1. w w w. S C E M A G A z I N E . C O M
January/February 2012 www.scemagazine.com ISSN 1742-447X
SUSTAINABILITY
Cutting carbon in the value chain
ELECTRONICS
Strategies for a fast-moving sector
FORECASTING
How to make use of Big Data
CATTLE
MARKET Supply chains from polder to plate
… s o u r c e … m a k e … s t o r e … s h i p … d e l i v e r… r e c y c l e …
2. sustainability
CAN YOU REDUCE
TRANSPORT COSTS AND
MAINTAIN CUSTOMER SERVICE?
Yes, says Tim Fawkes, who explains how companies such as JCB Service have addressed increasing logistics costs
W e all know that fuel and transport
costs have escalated significantly
during the past few years,
alongside other inflationary increases that are
getting out of hand. Companies are facing the
parts, sets high standards of customer service
and aims to provide availability within 24
hours in 95% of cases, through its distribution
network. The UK-based JCB World Parts
Centre (WPC) supports more than 180,000
As is the case with many large companies,
the end of month financial reporting was
based on carrier invoiced costs; there was
no auditing or drilling down into the detail and
accounts were presented by carrier invoice
increasingly tough challenge of simultaneously parts and provides all customer order type date rather than despatch date. In addition,
maintaining high levels of service and looking for deliveries to all dealers globally. The European the global recession had caused machine
ways of deferring increases — all in addition to Parts Centre (EPC) in France holds 40,000 sales to drop by 40%, making cost reduction
pressure to actually reduce costs. Companies parts, processes orders for urgent deliveries initiatives a priority and, anticipating future
are also being challenged by sustainability and to dealers throughout mainland Europe and carbon tax legislation, the company was also
environmental considerations that require them receives stock replenishment from WPC daily. seeking assistance in the reduction of its
to meet tougher government target levels of With delivery to approximately 90 countries carbon footprint.
corporate responsibilities. So, if companies and 3 levels of service — stock, intermediate
are to remain competitive, profitable and and VOR — delivery requests are frequently Implementing a Transport
responsible, they must seek ways to improve demanding and complex. Management System
efficiency and visibility within the supply chain Stage One
and measure service levels and costs. The JCB Challenge 3t began by implementing its transport
A major reason behind the involvement of management system, Global Carrier Manager
Combining Customer transport management company 3t was (GCM), in the European Parts Centre. During
Service with Cost Efficiency that, although the service business had the last 12 years 3t has been developing this
A successful international company will already grown significantly since 2000, the focus had software tool to help its customers to meet
have systems and procedures in place — been centred on providing a high service the transport management needs of any
but there is always room for improvement. level, which resulted in a disproportionate shipper. The system facilitates the automation
If business processes are static for too long increase in associated transportation costs. of all transport administration and optimizes
they soon become outdated and lag behind The company wanted to understand their the transport plan, allowing staff to focus on
the competition. JCB Service, the division of transport costs in more detail without managing customer service and the continuous
JCB responsible for providing replacement increasing on-cost to the business. improvement process.
14 www.scemagazine.com January/February 2012
3. sustainability
Its introduction into the EPC consisted of 3 regardless of carrier. Dealers can log onto their Addressing the Carbon Issue
key elements: own private web page and search for their Carbon reporting is an issue that many
1. Managing a European transport tender that orders by date and order reference. They also companies are still choosing to ignore but, as
identified the optimum carrier partner for have access to a variety of data, ranging from punitive measures for companies that fail to take
each service level and region. the date and time their order was received by action are set to be introduced in the near future,
2. Introducing and integrating GCM with the JCB and when it was processed and picked it will become increasingly significant. Accordingly,
JCB order and warehouse management by the warehouse, to details of the delivery by 3t has now introduced greenhouse gas reports for
systems to create track and trace visibility for the carrier, such as which items are in each JCB that follow Defra guidelines. These monthly
dealers. It also provides a complete carrier box. Having this information available online reports provide greenhouse gas emissions data
invoice audit process, ensuring that the has reduced JCB customer service queries by for transport by road, sea and air and include
correct tariff is applied to each delivery. 30%, besides providing the dealers with real carbon dioxide, methane and nitrous oxide
3. Managing the ongoing transport time delivery tracking information. calculations that take into account destination,
operation and producing detailed monthly location, routing, dimensions and weight of
management reports that include a Tim Fawkes consignments, transport mode and carrier.
