Fighting frighteningly high fuel prices

Fighting frightening high fuel prices

It’s said that “money is the root of all evil”, but for the transport industry, the rise in fuel prices could be called “the devil’s work” as it hikes the cost of logistics … However, supply chain technology and consulting solutions company, VSc Solutions, offers some respite.

According to Grant Marshbank, chief operations officer for VSc Solutions: “The key to securing savings of anywhere between 10 and 25 percent of logistics costs – which will endure long after the fuel price drops – is to focus on greater efficiencies in terms of distribution.”

To achieve this, and thereby negate a huge portion of fuel price increases, he suggests five areas for companies to focus on:

Soup up your strategy with network modelling

By applying a smarter strategy through network modelling – an exercise that’s done periodically – you can determine the most efficient way of doing business.

Factors include: determining the best possible geographic location for warehouses, comparing supply chain costs and CO2 footprint, and comparing transport costs when using your own vehicles for inter-warehouse transfers, versus hired ones.

“This exercise is vital for determining whether a company’s current operations are optimised, and if going after certain new business will be profitable,” says Marshbank.

Optimise routes

“Ensuring that the least number of vehicles drive the least amount of kilometres is the goal of route optimisation,” he points out. This works by feeding data – for example, what needs to be delivered, to where and by when – into a system that generates an efficient set of routes, and ensuring that the load is spread evenly across available delivery days. “After all, there’s no point in having vehicles stationary one day and maxed out on others,” Marshbank adds.

Ensure proper execution

The next step is to ensure that the routes are being properly utilised. This is achieved by combining the data from each vehicle’s tracking system and comparing it to the routes generated by the route optimisation tool. “Essentially, the system enables you to see on a map and Gantt chart where your vehicle is, versus where it should be.”

Automate processes

Marshbank explains that automated processes don’t directly decrease fuel costs, but remove inefficiencies that result in cost and time saving.

“For example, most delivery processes are manual, which wastes time. But, by integrating data from a company’s ordering system with a driver’s smartphone, acceptance of goods can be automated and an electronic proof of delivery sent immediately – enabling invoicing to take place that much faster,” he says.

“By automating these basic business processes – of which invoicing is just one example – companies can get more from resources like people and trucks.”

Integrate systems and reporting

By integrating systems, companies can transfer data seamlessly – enabling more effective reporting that gives complete visibility of the entire supply chain in real time. “By combining salary and overtime data, data from distribution systems and data from your enterprise resource planning  (for example revenue, costs and margins) one can calculate the profitability of routes or the root cause of overtime – all in real time,” says Marshbank. “So the possibilities for enabling better-informed decisions are endless!”

He adds: “Most of these solutions can be implemented quickly and will result in a favourable return on investment from the very first month.”

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Focus on Transport

FOCUS on Transport and Logistics is the oldest and most respected transport and logistics publication in southern Africa.
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