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Month: November 2020

Logistics Confidence Index Falls to Lowest Level

Posted on by David Priestman

The latest Barclays-BDO Logistics Confidence Index has fallen to its lowest ever level since the survey began in 2012 as the sector deals with the fallout from the pandemic, skills shortages and concerns over Brexit. The survey assesses the expectations of more than 100 senior decision-makers across the sector.

• Confidence index falls to lowest level since survey began in 2012 as the sector deals with the fallout from the pandemic, skills shortages and concerns over Brexit
• Some bright spots – nearly half still expect profits to increase next year and those focused on e-commerce/last mile deliveries have fared better
• Technology is being increasingly deployed to address challenges facing the sector and over two thirds are investing in sustainability
• Consolidation is on the cards with nearly 40% considering acquisitions in next 12 months

The Confidence Index has fallen from 49.7 in 2019 to 47.1 this year, continuing the downward trend seen in recent years and taking the score to its lowest level since the survey began in 2012.
This fall in confidence comes against a backdrop of unprecedented domestic and global uncertainty created by the pandemic, in addition to ongoing concerns over the UK’s future relationship with the EU and the continuing skills shortages.

The Index number, however, masks the high degree of polarisation in the views of operators, with results differing depending on the sectors they are most exposed to. A third of operators reported current business conditions as either the same or more favourable than 12 months ago, despite the economic disruption. Those focused on e-commerce and last-mile deliveries have fared relatively well, while others operating in manufacturing sectors, such as automotive, aerospace, oil and gas saw unprecedented levels of disruption.

The results are similar when asked about which industries are providing the greatest business opportunities in 2021 with more than a half of the operators surveyed (55%) saying online retail, 32% saying manufacturing and only 6% of respondents highlighting the automotive sector. This reflects how changes in consumer buying habits away from bricks and mortar stores to online purchasing and manufacturers direct selling have been exacerbated by Covid-19. To illustrate the impact of Covid-19 on the sector, the vast majority of respondents (94%) stated that they have utilised the government’s Job Retention Scheme and staff furloughs to help them through the pandemic.

In keeping with other industries such as retail and hospitality, the adoption of technology to address business challenges has rapidly accelerated this year. To help overcome talent shortages, more than two fifths (42%) of operators stated they are using technology to replace human talent. Meanwhile, many businesses are continuing to invest in sustainability with more than seven in ten (72%) putting funds into green-related projects over the next 12 months.

Looking ahead, there is cause for cautious optimism. Logistics continues to be a strong and resilient sector and remains a major contributor to the UK economy. The total combined UK revenue for the 100+ companies surveyed is £16.4bn and, even under the current highly uncertain economic conditions, nearly half (49%) of them say they still expect to see profits increase over the next 12 months. In the context of a changing market, it is perhaps no surprise that M&A is in the plans of many companies, driving many to adapt by extending existing service offerings or targeting new customer markets or industry sectors. The number of companies expecting to make acquisitions is close to the all-time high of 2017, with 38.9% of respondents saying they are likely to make an acquisition within the next 12 months.

Ian Cranidge, Head of Transport & Logistics at Barclays Corporate Banking, said: “2020 has been an unprecedented year – never has the industry faced such a plethora of multi-faceted challenges. However, longer term this is an extremely resilient sector which is ready to bounce back once the pandemic passes. Businesses are using this challenging period to build back better, by investing in technology and sustainability. The present is undoubtedly tough, but we can look to the future with optimism.”

Jason Whitworth, Partner, M&A Advisory and Logistics & Supply Chain Management at BDO LLP, said: “As we stand today, it feels like we are still in the eye of the storm in terms of uncertainty. Given this, it is no surprise confidence is low. The pandemic highlighted the vital nature of an effective supply chain, and this survey demonstrates the sector’s resilience and adaptability. Encouragingly, the responses reveal a continued appetite to invest for the future – searching out new markets and added value services, developing technology, automation and sustainability projects, and attracting, training and retaining good people.”

