There are useful reminders of what can go wrong.  During the Foot and Mouth outbreak amongst livestock a few years ago DEFRA had sufficient stocks of the necessary Personal Protective Equipment (PPE) and chemicals but failed to distribute them to where they were needed on time.  After it was over, and keen to ensure that they would be better prepared next time, DEFRA called in the THE LOGISTICS BUSINESS to help put in place a logistics plan for any future outbreak.

More recently there have been a number of articles published in the USA about breakdowns in the medical supply chain when the H1N1 outbreak occurred with local bodies failing to secure sufficient supplies of swabs and face masks.

Now it’s the turn of the Primary Care Trusts.  There are at least two logistics issues to deal with - distribution of anti-virals to infected patients and distribution of Personal Protective Equipment to NHS and other staff.

The first task is to understand the numbers - how much stock and how much throughput - expressed in unit loads.  How many deliveries per day?  What service level is needed?  What hours will sites be open?  And of course where will deliveries be from and to?

Of course this is hard to predict particularly because activity levels need to be condensed down to daily movements and that means understanding at what level the outbreak will peak so in part the question is what level of outbreak you should plan for?  Also don’t forget that you also need to deal with disposal of used equipment and return of unwanted items.

Once the numbers have been agreed these need to be converted into requirements :-

• Buildings - number, size, layout, environmental conditions
• Vehicles - distances they will travel, how full they will be and how many trips they will make?  This will in turn determine the number of vehicles needed
• Staff - what are the processes, what productivity levels can be expected and what hours will be needed?  This will determine the number of people
• Procedures, systems and communication.  Both staff and the public will need to understand clearly what they are required to do and stock control systems will be needed to ensure that sites are neither overstocked nor run out.  These need not be complicated but they do need to be tried and tested.  All of this will in turn require a communication plan.

Now that you have decided what you need the next step is to decide how it is to be delivered.  Will you be using existing buildings and if so what changes will need to be made to them.  You might need to bring in some shelving or racking and how are you going to load and unload lorries when they arrive and leave with supplies?  Will you buy in the logistics resources you need, for example transport, in which case you need to set up service contracts and agree prices.  Do not rely on your existing contracts or suppliers to simply pick this up.

From all of this a logistics plan can be developed.

If this all seems a little daunting or you have a plan but would like to have it independently checked then help is at hand.  THE LOGISTICS BUSINESS has undertaken numerous projects within both the Public and Private sectors and in particular with National Blood Service and other parts of the NHS doing just this.

If you would like to talk to us without obligation to see how we might help or just want to bounce some ideas around we’re happy to help.
THE LOGISTICS BUSINESS, a leading specialist supply chain and logistics consultancy, has experience in planning and developing supply chain, distribution and warehousing operations throughout the world. From supply chain and distribution strategy, to development of distribution operations, warehouse design and layout, as well as manufacturing logistics and IT systems design, its clients include many blue chip companies.

We have also worked on government initiatives on sustainable transport and waste minimisation.For further information please call:Helen Morris, THE LOGISTICS BUSINESS on +44(0)1527 889 060, email helen.morris@logistics.co.uk

Cost or benefit?

So what is happening and who is taking the initiative?  For businesses the key incentive to improve construction supply chains should be the desire to increase profits through more effective operation.  But this is the first stumbling block.  Mention logistics to many construction managers and they think only of costs; the costs of preliminaries (fencing and staff facilities) the costs of employing staff to manage vehicles movements, and the costs of finding space to store goods where there is limited space available at the construction site.  For example, one leading construction company is building two hospitals in London.  One of these is on a site, which has restricted road access and very limited storage space on site; hence some excellent logistics principles are being applied to control the delivery of materials, including the use of off-site consolidation.  The other site does have have these same constraints, so no similar logistics principles are being applied.  In other words good logistics practice is not being seen as beneficial for the construction project as a whole but merely as a means to overcome delivery constraints. It is too early to see what the impact might be on the overall outcome of these projects but simply walking around the sites would show you the difference.  The first site is well ordered with relatively small amounts of material waiting to be used whereas the second is far untidier with large quantities of material lying around, just waiting to be damaged or go missing.

