According to Aaron Scott, vice president operations for DHL, considerable opportunities for efficiency gains are presented by retailers working more collaboratively to share spare capacity on their trucks as they travel between distribution centres (DCs) and high street stores, picking up product from suppliers backhauling on the way.
“We’re now able to offer more collaborative opportunities for [retailers],” said Scott.
DHL is already at an advanced stage of negotiations with Iceland about sharing its transport fleet with another retailer, said Scott. JDW, BP Retail and NISA are all potential partners but others could also be in the frame, he added.
Collaborative use
“Iceland have recognised they have a large number of vehicles that we already do a large amount of backhaul for,” said Scott. “We do a lot of dynamic planning for that. In terms of the wider use of that fleet, that is something I expect to see more collaborative use of the Iceland fleet during 2014.”
Scott is responsible for four main food retail accounts in the UK. These include ambient, chilled, and frozen distribution for Iceland Foods; JD Wetherspoon’s (JDW’s) national DC and a number of cross-dock locations around the UK supplying its 900 pubs; BP Retail's 350 forecourts; as well as Tesco's frozen food supply chain.
DHL is responsible for Iceland’s warehousing and distribution in the UK, covering DCs in Swindon, Enfield, Warrington and Livingston in Scotland. For Tesco, it runs an automated frozen DC in Daventry.
“These accounts all sound very different but the challenges for each of them are pretty similar,” said Scott. “If you look at what's happening in the marketplace at the moment, they are all finding it challenging the market's become very competitive.”
All four are taking a close look at their supply chains to “squeeze the cost out” in terms of quality and service said Scott. While he believes Tesco and Iceland could both benefit by working together in this way, he suspected it would take more time to convince Tesco of the merits of such co-operation. However, as well as Iceland, DHL is also in discussions between JDW and BP retail about working more closely together, said Scott.
“It’s good for JDW because they get a backhaul price and it’s good for the manufacturer because they get a collection that’s on time and are able to take the quantity and format as and when they require it and it's good for BP because it contributes to the cost of running the vehicle that might otherwise be empty,” he says.
Efficiency perspective
“If you look at BP and Nisa, we do a lot of collaboration between those customers. We introduced them and they effectively share an outbound distribution network. Nisa have got their own DCs. They share cross-dock locations. In some cases we have got BP product going out to a Nisa location for onward delivery on a Nisa vehicle. And equally we’ve got Nisa product travelling on BP vehicles and that works very well from an efficiency perspective.”
DHL is running fleets of multi-temperature vehicles for Iceland, BP and JDW to provide flexibility in the ambient, chilled and frozen products transported. “We are able to compartmentalise vehicles and trailers so we are able to get those three different temperature regimes on one vehicle at the same time,” said Scott. “Which then helps with the backhaul.”
At present, backhauling capacity is only restricted by the amount of transportation “media” roll cages, tote boxes, trays and other packaging for recycling carried by the trucks.
Back in 2007 Food Manufacture reported on a collaborative distribution venture between rivals Nestlé and United Biscuits.