Abu Dhabi Ambition

Posted on by David Priestman

Logistics Business talks to Robert Sutton of Abu Dhabi Ports, which is expanding fast and strengthening its logistics capabilities courtesy of an important acquisition.

Abu Dhabi Ports, which itself is part of ADQ, one of the largest holding companies in the Middle East, has taken another step towards establishing the Emirate as a global hub for trade and logistics with the acquisition of Micco Logistics. Micco was one of the first freight forwarders to set up in Abu Dhabi over 40 years ago and built a strong base in the Oil and Gas sector on its way to being one of the most diverse multimodal operators in the region.

Robert Sutton, Head of Abu Dhabi Ports’ Logistics Cluster, explains that the move is a natural progression for Abu Dhabi Ports. “First of all, we are more than a ports business. Abu Dhabi Ports has been enabling trade since its inception and this acquisition further strengthens its logistics capabilities. We’re enhancing the value we can add to our customers, so the acquisition is allowing us to strengthen and extend the value chain across our broad customer base. It will allow us to diversify our service portfolio.

Historically, we were focused on Oil and Gas, Polymers, and some industrial sectors. This allows us to look at our speed of diversification into retail, Pharma, healthcare and other sectors.” Where does he see that value being seen most visibly at the outset? “Micco are strong in all modes. They’re one of the major freight forwarders for import and export in the Emirates, with a very strong on-road presence of over 350 branded vehicles fitted with the latest technology. So an immediate benefit is access to a much larger captive fleet of commercial vehicles with the ability to extend freight forwarding services.”

Customer requirements are, of course, at the forefront. “The underlying requirements remain the same – customers want an all inclusive holistic service, where possible, from an integrated provider and they want it at the lowest cost or the best value available. They want to measure that against the value delivered.” Does he see those requirements changing, particularly given the global disruption we’ve experienced? “I guess the changes now are in the buying decisions, based on looking at risk management and how you mitigate risk in the supply chain. Some of the dynamics are changing in the customer’s decision criteria, with the customers now requiring very strong built-in supply chain resilience.”

It’s fair to say that at this point Abu Dhabi Ports is not an immediately familiar name to many logistics professionals based in Europe. How would we characterise the company’s ethos?

“Customer First,” he replies promptly. “We say it and we truly mean it. We spend a lot of time trying to pre-empt customer requirements and ensure that we meet them through development of
solutions.” That’s a familiar refrain, though, I point out, and ask for a specific example to illustrate his claim.

“We don’t look at a solution within four walls, we look at a customer’s entire supply chain. We will then try to identify parts of the supply chain where we believe we can create some value for
the customer. And it might be an area that’s outside our immediate influence or control. We don’t let that prevent us from having a discussion with the customer.” He provides an example from the
COVID-related push to online solutions from retailers. “The way Abu Dhabi Ports responded to that was by working with retailers to mobilise additional in-store support services. We trained those individuals, who had come from the food and beverage sector, to be familiar with piece picking in the retail environment and thus be able to match the surge in demand from the retailers when required. This allowed us to re-use and repurpose facilities within Abu Dhabi Port Logistics for the betterment of the community by being served via online retail. Speed of thought and action were
crucial.

“We started mobilising within one week of the requirement being known to us. We repurposed the Abu Dhabi Cruise Terminal and turned it into a training centre, then deploying the teams to the stores in line with their needs.” Transparency and visibility are now vital components of supply chain management. What will the acquisition of Micco add to the company’s capability?

“One of the criteria when we look at a potential business partner, acquisition or collaboration is the value it can bring. The goal of any supply chain company is to extend the visibility in the supply chain as far upstream and downstream as possible. Micco have very good underlying systems which enhance the visibility of the supply chain. We also work with external parties, such as JDA Blue Yonder to provide additional levels of visibility.”