High levels of construction waste

One result of the poor supply chain management is that the level of waste generated by the construction sector is staggering.  Typically 10% to 15% of total materials ordered for construction projects are either unused or end up as waste, and for some materials the figure can be as high as 45%.  According to WRAP (Waste and Resource Action Programme) a 35% reduction in this material wastage could be achieved by adopting more efficient logistics practices.  Waste seems to be taken for granted on construction projects and to a large extent is embedded in the project costing so that quantities are based on an expectation that there will be significant damage and other losses.  As an example of the levels of waste that are common consider this.  Construction logistics specialist, Wilson James, which runs the London Construction Consolidation Centre (CCC) reported that on completion of one construction project in London, some 38, 26 tonne lorry loads of unused, good quality plant and materials with a value close to £1/4 million were returned from site to the CCC.  The benefits of the CCC were that this waste could be controlled and managed, and ultimately most of it was re-used on other projects.  On other less well managed projects this material would simply have been skipped and probably sent to landfill.  The cost of such waste is normally just built into the project cost, increasing the cost to the client, or perhaps it is not built in, in which case contractor margins are reduced.

One of the most significant initiatives under way at the moment is that being promoted by WRAP and funded by Government through DEFRA.  WRAP has an active programme in hand, driven by targets for waste reduction, to promote much improved logistics in UK construction.  WRAP’s programme has resulted in the development of a number of tools to help construction companies with their logistics plans and is actively supporting a number of projects which are seen as exemplars for the industry as a whole.  WRAP’s work is important and is delivering results, but in the overall scheme of things the total effort is small.

Productivity improvement

WRAP’s programme is aimed at reducing physical waste and CO2 emission, but as important for improved profitability are the gains in productivity that improved supply chain management can provide.  Can you imagine a manufacturing plant where the skilled workers spend half their time walking to and from storage areas to find the materials they need?  Probably not, but that’s just what happens on most construction sites; skilled workers from numerous sub-contractors all managing their own small, inefficient supply chains with no overall logistics plan.  The idea that kits of parts can be delivered to the point of use has been shown to work on construction sites but examples are few and far between.  There are many other tools and techniques that could be used on construction projects but their application needs to be driven from top management with an overall plan for improving the supply chain.

Supply chain management can add value, it can reduce waste and it can improve productivity - why is it so difficult to persuade construction companies to embrace it?  There is much more that needs to be done and ultimately it must be for construction clients and major contractors to drive forward the change.

Unfortunately there is little sign of this change taking place and one still wonders just what is needed to make it happen.  Perhaps the current recession will provide the incentives to seek further performance improvements and perhaps those who may take up the challenge will be the ones that survive.

THE LOGISTICS BUSINESS, a leading specialist supply chain and logistics consultancy, has experience in planning and developing supply chain, distribution and warehousing operations throughout the world. From supply chain and distribution strategy, to development of distribution operations, warehouse design and layout, as well as manufacturing logistics and IT systems design, its clients include many blue chip companies.

We have also worked on government initiatives on sustainable transport and waste minimisation. For further information please call:Helen Morris, THE LOGISTICS BUSINESS on +44(0)1527 889 060, email helen.morris@logistics.co.uk

A key factor for success is the ability of an organisation to convert the energy burst of the launch itself into new sales orders that are manageable and deliverable.  Processes are needed to ensure that the sales teams know well in advance what to expect and can be confident that the promises they make to customers can be supported by the supply chain as a whole.  On the other hand production and supply chain teams need to know that sales are not making promises that cannot be sustained by production or supply chain capacity.

Nowhere is the success of a product launch more important than in the cosmetics industry, where companies rely on innovation to build competitive advantage and increase market share.  That’s why cosmetics giant L’Oreal turned to THE LOGISTICS BUSINESS to help to ensure that its new product launch processes were robust and met the needs of every part of the business.

L’Oreal has been a leading light in the cosmetics industry for more than a century and owes its very existence to the excellence of its research and innovation.  Founder Eugene Schueller developed the world’s first synthetic hair colorant and today, L’Oreal still invests heavily in research and development.  The company creates up to 4,000 new formulae each year covering a wide range of products including skin care, sun protection, make-up, hair styling and fragrances.  The result is that L’Oreal is constantly refreshing its consumer offer, listening to its customers and bringing new products to market to meet new demands.  It’s a winning recipe, which results in the astounding statistic that around 67 per cent of UK women use at least one L’Oreal product.

