More cargo with 20% less trucks in FMCG

Wouter Clermonts - Business Development Manager at CAROZ

Truck turn times in FMCG supply chain are unreliable. The Dutch ‘Speed Docking’ project in gave clear evidence to this. The result is too many trucks and drivers. FMCG producers,  together with logistics service providers and customers, can realise improvements with the use of mobile communication, connected navigation, process mining based on big data to benefit better tactical and operational planning, geo-fencing, dynamic dock allocation and the use of community platforms were data is shared with all chain partners. Improving reliability of truck turn time will lead to 10 to 20 percent less trucks and drivers in the transport network and improved productivity at distribution centres the next 10 years.

There will be a shortage of drivers in the transport industry. Over the next 10 years, about 1 in 5 employees in the European transport industry will retire. Shortage of transportation capacity could result in empty shelves and stalled production if the productivity in transport is not improved drastically.

Fast Moving Consumer Goods

A reduction of transport is on top of the agenda’s of FMCG companies. Unilever launched a EU Marco Polo project to reduce the mileage of its trucks in Europe by 200 million kilometres per year, compared to 2010. The French Franprix chose to supply stores in Paris by water. SCA and Hero bundle the supply of goods with logistics service Nabuurs. 

Truck turns times

Truck turn times have a big impact on the tactical and operational planning of transport networks. Nearly half the time trucks are not moving. It’s not that trucks are actually waiting for the loading or unloading to start, but the planners have scheduled this cycle time. In logistics planning, it is not the average time that matters, the longest cycle times do. If an average time is used, schedules would have to be revised over and over again. The larger the variance the more slack needs to be considered when planning.

Speed Docking Competition

Mars Netherlands organized the Dutch Speed Docking Championship for the second time, in 2012 together with HJ Heinz. With this logistic competition, both companies want to accomplish a faster and more efficient inbound logistics process at the distribution centres of retailers and wholesale. The competition revolves around the duration and time spent by trucks at the distribution centres. For ten weeks the distribution centres of retailers and wholesalers competed for the greatest accomplishment: Who will save the most time when unloading the trucks?

Process mining

Mars and Heinz collected the entry and exit times via on board computers (by the transportation companies involved: Kuehne Nagel and Nabuurs, and share this information onwards with retailers and wholesalers. Via ‘process mining’ researchers determined at what distribution centre a delay occurred.

Caroz More Insight, the research company responsible for the collection of the truck turn time data via the onboard computers of the trucks and the analysis of the Speed Docking data, analyzed 3.247 shipments in 2012, spread over a period of 9 weeks. The shipments went to 46 retail locations (1.556 shipments) and 116 wholesale locations (1.691 shipments).

Truck turn times

A large amount of the time spent by truck drivers is spent in waiting for loading and unloading of their cargo. For wholesales truck turn times are between 10 and 30 minutes, for retail distribution centres truck turn times are between 30 and 90 minutes (see figure 1). However 15 to 20 percent of the truck turn times are much longer.

Figure 1: truck turn times (Speed Docking data 2012)

Dropsizes between retail and wholesale are different (see figure 2); 80% of shipments to wholesale is less than 10 pallets per drop, 80% of shipments to retail are more than 10 pallets per drop. Truck turn times for trucks with 5, 10 or 26 pallets for one single delivery address are the same. Transport networks for wholesale are typically a milk run. The impact of individual truck turn times, and the reliability of the truck turn times, might have a big impact on overall efficiency and reliability of these networks.

Figure 2: Dropsizes (Speed Docking data 2012)

The distribution centre or Dutch retailer Jumbo in Veghel was announced winner of the Speed Docking contest in 2012.

Jumbo’s Supply Chain Director Karel de Jong: “We are very proud on this achievement, in particular because we are operating in a dynamic environment with the take-over of Super de Boer and C1000. In particular in the areas of transport and distribution the impact has been substantial. We managed to keep a strong team together at the distribution center, however. What ever may be happening, the focus of all Jumbo employees is 100% satisfied customers. Winning this prize is a big boost. I am very proud of our employees.”

Lessons learned

Analyzing transactional data from the onboard computers with process mining has shown three practical take-aways:

Bigger

Ordering full trucks, and bundling of volumes by shippers to full truckloads, is more efficient and speeds up the goods receipt process enormously. In addition, a better flow provides a distribution centre that is more at ease. Bigger shipments score better in terms of ‘docking efficiency’.

Better

Reliability is more important than quick. Loading and unloading outside the agreed time window disrupts the dock planning, the downstream processing in the distribution centre and causes an unnecessary use of trucks because of the safety margins that is use for planning.

Faster

The mindset of staff and management turns out also to be of importance. After the official contest there has been an additional ‘blind’ measurement of the truck turn times for two weeks, without the staff knowing. Jumbo was again the fastest retail distribution centre.

Improving truck time times

The ‘Speed Docking’ project bundles innovative and sometimes complex concepts like scanning of special pallet labels (SSCC), advanced delivery notifications via EDI, data alignment, bundling of orders, even with other suppliers and full trucks with ‘Green Order’.

Green order

Speed Docking uses an obvious order of events. Companies started measuring the ‘Green Order’; how full is a truck actually? The smaller the number of trucks going to a distribution centre, the smaller the delay. The ‘Green Order’ indicates how sustainable the orders are, based on CO2 emission.

Paperless processes: ‘Scan & Go’

The second stage is ‘Scan & Go’, that consists of scanning all the pallets upon receipt, based on the standard pallet labels (SSCC), advanced delivery notifications and supply chain data alignment. The standards for electronic data interchange and data alignment are developed by GS1.

Geo Docking

The third stage is the linking of ‘geo fencing’ with ‘dynamic dock planning’; geo docking. The receiving distribution centre will assign the unloading dock only when the truck is in the immediate area. This can be determined by geo fencing technology that allows the definition of one or more areas of relevance for each truck. Once a truck enters or leaves a certain area, a message is sent via e-mail or SMS to the planner. The on board computer in the truck announces itself from e.g. 20 kilometres away and triggers certain software agents to start the negotiation about which unloading dock to use based on availability. Following this, the driver is notified via the onboard computer of the exact unloading dock to use.

Dock-and-Roll

The final stage is Dock-and-Roll. The truck is equipped with a rolling floor, drives up to the loading back and is automatically emptied when cargo is moved over the track.

Frans van den Boomen from Mars and Tom Tillemans from H.J. Heinzinitiated Speed Docking in 2012.

“No customer will pay for waste in the supply chain”, states Frans van de Boomen, Value Chain Manager at Mars Netherlands. Van den Boomen stressed that the discussions should not be only about money. “We have to broaden the scope. We should not get bogged down in pricing discussions. We have to focus on the joint creation of value. Sustainability is important, preceded by responsiveness in the chain.”

The lessons learnt from the NK Speed Docking gave Heinz food for thought. Tom Tillemans European Head of Logistics Network Development: “We have to reconsider our role. The end result should not be kept to ourselves but needs to be shared. The FMCG sector takes their problems seriously nowadays. We wont burry our heads in the sand anymore.” Tillemans sees future supply chains as richer, better utilized and more balanced.

2013…

Speed Docking translates technological innovations to common understandable concepts in such a way that the employees, the truck drivers and the warehouse staff are enthusiastic contributors to the improvements. Speed Docking shows there are 10 to 20% too many trucks in the transport network. By bundling innovations, the transport industry can improve future productivity in FMCG transport networks.

Video on speed docking - http://goo.gl/MzAQc