Serious multinational logistics players these days have to think globally, and Micco can help Abu Dhabi Ports achieve that. “One of the reasons why we acquired Micco was because of their international reach. They’ve been working in the industry for over 40 years and have built up an extensive network of international partners and trade related experience with their customers. So it provides us with an opportunity to connect that ability to our ports’ capabilities.”

Does that mean Abu Dhabi Ports has ambitions as a serious global player, to be spoken of in the same breath as, to quote an obvious example, DP World? “We respect the competition, their strategies and strengths. Abu Dhabi Ports doesn’t aspire to replicate the competition, we aspire to be competitive, and to do so, we work with multiple partners. I wouldn’t say we’ve set out an aspirational goal of matching any particular logistics or supply chain company, that’s not what we’re about. We know our own direction and what our customers are looking for, and that’s our focus.”

How would he crystallise those aims?

“Our long term goal is to continue to grow, expand and make sure that we’re ahead of our requirements, through partnerships and acquisitions, and to make sure that we’re providing the type of logistics and supply chain requirements that are appropriate for the conditions.” Does that mean there are further big acquisitions to come? He is guarded. “We remain open to growth enablers,
whether that’s through partnership acquisition, mergers, or collaborations. We’re a very ambitious business, we look at the opportunities as they come, evaluate them, and move on accordingly.”

As a veteran of the global logistics industry, how does Robert Sutton view the wider sector’s future? “It’s a time of both opportunity and risk. The winners will be those who use the data and technology and are able to leverage their investments in making sure they have resilient and long-range supply chains. So that’s where the focus will be. I also think we’ll see more of a balance in the supply base – long range, near-term and maybe onshore sourcing for certain products, which historically may have been outsourced. Companies might procure from two or three suppliers, where they might once have used one premium supplier.”

Are we heading towards an end-to-end autonomous supply chain? “I see that as a far away development,” he reflects. “There’s a long distance to travel before we reach that goal. But certainly, parts of the supply chain are now fully autonomous, and there are opportunities to extend beyond. We already see it within the four walls of a warehouse on a pretty regular basis, and we see automation extending to commercial vehicles as well.”

Abu Dhabi Ambition

Posted on by Keith McKinley

Logistics Business talks to Robert Sutton of Abu Dhabi Ports, which is expanding fast and strengthening its logistics capabilities courtesy of an important acquisition.

Abu Dhabi Ports, which itself is part of ADQ, one of the largest holding companies in the Middle East, has taken another step towards establishing the Emirate as a global hub for trade and logistics with the acquisition of Micco Logistics. Micco was one of the first freight forwarders to set up in Abu Dhabi over 40 years ago and built a strong base in the Oil and Gas sector on its way to being one of the most diverse multimodal operators in the region.

Robert Sutton, Head of Abu Dhabi Ports’ Logistics Cluster, explains that the move is a natural progression for Abu Dhabi Ports. “First of all, we are more than a ports business. Abu Dhabi Ports has been enabling trade since its inception and this acquisition further strengthens its logistics capabilities. We’re enhancing the value we can add to our customers, so the acquisition is allowing us to strengthen and extend the value chain across our broad customer base. It will allow us to diversify our service portfolio.

Historically, we were focused on Oil and Gas, Polymers, and some industrial sectors. This allows us to look at our speed of diversification into retail, Pharma, healthcare and other sectors.” Where does he see that value being seen most visibly at the outset? “Micco are strong in all modes. They’re one of the major freight forwarders for import and export in the Emirates, with a very strong on-road presence of over 350 branded vehicles fitted with the latest technology. So an immediate benefit is access to a much larger captive fleet of commercial vehicles with the ability to extend freight forwarding services.”

Customer requirements are, of course, at the forefront. “The underlying requirements remain the same – customers want an all inclusive holistic service, where possible, from an integrated provider and they want it at the lowest cost or the best value available. They want to measure that against the value delivered.” Does he see those requirements changing, particularly given the global disruption we’ve experienced? “I guess the changes now are in the buying decisions, based on looking at risk management and how you mitigate risk in the supply chain. Some of the dynamics are changing in the customer’s decision criteria, with the customers now requiring very strong built-in supply chain resilience.”