In choosing a consultant to help with this work L’Oreal recognised the excellent track record which THE LOGISTICS BUSINESS has had in developing complete supply chain processes for FMCG manufacturers and particularly for other leading luxury goods and cosmetic brands.  Hence, THE LOGISTICS BUSINESS was commissioned to undertake a complete review of the way in which the Luxury Products Division of L’Oreal UK launched new products and, particularly, the way that resulting sales orders were handled.  There were a wide range of cross-functional issues to consider bearing in mind that all elements of the organisation had to be confident that any changes would be workable and would enhance rather than hinder their ability to meet targets from product concept through development and production all the way to the shelf in the retail store.  Many of the issues were related to the speed at which  sales orders were processed and to the flexibility and suitability of L’Oreal’s existing software tools.  The overriding objective was to develop processes that would reduce to an absolute minimum any risk that the maximum benefit from new products would not be gained because of delays in processing orders.

THE LOGISTICS BUSINESS appointed a world class consultancy team to the project, headed by Senior Consultant, Graham Mawdsley.  Graham’s operational and analytical experience in the development of FMCG international supply chains and department store operations put him in a ideal position to head up this project, where practical experience and an ability to gain the confidence of a wide cross section of L’Oreal’s team was as important as the ability to undertake detailed analysis and understand complex business systems.

The consultancy team worked with a range of key managers in L’Oreal and undertook a detailed process mapping exercise to understand how L’Oreal’s product launch process had operated in the past.  The exercise involved gathering information from many different parts of the organisation including sales, marketing, logistics, customer service and finance.  It also required an understanding of L’Oreal’s supply chain processes and product development lead times.  The consultancy team got right “under the skin” of the L’Oreal organisation and delved deep into what really was driving the issues behind the product launch process.  This “under the skin” approach was vital in order to ensure that the business was really well understood and to highlight those elements of the process that were adding value and those that were not.  It was only by understanding the detail and limitations of current systems and combining this with the human element that it was possible to identify areas for potential efficiency improvements and then confidently provide recommendations for change.

THE LOGISTICS BUSINESS produced a series of recommendations for actions to improve the product launch processes.  The key factors for change were to understand where in the processes communications were breaking down and where delays were occurring due to lack of data or appropriate feedback along the supply chain.  The consultancy team identified unnecessary complexity in the processes and introduced changes to simplify and speed-up the communication process and the availability and transfer of vital data.  The recommendations included the introduction of new software tools, which would be simple to use and would be seen as adding value for sales teams and others.  The reasoning behind these tools was that they should help make information readily available and shared by all those elements of the organisation that had a role to play in the product launch.  Visibility of and easy access to reliable data is the cornerstone of any supply chain process, product launch or otherwise.

The recommendations put forward by THE LOGISTICS BUSINESS were fully accepted by L’Oreal and some 18 months after the introduction of the changes L’Oreal has reported that its performance in planning and executing promotions and launches has “improved considerably”.  It has also reported that those results have proved to be sustainable.  Christophe Albenque Head of Customer Service and Supply Chain at L’Oreal Luxury Product UK, said: “The mapping of the processes helped to make all teams aware that the solution would not be found in a heavy IT tool to manage the complexity of the operations but in the simplification of our processes.  As it was a cross-function approach, it was important to have someone neutral with no pre-conceived ideas.  This was crucial to the acceptance of the conclusions by all parties”.

The cosmetics industry is perhaps special in that it depends on a regular supply of so many new products but the principles applied at L’Oreal are just as applicable to any other business where development, production, marketing and sales teams have to work together to launch new products on time so that customer expectations are fully met and sales volumes are maximised.  Excellence in supply chain management is not just about the efficient movement of goods to market.  It is of strategic importance to most organisations and is a means to gaining competitive advantage.  Investment in good supply chains was always important in the economic good times but in the current economic climate it could well be the difference between success and failure.
THE LOGISTICS BUSINESS, a leading specialist supply chain and logistics consultancy, has experience in planning and developing supply chain, distribution and warehousing operations throughout the world. From supply chain and distribution strategy, to development of distribution operations, warehouse design and layout, as well as manufacturing logistics and IT systems design, its clients include many blue chip companies.

