New business model saves money, improves efficiency and benefits the environment

23 July 2012

Dramatic changes within the South African FMCG and retail environments are demanding new supply chain strategies from companies aiming to remain competitive.

New trends in consumer behaviour require even more efficient product flow and real-time information flow. Infrastructure is becoming increasingly congested and energy prices are affecting transport costs. Companies must effectively match supply with demand, without affecting their competitive positioning. For consumer goods manufacturers and retailers, this translates into perfect order fulfillment and supply chain integration, as well as improving visibility, shipment density and load utilisation.

For Imperial Distribution’s customers, the solution was a brand new business model – previously unseen and untested in South Africa. It was adopted by Imperial Distribution to provide them with a competitive advantage in their industries, and a sustainable response to the powerful factors shaping their markets.

Imperial Distribution is a specialised third party logistics (3PL) service provider with more than 80 customers in the FMCG, retail, packaging and construction industries around South Africa. It has earned a reputation for its focused management teams, world-class facilities and assets, as well as effiency enablement technology. This new business model establishes Imperial Distribution’s reputation as an insightful innovator, and reflects its commitment to providing unrivalled logistics solutions to its valued customers.

The goal

The goal was to provide clients with several game-changing advantages, including actionable visibility, strategic alignment, centralised transport management and continuous improvement. MD Heinrich Strauss elaborates: “To achieve the goal of actionable visibility for our clients, we needed to build ‘sensory’ distribution networks that could provide real-time visibility and alerts with forward-looking dashboards, so that Imperial Distribution’s control room could have all the information on hand, in real time, to make better decisions on distribution activities as situations unfold.”

Providing strategic alignment for its clients required Imperial Distribution to bridge the gap between planning and execution, by not only aligning its processes with that of its customers, but also integrating planning and execution activities into a single process, within one team.

To provide centralised transport management, Imperial Distribution needed to establish a centralised transport management team in one control room, using the latest technology to execute daily plans and track actual execution against planned execution.

Standardising people, processes and technology

To design a new business plan to achieve these goals, Imperial Distribution reviewed its existing planning and execution processes, people capabilities and systems. Fleet mix opportunities were identified, as well as opportunities to standardise people roles and responsibilities, processes and a common technology platform across 16 dedicated contract logistics sites.

The final solution consists of an integrated way to manage planning and execution of all distribution activities from a central control room for all Imperial Distribution’s customers, across all sites. It includes an integrated technology platform for planning, execution and intelligence – providing real-time vehicle tracking data, matching supply to demand, measuring and presenting relevant information within dashboards so that better and more timeous decisions are made. This innovative new business model offers Imperial Distribution’s customers a new value proposition – continuously optimising the trade-offs between customer service, cost-to-serve and supply chain risks.

The result is efficient, cost-saving and environmentally-friendly

It has resulted in an average increase of 7% in efficiency for Imperial Distribution’s customers (measured by the number of drops per vehicle). This increase in efficiency translates into a total fleet reduction of 15 vehicles and an annualised distribution cost saving of approximately R12 million.

Operational and environmental benefits have also been achieved. Imperial Distribution’s clients are enjoying an increase in overall visibility, Strauss says, adding that the immediacy of this visibility means that adverse events in the supply chain are identified as they happen and plans can be adjusted accordingly. “A single version of the truth exists within this more integrated supply chain, and it’s visible to Imperial Distribution and customer alike,” he says. “Better and faster decisions are the result.” The new business model also provides for perfect order fulfilment to be measured not against an outdated plan, but against a current plan, taking into account current supply chain constraints.

Companies are increasingly putting environmental considerations high on the business agenda, and Imperial Distribution’s new business model is enabling its clients to reduce their carbon footprint. Strauss explains: “The planning and execution management tools ensure that the fleet is travelling optimal distances, thereby avoiding unnecessary kilometres and extra carbon emissions. The extrapolated results from the main operations show distance savings of 4,5% (net of the fleet savings), resulting in a reduction of 400 tons of CO2 emissions per annum,” he concludes.

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