It’s fair to say that at this point Abu Dhabi Ports is not an immediately familiar name to many logistics professionals based in Europe. How would we characterise the company’s ethos?

“Customer First,” he replies promptly. “We say it and we truly mean it. We spend a lot of time trying to pre-empt customer requirements and ensure that we meet them through development of
solutions.” That’s a familiar refrain, though, I point out, and ask for a specific example to illustrate his claim.

“We don’t look at a solution within four walls, we look at a customer’s entire supply chain. We will then try to identify parts of the supply chain where we believe we can create some value for
the customer. And it might be an area that’s outside our immediate influence or control. We don’t let that prevent us from having a discussion with the customer.” He provides an example from the
COVID-related push to online solutions from retailers. “The way Abu Dhabi Ports responded to that was by working with retailers to mobilise additional in-store support services. We trained those individuals, who had come from the food and beverage sector, to be familiar with piece picking in the retail environment and thus be able to match the surge in demand from the retailers when required. This allowed us to re-use and repurpose facilities within Abu Dhabi Port Logistics for the betterment of the community by being served via online retail. Speed of thought and action were
crucial.

“We started mobilising within one week of the requirement being known to us. We repurposed the Abu Dhabi Cruise Terminal and turned it into a training centre, then deploying the teams to the stores in line with their needs.” Transparency and visibility are now vital components of supply chain management. What will the acquisition of Micco add to the company’s capability?

“One of the criteria when we look at a potential business partner, acquisition or collaboration is the value it can bring. The goal of any supply chain company is to extend the visibility in the supply chain as far upstream and downstream as possible. Micco have very good underlying systems which enhance the visibility of the supply chain. We also work with external parties, such as JDA Blue Yonder to provide additional levels of visibility.”

Serious multinational logistics players these days have to think globally, and Micco can help Abu Dhabi Ports achieve that. “One of the reasons why we acquired Micco was because of their international reach. They’ve been working in the industry for over 40 years and have built up an extensive network of international partners and trade related experience with their customers. So it provides us with an opportunity to connect that ability to our ports’ capabilities.”

Does that mean Abu Dhabi Ports has ambitions as a serious global player, to be spoken of in the same breath as, to quote an obvious example, DP World? “We respect the competition, their strategies and strengths. Abu Dhabi Ports doesn’t aspire to replicate the competition, we aspire to be competitive, and to do so, we work with multiple partners. I wouldn’t say we’ve set out an aspirational goal of matching any particular logistics or supply chain company, that’s not what we’re about. We know our own direction and what our customers are looking for, and that’s our focus.”

How would he crystallise those aims?

“Our long term goal is to continue to grow, expand and make sure that we’re ahead of our requirements, through partnerships and acquisitions, and to make sure that we’re providing the type of logistics and supply chain requirements that are appropriate for the conditions.” Does that mean there are further big acquisitions to come? He is guarded. “We remain open to growth enablers,
whether that’s through partnership acquisition, mergers, or collaborations. We’re a very ambitious business, we look at the opportunities as they come, evaluate them, and move on accordingly.”

As a veteran of the global logistics industry, how does Robert Sutton view the wider sector’s future? “It’s a time of both opportunity and risk. The winners will be those who use the data and technology and are able to leverage their investments in making sure they have resilient and long-range supply chains. So that’s where the focus will be. I also think we’ll see more of a balance in the supply base – long range, near-term and maybe onshore sourcing for certain products, which historically may have been outsourced. Companies might procure from two or three suppliers, where they might once have used one premium supplier.”

Are we heading towards an end-to-end autonomous supply chain? “I see that as a far away development,” he reflects. “There’s a long distance to travel before we reach that goal. But certainly, parts of the supply chain are now fully autonomous, and there are opportunities to extend beyond. We already see it within the four walls of a warehouse on a pretty regular basis, and we see automation extending to commercial vehicles as well.”