We have also worked on government initiatives on sustainable transport and waste minimisation.For further information please call:Helen Morris, THE LOGISTICS BUSINESS on +44(0)1527 889 060, email helen.morris@logistics.co.uk

In April 2004 the CILT’s Construction Industry Supply Chain Forum was established and I took on the task of moving it forward as the Forum’s first Chairman.  Our aims were simply to help improve the up-take of good logistics and supply chain management practices in the UK construction industry and to encourage debate on the subject.  In the five years since then the Forum has made steady, if at times slow progress, with an enthusiastic and committed band of members.  Indeed, the regular Forum Committee meetings now has one of the best attendance records of any of the Institutes Forums.  After five years I am handing over the chairmanship to Stephen Bacon and now seems a good time to reflect on how logistics has developed in the UK’s construction industry and what the Forum has achieved.

Uptake is slow

In April 2001, well before the idea of the Construction Forum was conceived, I wrote an article for Logistics Focus which on reflection was rather full of optimism about the opportunities for improving construction logistics.  It described the work that THE LOGISTICS BUSINESS had undertaken with BRE (formerly the Building Research Establishment) to investigate the logistics of supply and delivery of materials to construction sites and I started the article by commenting that a few enlightened companies within the construction industry had begun to see that good logistics practices were essential to the achievement of sustainable improvement.  However, I also noted that most construction companies had yet to recognise the benefits that could be realised.  At that time I was of the view that it would not be too long before many of the major construction contractors would be developing logistics improvement programmes and learning from other sectors, such as motor manufacturing and retail distribution, just how important supply chain management would be for gaining a competitive advantage.  But if I was taking the long view it was clearly not long enough, and I think it’s fair to say that whilst indeed some enlightened companies have continued to make progress, on the whole the industry is not much further forward now than it was eight years ago.  Karl Hudson and Stephen Bacon, both highly experienced individuals working within the construction sector certainly think that things have not improved.  In their recent article published in Focus they are damning in their comments on the construction industry’s uptake of good logistics practices and conclude that the industry still uses “archaic supply chains”.

Who is taking the initiative?

So what is happening and who is taking the initiative?  For businesses the key incentive to improve supply chains should be the desire to increase profits through more effective operation.  But this is the first stumbling block.  Mention logistics to many construction managers and they think only of costs; the costs of preliminaries (fencing and staff facilities) the costs of employing staff to manage vehicles movements, and the costs of finding space to store goods where there is limited space available at the construction site.  For example, one leading construction company is building two hospitals in London.  One of these is on a site which has restricted road access and very limited storage space on site; hence some excellent logistics principles are being applied to control the delivery of materials, including the use of off-site consolidation.  The other site does not have these same constraints, so no similar logistics principles are being applied.  In other words good logistics practice is not being seen as beneficial for the construction project as a whole but merely as a means to overcome delivery constraints.  It is too early to see what the impact might be on the overall outcome of these projects but simply walking around the sites would show you the difference.  The first site is well ordered with relatively small amounts of material waiting to be used whereas the second is far more untidy with large quantities of material lying around, just waiting to be damaged or go missing.

As Karl Hudson and Stephen Bacon have stated “construction industry logistics are immature” and the construction industry simply does not understand how logistics can add value.  Hence, it is only a few companies who see that experience in improved logistics and more effective supply chains is actually an investment which will lead to reduced waste and higher profits, and will actually result in a competitive advantage.  Other sectors have seen it, so why not construction?   I wish I had the answer to that question but perhaps it has something to do with the training of the professionals in the industry (architects, designers and construction managers) who, in my experience, have very little understanding of what supply chain management is all about.

