Whether you operate your own fleet or employ third party contractors to run your outbound operations, you are likely to be talking about a range of issues over the next few months. Following my recent visit to the Multimodal 2018 trade fair, and given my 25 years’ industry experience, I feel these are the areas that clients need to be aware of, and should be planning for:
1. There are numerous pieces of legislation within the UK that need consideration. These have either already impacted (apprentice levy, living/minimum wage, auto-enrolment pensions) or soon will do (New ‘clean air zones’ are set to affect up to 39 UK towns and cities at the end of 2019).
2. Brexit is the elephant in the room. It remains mostly an unknown quantity as negotiations continue and details of the transition period are discussed. The major issues are border controls and the customs union, the depreciation of sterling and restricted movement creating labour shortages. Whilst the impact cannot be seen yet, steps should be taken now to help position your business for the potential impact of these unknowns.
3. The pace of change within the sector has increased dramatically and it seems some have struggled to keep up- we’ve seen several big names go to the wall already this year! When there is a dynamically changing environment like this one, borrowing only tends to be granted over a short period, since there is too much risk for investors to be sure of a return on investment over a longer period.
4. Industry research suggests that the UK has a capacity gap equal to 50,000 drivers today; that’s before any Brexit-related exodus of labour. Driver and warehouse staff shortages coupled with possibly the lowest level of unemployment in 40 years have had a profound effect on an organisation’s capabilities.
5. Management of client expectations regarding delivery times is getting harder. Road congestion causes delays of an average of 20 seconds per mile due to the sheer volume of traffic: 9 seconds per mile on the main strategic road networks and more than 45 seconds per mile in London. Businesses are finding it more and more difficult to predict journey times; particularly at peak times of the day.
6. What can and is being done to ensure maximum productivity of your vehicles and drivers to get the most out of your assets? Transport route optimisation technology will prove to be an enabler, but drivers may feel less empowered if they must follow the routes designated by an in-cab system.
7. Warehousing space in the UK is predicted to run out in 2020, with limited speculative builds going on and perhaps a year’s supply on the market in many popular areas. Land availability is limited; to support ‘last mile delivery’, should companies be thinking about what to hold near the consumer and whether to offer same day delivery?
8. With that in mind, is your organisation maximising its warehouse use? You should ensure you are getting the most out of the space, operating the building as efficiently as possible and tightly controlling your inventory to ensure best-in-class availability.
9. Picking and packing correctly is the route to creating high customer satisfaction scores. Ensuring the correct procedures are in place is important. Businesses must maximise the opportunity for staff to get the orders right first time, whilst balancing this against the required pace of operation. Best-in-class operators work at 99.9% accuracy with much more picking at “each or single” level instead of full case, part or full pallet picking.
10. Excess inventory and safety stocks can be expensive and problematic. If stock is not held by the retailer or distributor, it must be held somewhere in the supply chain. This can be expensive and logistically complicated, and the problems with this are likely to be exacerbated by Brexit for anyone who has raw materials, work in progress or finished product crossing a border.
It was interesting to note that one of the main topics of conversation historically didn’t come up much at Multimodal 2018 this May. However Fuel cost and efficiency is always likely to be high on the agenda for operators and an important topic in corporate fleet management. If you would like to have no obligation chat about this or any other supply issues with one of our consultants, please contact us.
Author: Simon Paget