Mansfields go Green with Lithium Ion Batteries for Machine Fleet

Posted on by David Priestman

Hiremech has completed the delivery of 15 new Hyster machines, fitted with Lithium Ion batteries, to Mansfields.

The new fleet is a mix of four wheel forklifts and platform pallet trucks, which will be used to boost productivity at Mansfields’ 20+ farms across the South East region of the UK.

Mansfields have been in the fruit business for many generations and are currently one of the largest fruit growing, storage and packing operations in the UK.

Mansfields have now completed rolling out state of the art production across all its facilities. Alongside innovating its production, the company has rolled out a carbon zero scheme and an environmental strategy to match and these new machines will help achieve greater levels of performance and efficiency. The Lithium Ion batteries mean operators can use the machines for longer, whilst also making significant energy savings and helping to reduce their environmental impact. This technology also allows for opportunity charging, which is ideal for busy shift patterns that need to keep working.

This investment in brand-new Lithium Ion equipment shows their clear commitment to sustainability and understanding of their carbon footprint responsibility.

Lee Port, Head of Operations at Mansfields, commented: “Advancements in farming technology continue apace, which is why Mansfields are constantly looking ahead to plan for future investments that will continue to keep them sustainable and ahead of the competition, and indeed continuing its legacy of innovation dating right back to its beginnings”

Paul Green, Hiremech’s Managing Director, commented “We are delighted to have completed this latest delivery of Hyster equipment to Mansfields.

“From our initial conversations, they made it clear that any new equipment would need to be energy efficient. We were quickly able to present a suitable solution of Hyster trucks fitted with Lithium Ion batteries.

“The team at Mansfields were impressed with the energy savings, performance and opportunity charging that this offered and following agreement of the deal earlier in 2020, the equipment has arrived on-time, on-site and ready to go.

“We look forward to working closely with Mansfields and supporting their equipment requirements as their business continues to grow.”

For more news on Lithium Ion batteries being used to make energy savings, sign-up to our news here

Mansfields go Green with Lithium Ion Batteries for Machine Fleet

Posted on by David Priestman

Hiremech has completed the delivery of 15 new Hyster machines, fitted with Lithium Ion batteries, to Mansfields.

The new fleet is a mix of four wheel forklifts and platform pallet trucks, which will be used to boost productivity at Mansfields’ 20+ farms across the South East region of the UK.

Mansfields have been in the fruit business for many generations and are currently one of the largest fruit growing, storage and packing operations in the UK.

Mansfields have now completed rolling out state of the art production across all its facilities. Alongside innovating its production, the company has rolled out a carbon zero scheme and an environmental strategy to match and these new machines will help achieve greater levels of performance and efficiency. The Lithium Ion batteries mean operators can use the machines for longer, whilst also making significant energy savings and helping to reduce their environmental impact. This technology also allows for opportunity charging, which is ideal for busy shift patterns that need to keep working.

This investment in brand-new Lithium Ion equipment shows their clear commitment to sustainability and understanding of their carbon footprint responsibility.

Lee Port, Head of Operations at Mansfields, commented: “Advancements in farming technology continue apace, which is why Mansfields are constantly looking ahead to plan for future investments that will continue to keep them sustainable and ahead of the competition, and indeed continuing its legacy of innovation dating right back to its beginnings”

Paul Green, Hiremech’s Managing Director, commented “We are delighted to have completed this latest delivery of Hyster equipment to Mansfields.

“From our initial conversations, they made it clear that any new equipment would need to be energy efficient. We were quickly able to present a suitable solution of Hyster trucks fitted with Lithium Ion batteries.

“The team at Mansfields were impressed with the energy savings, performance and opportunity charging that this offered and following agreement of the deal earlier in 2020, the equipment has arrived on-time, on-site and ready to go.

“We look forward to working closely with Mansfields and supporting their equipment requirements as their business continues to grow.”