High levels of construction waste

One result of the poor supply chain management is that the level of waste generated by the construction sector is staggering.  Typically 10% to 15% of total materials ordered for construction projects are either unused or end up as waste, and for some materials the figure can be as high as 45%.  According to WRAP (Waste and Resources Action Programme) a 35% reduction in this material wastage could be achieved by adopting more efficient logistics practices.  Waste seems to be taken for granted on construction projects and to a large extent is embedded in the project costing so that the quantities are based on an expectation that there will be significant damage and other losses.  As an example of the levels of waste that are common consider this.  Construction logistics specialist, Wilson James, which runs the London Construction Consolidation Centre (CCC) reported that on completion of one construction project in London, some 38, 26 tonne lorry loads of unused, good quality plant and materials with a value close to £1/4 million were returned from site to the CCC.  The benefits of the CCC were that this waste could be controlled and managed, and ultimately most of it was re-used on other projects.  On other less well managed projects this material would simply have been skipped and probably sent to  landfill.  The cost of such waste is normally just built into the project cost, increasing the cost to the client, or perhaps it is not built in, in which case contractor margins are reduced.

One of the most significant initiatives under way at the moment is that being promoted by WRAP and funded by Government through DEFRA.  WRAP has an active programme in hand, driven by targets for waste reduction, to promote much improved logistics in UK construction.  WRAP’s programme has resulted in the development of a number of tools to help construction companies with their logistics plans and is actively supporting a number of projects which are seen as exemplars for the industry as a whole   WRAP’s work is important and is delivering results, but in the overall scheme of things the total effort is small.

Productivity improvement

WRAP’s programme is aimed at reducing physical waste and CO2 emissions, but as important for improved profitability are the gains in productivity that improved supply chain management can provide.  Can you imagine a manufacturing plant where the skilled workers spend half their time walking to and from storage areas to find the material they need?  Probably not, but that’s just what happens on most construction sites; skilled workers from numerous sub-contractors all managing their own small, inefficient supply chains with no overall logistics plan.  The idea that kits of parts can be delivered to the point of use has been shown to work on construction sites but examples are few and far between.  There are many other tools and techniques that could be used on construction projects but their application needs to be driven from top management with an overall plan for improving the supply chain.  Supply chain management can add value, it can reduce waste and it can improve productivity - why is it so difficult to persuade construction companies to embrace it?  There is much more that needs to be done and ultimately it must be for construction clients and major contractors to drive forward the change.  Unfortunately I see little of this change taking place and I wondered just what is needed to make it happen.  Perhaps the current recession will prove the incentives to seek further performance improvements and perhaps those who may take up the challenge will be the ones that survive.

Forum achievements

So what has the CILT’s Construction Supply Chain Forum achieved?  Well it’s the usual story, we have achieved much, but not as much as we would have liked.  At the outset one of our objectives was to pick up the recommendations of the Task Group on Logistics set up by the Strategic Forum for Construction.  I sat on that Task Group and although the recommendations  were no more than what the Group saw as common sense, their adoption would certainly be of great benefit to the construction industry.  We have probably not made much progress with the Task Group recommendations at a detailed level, but over the years the Forum has run a number of well attended events and in particular we have had some success in engaging with relevant Government departments in an attempt to gain support for change.   This has taken time for a number of reasons, not least of which has been the changes of Minister with construction industry responsibility and changes to Government departments.  However, we have at last made progress and we are now engaged with BERR who have agreed to host an event that we will run jointly with CIPS later this year.  Details of the event are being finalised but the broad objectives will be to promote the benefits of good supply chain management practices in construction and show the successful outcomes that have been delivered by the more forward looking companies.

Although change is much slower than I had expected in the views                                                                                                                                                                                                                                                                                                                                                                                                                                             expressed in my 2001 article, I still firmly believe that change is necessary.  I am less confident than I was that it will happen in anything like the short term I am confident that the Forum has an important role to play.  From the CILT’s perspective there is a major sector of the UK economy which is effectively untouched by the hand of supply chain management, and for a sector where margins are low and the history of delivery to programme is poor, there is a golden opportunity to improve performance and for individual companies to gain significant competitive advantage.

THE LOGISTICS BUSINESS, a leading specialist supply chain and logistics consultancy, has experience in planning and developing supply chain, distribution and warehousing operations throughout the world. From supply chain and distribution strategy, to development of distribution operations, warehouse design and layout, as well as manufacturing logistics and IT systems design, its clients include many blue chip companies.

