a finite resource – not only to minimise fuel consumption, but also to manage costs – which is why we use track and trace technology to monitor every single delivery across our fleet and reduce instances of empty running.
Other opportunities in transport are on the horizon, in the shape of automation in vehicles. The government’s planned trial of automated platooning – when trucks drive close together at a constant speed – could well deliver significant cost and fuel savings as its boosts the combined aerodynamics. It could also boost traffic flow and reduce tail-backs.
Automated vehicles aren’t quite a reality yet, but elements of the technology are already being implemented in the supply chain. We have ordered 100 new Mercedes Benz vehicles that feature ‘Proximity Control Assist’, which when used in conjunction with cruise control automatically maintains a pre-set distance from the vehicle in front.
We’re also involved in a government trial for longer vehicles, which is already yielding positive results in terms of boosting capacity and reducing emissions – for us and our manufacturing clients. The latest annual report on the trial showed that 90,000 lorry journeys have been cut leading to cleaner air, and reduced congestion.
Manufacturing and logistics share a long history. They could collaborate even more closely in the future, focusing on opportunities to embrace flexibility and sharing of resources. The potential for mutual support and growth is huge – especially with the government’s renewed focus on infrastructure, skills and education. Together we can solve whatever challenges come our way.