For more news on Lithium Ion batteries being used to make energy savings, sign-up to our news here

PlayStation 5 Supply Problems – ‘Size does Matter’ According to Supply Chain Expert

Posted on by Keith McKinley

Commenting on issues with the PlayStation 5 supply problems, Professor Richard Wilding OBE, Professor of Supply Chain Strategy at Cranfield School of Management, said: “Size does matter. The bigger the item the more logistics capacity is consumed. A large item such as a games console consumes more space and logistics providers need to understand the size of items to optimise logistics.      

“In logistics, we talk about ‘cube’. The smaller the ‘cube’ the more items can be packed on a pallet and loaded onto a vehicle.If the item has a large ‘cube’ less items can be carried. For example, if you can get only one item on a lorry then all the capacity of the vehicle is consumed, all the costs of running that lorry and all the CO2 generated are assigned to that one item.However if one thousand items are loaded on a lorry then it consumes 1:1000th of the capacity and all the costs and CO2 are divided by 1000.   

“Making products logistics and supply chain friendly is increasingly critical and linked to this is the science of packaging which impacts both profitability and the environment. For example, Apple has just shrunk the box on the new iPhone 12 to both improve logistics and help the environment. 

“Controversially plastic should not be seen as an evil in all situations, plastic packaging can be better for the environment than using paper and cardboard, for the same level of protection the plastic package may have a smaller “cube” and reduced weight so more items can be placed in containers and on lorries without damage, which therefore reduces the amount of pollution and resources consumed through logistics. These are just many complex trade-offs both consumers and companies need to consider.”

 

PlayStation 5 Supply Problems – ‘Size does Matter’ According to Supply Chain Expert

Posted on by David Priestman

Commenting on issues with the PlayStation 5 supply problems, Professor Richard Wilding OBE, Professor of Supply Chain Strategy at Cranfield School of Management, said: “Size does matter. The bigger the item the more logistics capacity is consumed. A large item such as a games console consumes more space and logistics providers need to understand the size of items to optimise logistics.      

“In logistics, we talk about ‘cube’. The smaller the ‘cube’ the more items can be packed on a pallet and loaded onto a vehicle.If the item has a large ‘cube’ less items can be carried. For example, if you can get only one item on a lorry then all the capacity of the vehicle is consumed, all the costs of running that lorry and all the CO2 generated are assigned to that one item.However if one thousand items are loaded on a lorry then it consumes 1:1000th of the capacity and all the costs and CO2 are divided by 1000.   

“Making products logistics and supply chain friendly is increasingly critical and linked to this is the science of packaging which impacts both profitability and the environment. For example, Apple has just shrunk the box on the new iPhone 12 to both improve logistics and help the environment. 

“Controversially plastic should not be seen as an evil in all situations, plastic packaging can be better for the environment than using paper and cardboard, for the same level of protection the plastic package may have a smaller “cube” and reduced weight so more items can be placed in containers and on lorries without damage, which therefore reduces the amount of pollution and resources consumed through logistics. These are just many complex trade-offs both consumers and companies need to consider.”

 

Precision Pricing Software

Posted on by David Priestman

Forensic profitability analysis for small and global businesses alike is available at a click with today’s supply chain software, as Paul Hamblin discovers.

Graeme Aitken has a job title I’ve never heard before: he’s VP Strategic Customer Pricing, part of the global pricing team at parcels and shipping behemoth DHL Express. In essence, he is available when the standard company pricing process becomes more complex. “If we have a profitability issue, whatever it is, I tend to get involved,” he says. “I also work on larger yield projects.So if we want to look at unprofitable customers, unprofitable lanes, I help come up with various yield initiatives.”

‘Complex’ in this context can mean several things. “It might mean complex operationally, where we might offer services beyond normal pickup and delivery, or it could be complex pricing. Examples might include running dedicated trucks to the customer; or we might have people working in the customer premises to process shipments on their behalf, perhaps including specialpackaging requirements or customs paperwork.”