We have also worked on government initiatives on sustainable transport and waste minimisation.For further information please call:Helen Morris, THE LOGISTICS BUSINESS on +44(0)1527 889 060, email helen.morris@logistics.co.uk

Please call one of our consultants to discuss your next project.
THE LOGISTICS BUSINESS, a leading specialist supply chain and logistics consultancy, has experience in planning and developing supply chain, distribution and warehousing operations throughout the world. From supply chain and distribution strategy, to development of distribution operations, warehouse design and layout, as well as manufacturing logistics and IT systems design, its clients include many blue chip companies.

We have also worked on government initiatives on sustainable transport and waste minimisation.For further information please call:Helen Morris, THE LOGISTICS BUSINESS on +44(0)1527 889 060, email helen.morris@logistics.co.uk

However this may now be about to change.  Not overnight but the trend towards increased direct importing is definitely slowing and may even be reversed.  Why should that be the case if it has been so beneficial?

There are two forces at work.  As China’s economy grows, costs are rising and it is absorbing more of its own products, eroding some of the cost advantage over the West or other parts of the Far East.  And this trend is certain to continue.  In addition, like anything in life, the size of the reward is usually matched by a correspondingly sized risk and the recent economic downturn has highlighted some of those risks :-

• Lack of agility - part of the reason why China has been so cheap is by being efficient.  By manufacturing in large batch sizes with long lead times.  This means order have to be placed months in advance, cannot be charged at short notice and so cannot be flexed to meet changing economic circumstances
• Distance - adding to the above problem is simply the time it takes to get product from the Far East to Europe
• Supplier stability - direct sourcing often goes hand in hand with single supplier sourcing.  This means that if the supplier has problems, and many have in recent months, you too have problems.  Direct sourcing removes the buffer that sourcing from wholesalers, etc provides.

There are numerous examples of this in recent months. There is considerable evidence that retailers, anticipating a significant drop in sales prior to last Christmas, cut order early only to discover that sales proved remarkably resilient leaving many without stock of important lines and with no opportunity to replenish at short notice.  Other have had suppliers go bust or have funding withdrawn leaving them short of product and without the support network of agents and importers to find new sources of supply.

So what is likely to happen over the next few years?  As has already been suggested it is highly likely that the growth in direct sourcing from the Far East will slow and eventually reverse.  Some of that sourcing will switch to other emerging economies such as South American and, as political stability improves, Africa.  But it is this writer’s belief that there will be new opportunities for some sort of wholesale model to re-emerge.  Perhaps not in the same form as in the past and it will probably have a different name but the principles will be similar.  An intermediate third party, specialising in buying product from a number of sources, possibly holding stock, supplying numerous customers and in so doing spreading and therefore reducing the risks referred to.  They will not be able to enjoy the margins of the past and will have to work more closely with their customers.  However with so much more willingness now for, in some cases, competing organisations to collaborate, wholesalers, or whatever we choose to call them, have a real opportunity to add value to the supply chain by improving agility and reducing risk.

If you feel this article has given you some food for thought and highlights areas of your business / projects THE LOGISTICS BUSINESS could assist you with please contact Simon Tomlinson the writer on 01527 889 060 or email info@logistics.co.uk

THE LOGISTICS BUSINESS, a leading specialist supply chain and logistics consultancy, has experience in planning and developing supply chain, distribution and warehousing operations throughout the world. From supply chain and distribution strategy, to development of distribution operations, warehouse design and layout, as well as manufacturing logistics and IT systems design, its clients include many blue chip companies.

We have also worked on government initiatives on sustainable transport and waste minimisation.For further information please call:Helen Morris, THE LOGISTICS BUSINESS on +44(0)1527 889 060, email helen.morris@logistics.co.uk

Many projects include an implementation phase, which is of sufficient duration for it to be notifiable to the Health and Safety Executive under the ‘Construction Design & Management Regulations 2007′, often referred to as just ‘CDM’.  This applies to any project lasting for more than 30 days or requiring more than 500 person-days to complete it.  And not just civil construction.  The legislation applies to all types of building fit out including racking, mezzanine floors etc.

As part of our project skill-set THE LOGISTICS BUSINESS offers additional value by advising clients on the requirements imposed by the CDM regulations and we are often ideally placed to integrate the role of CDM Co-ordinator with our services as Designers and Project Managers.

