Supply chains have evolved to become efficient networks in which we have learnt to shape and influence demand. But our approach to transport has not advanced and opportunities abound to challenge traditional transport planning for big benefits.

This is the contention of Imperial Logistics chief business development officer Cobus Rossouw.

“Transport efficiency is being hampered,” Rossouw says, “because it is largely still planned in a traditional, sequential process. We start by looking at demand, and move in a linear model through constraints like capacity and costs, to arrive at the outcome of supply, which is shaped by our constraints. Rather than merely optimising supply, however, we should be challenging demand and constraints, for optimal transport solutions.”

Stressing that it is important to differentiate between primary and secondary transport when aiming to optimise transport planning and modeling, he says that the traditional approach to primary transport is to determine the supply – or allocation of vehicles – based on constraints like time slots, vehicle capacity and transport costs, which are largely shaped by distances.

“This is a sequential, linear approach that is not ideal. Similarly, the traditional, sequential approach to secondary transport entails starting off with demand, or quantities per drop, and considering issues like lead times, capacity (from a time perspective) and vehicle utilisation, to arrive at the routes and schedules.”

Instead of continuing to approach transport in the same way, Rossouw stresses that the industry needs to consider what can be changed to make this link in the supply chain more efficient. “Transport is the poor relation in the supply chain. It’s widely regarded as something that merely happens to execute everyone else’s plans. The reality is that transport can be made more efficient, more cost effective and safer by doing things differently – to benefit the whole supply chain.”

On the primary transport side, Rossouw outlines opportunities for improvement through quantity and activity ‘smoothing’
“Quantities are usually highly variable. If quantities can be ‘smoothed’, or made more consistent, we could lower transport costs and boost safety and efficiency.”

“Reviewing and adjusting order lead times, order deconsolidation and peak back-scheduling are some of the ways in which quantities can be smoothed.”

“If, for example, we know that a manufacturer in Cape Town produces goods for peak periods six weeks in advance, and these are warehoused in Cape Town, for transport to consumers in Johannesburg at peak, could we not move the products earlier, and utilise a warehouse in Johannesburg? Why move everything at the same time, at peak? Similarly, order deconsolidation could smooth quantities.”

Activity ‘smoothing’ affords a further opportunity to do things better in primary transport, Rossouw contends. “In business, we operate according to appointments. Why not apply the formal logic of appointments to transport, with scheduled appointment times for a truck to arrive for loading, rather than having the current, inefficient process where 20 trucks arrive at the loading point at the same time? Where the 20 trucks are all loaded and then set off together, travelling in convoy, often in rush hour traffic.”

Rossouw believes that inefficient pricing structures and lack of planning are preventing transport industry players from seizing the opportunities to make primary transport more efficient.

“In transport rates, we don’t price in inefficiency. There is no penalty for doing things badly and no benefit for doing things well. We work on delivered prices. Continuous improvement programmes, and payments structured on a gainshare basis could be solutions to this. The lack of planning is largely due to a lack of communication between different links in the supply chain. There is currently a lack of demand predictability, but demand can be predicted, if everyone in the supply chain collaborates and shares demand information.”
A further constraint to boosting the efficiency of primary transport is inadequate measurement, he adds.

“If you don’t measure, you don’t know where you are at, and you cannot change anything.”

In terms of secondary transport, the most important factors are to make sure you are busy, and that the vehicle is full, says Rossouw, who believes that there are opportunities to boost both time and space utilisation.

“Time utilisation is influenced by turnarounds, and we can actively manage demand by managing turnaround. Improving inbound integration would also improve time utilisation, as would better traffic planning,” he says.

Space utilisation in secondary transport is lower than one would expect, Rossouw states, and proposes delivery day assignment, pre-scheduling peaks and disciplined ordering as ways in which this can be improved.
However, a lack of demand understanding and inadequate cost trade-offs are the main factors preventing secondary transport planning from advancing, he notes.

“We need improved inventory management, true consumption tracking and better integration of promotions in order to boost our demand understanding. How can a transporter plan for increased demand if the manufacturer doesn’t inform him of promotions? Space utilisation cannot be optimised unless we invest in distribution centre capacity; unless we can ensure receiving reliability and uninterrupted operations.”

In addition to challenging the constraints in primary and secondary transport, Rossouw’s approach to transport modeling also encompasses logistics infrastructure, the opportunities to be seized and limitations to be overcome, in this space.

“Transport infrastructure development and facility design are two areas that we need to relook – to challenge the constraints and do things differently. In terms of infrastructure, we need to place greater focus on consumer demand. Transport infrastructure should centre on consumer demand. There is also the issue of accessibility versus location. A great location is worthless if it is not accessible. There are also opportunities to capitalise on intermodal functionality.”

Rossouw stresses that facility design should focus more on flow than storage, since the primary purpose of a warehouse is not to store goods, but for goods to flow through.

“There are also opportunities to change facilities’ operating hours – to possibly make these flexible, depending on peak periods.”
“We know what we should be doing, but the trick is closing the gap between knowing and doing. We tend to stick to how we have done things in the past and this is proving our undoing.”

“Our transport capability is currently being squeezed by limitations imposed by demand and infrastructure. Challenging these constraints and thinking differently is the key to changing this, and unlocking logistics efficiency,” Rossouw concludes.