breakdown of transport cost by dealer, JCB use this information to measure how their
carrier and service level. greenhouse gases vary from month to month and
New systems cannot be implemented effectively generate initiatives and dealer incentives to reduce
overnight, but within 3 months savings were their environmental impact, thus ensuring that they
being delivered and, after a 12 month period, are prepared to meet government targets.
JCB Service had succeeded in reducing
transport costs by 25%. The system also Looking to the Future
improved visibility of information for the dealers, Despite all the achievements of their 3 year
created a better understanding of transport transport partnership, JCB and 3t continue
costs and provided more detailed financial to look forward. As part of a drive to remain
information for accruals, internal cost reporting competitive in a growing market, JCB’s
and cross charging between departments. continued objective is to offer a comprehensively
Stage Two high delivery service across the globe. To achieve
The next step was to introduce the model to this, it has opened new warehouses in additional
the WPC, but with a slightly different objective: Management Reporting strategic locations including Madrid, Czech
the aim was to capture accurate delivery and Transparency and availability of information has Republic and Dubai. Working in partnership with
cost information to enable more accurate been crucial to the success of the project. All JCB, 3t has developed the Order Control Tower
measuring of transport cost and service, carrier invoices are audited automatically by 3t module, a tool that holds live stock information
with a view to introducing a programme of and management reports are produced on a for each JCB warehouse and identifies optimum
continuous improvement. To achieve this, monthly basis. These reports include a range source warehouse with stock available to fulfil
GCM was integrated with WPC’s warehouse of detail, such as standard cost per dealer and the order in the required lead time. This has
management and order processing system, country and service level, in addition to bespoke reduced communication time to the transferring
a process that demanded the integration of a JCB reports — for instance cost per part and warehouse, in turn reducing picking time by up
different set of systems. cost to service each dealer. Sales invoices are to 48 hours.
imported to the system to enable 3t to calculate Not all companies must deal with the highly
Carrier Integration transport costs as a percentage of sales. Cost complex and widespread transport demands of
Carrier integration is essential to closing the to serve information and transport cost as a JCB, but many do need to take a step backwards
invoice loop and ensuring cost reporting percentage of sales can be generated at micro and appraise their transport management
accuracy. GCM (integrated with the WPC) and macro level, giving the company all the approach. The systems implemented by 3t for
generates carriers’ labels in their own format. information it requires to monitor and manage JCB have been designed with scalability in mind
Each label specification has been set up in transport costs as efficiently as possible. and are available for other companies. In today’s
GCM, so the label produced and applied to The key driver for change is the continuous tough economic climate there is an even greater
the containers in the JCB warehouse has all improvement programme. Having all the need for companies to ensure that they provide
necessary transport information, reducing JCB data in one location provides a wealth the very best service levels for the optimum costs.
administration at the warehouse and carrier’s of information available for comparison and If you want to survive as a business in today’s
hub as well as providing end to end visibility to analysis. Questions such as: “How full are environment you simply can’t stand still. •
the point of delivery. containers? What are the most prominent
operational issues logged? What consolidation About the author
The Dealer Web Portal opportunities are available? Can service levels Tim Fawkes is the Business Development Director at 3t
Another major innovation is the GCM dealer be adjusted and at what cost? What drives Logistics, which has offices in UK, France and Spain. For
web portal, which enables all JCB dealers dealer behaviour?” can all be answered and more information contact Tim at
tim.fawkes@3t-europe.com
to view their order status via the 3t website, supported with factual evidence.
16 www.scemagazine.com January/February 2012