When appointed by the client in the formal capacity of CDM Co-ordinator, we undertake the responsibility for ensuring that the client is aware of his own duties under CDM and for providing assistance in complying with these.  In addition, we ensure that he health and safety aspects of the project are properly managed throughout the course of the project this would include:

• Ensuring the competence of contractors
• Preparing pre-construction information to contractors
• Notifying the Health & Safety Executive
• Preparing the Construction Phase Health & Safety Plan
• Managing the site induction training
• Providing liaison between contractors to ensure co-operation and co-ordination of tasks, and chairing regular project review meetings
• Managing late design changes
• Collecting necessary information for the Health & Safety file, which must be handed over on completion

If we can assist you with a forthcoming project please call 01527 889 060 or email to info@logistics.co.uk

THE LOGISTICS BUSINESS, a leading specialist supply chain and logistics consultancy, has experience in planning and developing supply chain, distribution and warehousing operations throughout the world. From supply chain and distribution strategy, to development of distribution operations, warehouse design and layout, as well as manufacturing logistics and IT systems design, its clients include many blue chip companies.

We have also worked on government initiatives on sustainable transport and waste minimisation.For further information please call:Helen Morris, THE LOGISTICS BUSINESS on +44(0)1527 889 060, email helen.morris@logistics.co.uk

THE LOGISTICS BUSINESS suite of i-flow models was used to develop the supply chain network and costs.

Geographic Models

Initially data on the existing operations was collected and analysed to understand customer demand across the different geographic and demographic areas within the UK.  This demand information was modelled geographically to plot demand density and establish the optimum locations for transport hubs.  Vehicle drive times to satisfy the customer demand and inbound transport times were taken into account within the models.  The geographic models were used to determine the optimum delivery routes taking account of mileage, time taken, number of drops, stem mileage, average speeds and time with the customer.

Supply Chain Models

The information generated from the Geographic Models provided the base data for the Supply Chain Model.  These models provide information on volumes of products moved within the network and stock holding at National Distribution Centres, Hubs and delivery vehicles.  The sizes and functions of each of the facilities was determined from this information as was the optimum vehicle types in the different parts of the network.

Cost Models

Information on the physical movement of products from the Supply Chain Model is integrated with the Cost Model.  This provides detailed information on the total delivery costs to each customer.  These costs are broken down into the different elements of the supply chain such as vehicle costs, driver costs, hub handling costs, inbound transport costs, costs of stock etc.

All models are driven by a comprehensive set of parameters that provided the user with the ability to change volumes of demand, stock levels, vehicle speeds, road congestion, time with customers etc.  Peak periods during the year and seasonal demand patters were all taken into account.

Reporting Functions

The reporting capabilities within i-flow enable tables of results to be produced to understand the effects of parameter changes on service levels and costs.  These reporting facilities were one of the key tools in defining the optimum supply chain to provide the same day delivery of electronic devices.
THE LOGISTICS BUSINESS, a leading specialist supply chain and logistics consultancy, has experience in planning and developing supply chain, distribution and warehousing operations throughout the world. From supply chain and distribution strategy, to development of distribution operations, warehouse design and layout, as well as manufacturing logistics and IT systems design, its clients include many blue chip companies.

We have also worked on government initiatives on sustainable transport and waste minimisation.For further information please call:Helen Morris, THE LOGISTICS BUSINESS on +44(0)1527 889 060, email helen.morris@logistics.co.uk

One would think that with all of the systems that have been installed, particularly by the big international suppliers, functionality would have been completely standardised by now with little requirement for customisation and yet, although there is a trend in this direction, it is still common for new users to want changes.

The diagram below demonstrates part of the reason for this.  Warehouse management systems (WMS) work at the operational level within a business - a level at which businesses do vary significantly one from another. It can be a level at which companies manage customer specific, value added services and these are often an important point of differentiation from competitors.  It is therefore understandable that organisations expect a WMS to adapt to their way of working rather than the other way round.

As part of the WMS selection process there are usually two elements of customisation proposed by the supplier - dedicated interface changes and enhancements to meet specific operational requirements.  The interface customisation is usually not negotiable, however any other customisation is only required if either the functionality is poor within the package being purchased, or there is a special requirement not deemed mainstream enough to be included in the base package.