Some years ago, as Head of Global Costing, Graeme Aitken built a new cost and profitability system for DHL Express. Historically, it was painstaking work, using the more basic spreadsheet skills available at the time and requiring detailed visits to DHL facilities to examine processes up close (“Time and motion studies, basically,” he sighs). By 2012, the company started to fully automate.
“So we now had every checkpoint for every shipment. Because we had that, we could cross reference it to the P&L, we could cross-reference it to the billing data. And we could produce margin data for every shipment that goes through our network.”

This is where data software vendor The Information Factory came in. The UK-based supply chain software specialist used this new profitability data to create a set of applications for Graeme Aitken and his
team which enable forensic analytical capability of DHL’s global network and processes. The results are astonishing levels of data knowledge that would have been inconceivable even a few
years ago.

How does it work, in layman’s terms? “We can look at groups of customers when we have a potential problem somewhere in the network. So, for example, we might have too much business on particular lanes. And if our planes are full, we either have to get a new plane, which is very, very expensive, or we take off the cheapest business that’s flying that plane; or we put in a rate increase, perhaps.”

The Information Factory has built the analytical capability to make these examinations very quickly. “Because I can specify a bunch of criteria,” Aitken goes on, “I can ask for, say, every shipment which is coming from Hong Kong, every shipment which is going to the US, every one over 30 kilos, or less than a certain price per shipment. With these high filter delivery percentages, I can specify such criteria and the system will immediately deliver, say, 50 customers that meet that criteria and need action.”

The data thrown up by the system is then shared with DHL’s relevant country management teams. “We will share everything with the country concerned, because the first thing we want to do
is check that the data is accurate,” Aitken explains. “If there’s a credit note, for instance, that needs to be taken into account. Then the country has everything it needs to fix the issue.”

All such knowledge is distributed through the system that The Information Factory built. “It creates the analysis at the front end, it’s the distribution tool for all the data, and then the country must come back and tell us what they’re going to do. And then we’ll go back to track it and measure the improvement.”

He says that The Information Factory is very good at building prototypes and showing what they can do for their clients, quickly. “It’s straightforward. Their experts say: ‘Here’s what we can do for you. Here’s how it’s going to work. Here’s a small testing set. Here’s how and why tests can be done quickly.’” And he wanted to succeed quickly, he confirms. “It can give me every customer with a margin of worse than minus 10%. If that’s too many, I make it minus 20, minus 25 minus 30. And I can run iterations of this stuff 20 times a day, if I wish. I will also go to the customer with the salespeople to discuss pricing. And you have this amazing information at your fingertips and you can show them why you’ve come up with the price you have. We can be very surgical in the actions we take.”

Precision Pricing Software

Posted on by David Priestman

Forensic profitability analysis for small and global businesses alike is available at a click with today’s supply chain software, as Paul Hamblin discovers.

Graeme Aitken has a job title I’ve never heard before: he’s VP Strategic Customer Pricing, part of the global pricing team at parcels and shipping behemoth DHL Express. In essence, he is available when the standard company pricing process becomes more complex. “If we have a profitability issue, whatever it is, I tend to get involved,” he says. “I also work on larger yield projects.So if we want to look at unprofitable customers, unprofitable lanes, I help come up with various yield initiatives.”

‘Complex’ in this context can mean several things. “It might mean complex operationally, where we might offer services beyond normal pickup and delivery, or it could be complex pricing. Examples might include running dedicated trucks to the customer; or we might have people working in the customer premises to process shipments on their behalf, perhaps including specialpackaging requirements or customs paperwork.”

Some years ago, as Head of Global Costing, Graeme Aitken built a new cost and profitability system for DHL Express. Historically, it was painstaking work, using the more basic spreadsheet skills available at the time and requiring detailed visits to DHL facilities to examine processes up close (“Time and motion studies, basically,” he sighs). By 2012, the company started to fully automate.
“So we now had every checkpoint for every shipment. Because we had that, we could cross reference it to the P&L, we could cross-reference it to the billing data. And we could produce margin data for every shipment that goes through our network.”