There is a debate to be had with regard to exactly how important any functionality enhancements really are, it is always better to look for a suitable work around first, either by constructive use of the software or through amendment of the operating practice.  If a particular process is not part of a WMS base package it is worth investigating why.  Is it because the process is not well thought through?  If so, the implementation advisor / WMS supplier should say and help to identify a more efficient and logical solution.  As mentioned earlier there are, however, situations where some degree of customisation is unavoidable perhaps because it is a point of competitive advantage.

There are a number of very good reasons for avoiding major customisation, which, during the negotiation stage of purchasing a system, should be discussed openly with the provider.

Will adding the enhancements allow the system to remain on the software upgrade path?

The answer to this question should always be yes.  Care must be taken to understand whether the ‘yes’ answer actually means ‘yes in all cases’ or ‘yes, but only under certain conditions’.  Conditions to be aware of can include:

• only for certain upgrades (i.e. - major upgrades but not software patches)
• at a cost, WMS suppliers often charge an additional upgrade fee to make enhancements compatible with the latest version.  This does not necessarily mean that changes to the software are required, but pays for the developer to investigate whether the software is compatible with the new release.

If the supplier has made it clear that enhancements will not or cannot be included in the upgrade path then in most cases choose another supplier.  Staying on an upgrade path is almost essential.

Have the modifications already been built (and paid), for another customer?

Suppliers aren’t always forthcoming with an answer to this, as saying “yes” will not earn them as much development time and provides a strong argument for the functionality being included in the base release.  If similar functionality is seen on a site visit (and this is one of the most important reasons for visiting existing users) during the selection phase, this will be worth pursuing.  The result may be that the development cost is split with another customer or even that the modification will be included in the base licence fee.

What are the supplier’s intentions for specifying, testing and implementing the enhancements?

Once a supplier has agreed to develop customer specific software, care must be taken to ensure that all aspects of the development and implementation are included in the price.  It is important that the supplier specifies the change, but equally important that the customer’s requirements are fully met.  At this stage suppliers have a tendency to roll out a number of technical reasons for the enhancement can’t be exactly what the purchaser requires.  This needs to be clearly understood before committing to pay for the enhancement and in some cases before committing to a particular supplier.  There may be a very good reason why the functionality cannot meet a customer specification, but this should be transparent throughout all negotiations, not come to light during the early stages of development.

Another pitfall is where the software supplier presents the customer with a very detailed technical specification and expects them to sign off the design.  A compromise needs to be found where the customer has input, but ensures that the supplier’s development team fully understand the requirement.  The design should only be signed off when it is fully understood.  However once signed off do not expect to influence or amend the design during development or test phases without incurring additional costs.

It is not un-typical for a supplier to expect the purchaser to carry out the larger portion of the testing and modification that they have commissioned.  This does not seem fair, but is common practice.  When agreeing the cost of changes, ensure that testing responsibilities are fully understood by both parties.  When it comes to project planning, confirm the exact plans and time-scales for the development to be implemented.   Many live dates are compromised by essential enhancements causing issues during the build phase.  Ensure that the supplier has built in enough time in the project plan for all aspect of the project; otherwise the most critical testing (the enhancements) are likely either to be missed or not received sufficient attention.  When considering the cost of customisation, the customer should also budget for a large element of internal resource for designing, testing and implementation.

Finally it is worth pointing out that the anecdotal evidence from suppliers is that a significant proportion of customisation is never used or ceases to be used after a short period of time.  Many customers only accept that the core functionality is acceptable, even preferable, once they have had experience of operating the system.  Keep this in mind when specifying changes.

The true cost of customisation is usually more more than the price initially quoted by the supplier.  However, by taking account of the points raised above those costs should be kept to a minimum and future problems avoided.

If all of this seems daunting, why not give one of our Senior Consultants a call on 01527 889 060 or email your questions / project requirements to info@logistics.co.uk

THE LOGISTICS BUSINESS, a leading specialist supply chain and logistics consultancy, has experience in planning and developing supply chain, distribution and warehousing operations throughout the world. From supply chain and distribution strategy, to development of distribution operations, warehouse design and layout, as well as manufacturing logistics and IT systems design, its clients include many blue chip companies.

We have also worked on government initiatives on sustainable transport and waste minimisation.For further information please call:Helen Morris, THE LOGISTICS BUSINESS on +44(0)1527 889 060, email helen.morris@logistics.co.uk