This is where data software vendor The Information Factory came in. The UK-based supply chain software specialist used this new profitability data to create a set of applications for Graeme Aitken and his
team which enable forensic analytical capability of DHL’s global network and processes. The results are astonishing levels of data knowledge that would have been inconceivable even a few
years ago.

How does it work, in layman’s terms? “We can look at groups of customers when we have a potential problem somewhere in the network. So, for example, we might have too much business on particular lanes. And if our planes are full, we either have to get a new plane, which is very, very expensive, or we take off the cheapest business that’s flying that plane; or we put in a rate increase, perhaps.”

The Information Factory has built the analytical capability to make these examinations very quickly. “Because I can specify a bunch of criteria,” Aitken goes on, “I can ask for, say, every shipment which is coming from Hong Kong, every shipment which is going to the US, every one over 30 kilos, or less than a certain price per shipment. With these high filter delivery percentages, I can specify such criteria and the system will immediately deliver, say, 50 customers that meet that criteria and need action.”

The data thrown up by the system is then shared with DHL’s relevant country management teams. “We will share everything with the country concerned, because the first thing we want to do
is check that the data is accurate,” Aitken explains. “If there’s a credit note, for instance, that needs to be taken into account. Then the country has everything it needs to fix the issue.”

All such knowledge is distributed through the system that The Information Factory built. “It creates the analysis at the front end, it’s the distribution tool for all the data, and then the country must come back and tell us what they’re going to do. And then we’ll go back to track it and measure the improvement.”

He says that The Information Factory is very good at building prototypes and showing what they can do for their clients, quickly. “It’s straightforward. Their experts say: ‘Here’s what we can do for you. Here’s how it’s going to work. Here’s a small testing set. Here’s how and why tests can be done quickly.’” And he wanted to succeed quickly, he confirms. “It can give me every customer with a margin of worse than minus 10%. If that’s too many, I make it minus 20, minus 25 minus 30. And I can run iterations of this stuff 20 times a day, if I wish. I will also go to the customer with the salespeople to discuss pricing. And you have this amazing information at your fingertips and you can show them why you’ve come up with the price you have. We can be very surgical in the actions we take.”

Panel Discussions Schedule Released for Logistics Business Virtual Exhibition

Posted on by Keith McKinley

At the Logistics Business Virtual Exhibition next year visitors and exhibitors will have a chance to engage in a series of live panel discussions.

The new virtual exhibition for the logistics and materials handling industry will be February 22nd – 25th.

This new digital show provides a platform for interaction between logistics, IT, transport and supply chain services, warehousing and materials handling manufacturing industries. The exhibition virtual marketplace enables visitors to source products online, request specific quotations, meet exhibitors on video calls & chats, networking, downloading documents and more.

There will be 6 virtual halls: Forklift & AGV Technology, Handling Automation Systems, Packaging & Pallets, Software & Computing, Transport Services & Equipment, Warehousing Equipment. Visitors will be able to browse halls and search for specific requirements from a long list of sub-categories.

If you are interested in participating in any of the panel discussions you can email show@logisticsbusiness.com

To register as a visitor click here

For more information about the show click here

Monday 22nd:

  • Distribution Centre Project Management
  • Supply Chain Software-as-a-service Thought Leadership
  • Loading Bay & Warehouse Safety

 

Tuesday 23rd:

  • Automated & Robot Warehouse Vehicles
  • Packaging for eCommerce
  • Contract Logistics & Freight Management

 

Wednesday 24th:

  • Forklift Technology Innovations
  • Sortation & Conveying Suppliers’ Forum
  • Storage System Projects

 

Thursday 25th:

  • Transport Management IT Platform Decisions
  • Wearable Devices and Data Capture in Logistics
  • Pallets & Palletizing for Green Supply Chains

 

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