Warehouse & Logistics

Last week Logistics Manager reported that the Freight Transport Association has called on the government to press for a Brexit deal – after seeing the latest documents on what a no-deal Brexit would mean for freight transport. Have you seen the latest information for the logistics sector? How could this affect your future runs? It picked up on the fact that the UK driving licence would only be accepted in partnership with an international driving permit, saying it would create delays and confusion for many operators – many of which might not even be aware that they would require additional paperwork. And it is concerned that no detail has been provided on the issue of whether permits will be required by vehicles travelling to and from the continent. “No detail has yet been provided on the issue of whether permits will be required by vehicles travelling to and from Europe – and time is marching on. “At this point, we expect only 1,224 permits to be made available to UK hauliers every year if they wish to travel to the European Union – that number pales into insignificance when you consider that the Port of Dover can handle up to 10,000 vehicle movements each day,” said Pauline Bastidon, head of European policy. “Without a significant improvement in the planned number of accepted permits for HGVs travelling across the border, there is a very real threat to the integrity of the UK’s supply chain, and delays and product shortages could be a reality while alternative suppliers are sourced and arranged. “Unavoidable queues would quickly build up as hauliers wait for permits to be returned to the UK, and delays would be inevitable. Hauliers will not be able to travel without the requisite documentation, so this must be front and centre for negotiations when they resume, while hauliers should prepare for additional levels of red tape and administrative tasks, and a learning period as they adapt to the new regimes.” The FTA also warned that there is still no clarification on how air freight will be able to move into and out of the UK without a new access agreement. Don't miss out on the latest Industrial news, tips and jobs Subscribe here

This month The Telegraph posted an article about how business's source, produce and ship their company’s wares can have a significant impact on its profitability. Would you be able to implement these solutions within your business? Identifying the parts of it that are ripe for profit is critical; a supply chain saving of just half a penny per unit can have an “enormous” impact on a business over the course of a year, explains Chris Trump, head of supply chain operations and development at London-based drinks manufacturer, Wow. He adds that a profitable supply chain is a flexible one. Small businesses rarely have the volume to unlock significant value in a chain, but flexibility, partnerships and “truly understanding every cost in your operation” is key, he says. “Breaking down every cost of transforming fresh fruits, vegetables and chia seeds to bottled juices was the first step that we took.” This involved reviewing everything from raw ingredients, packaging, labour, warehousing, transport, insurance to even the support services of IT, adds Mr Trump. “This enables you to quickly identify which costs are fixed and varied; which ones you can make savings on; and what percentage of your overall costs that represents.” “Our biggest cost was transport, so we changed warehouse location quickly to hold our products near the Austrian border and close to our customer,” says Mr Trump. “This increased our costs to other German customers, but halved our delivery costs to our big customer, making a net saving for that market.” Make a forecast for what will sell Understanding your costs is vital for supply chain profitability, agrees Lee White, founder and director of Cubbies, which designs and manufacturers personalised plush toys. “Many small companies are given a full-service unit price and don’t necessarily understand how that has been made up, which is a barrier to profitability,” he says. “This is particularly difficult as your business grows, because you’re unable to disentangle how much of that price is materials and how much is the suppliers’ own margin, which makes it hard to negotiate better pricing as volumes grow.” To combat this, he advises developing a system to forecast what will sell and when. “Ideally, this should be done using past sales, but if it’s a new line with no history, look at the sell through rate of similar lines,” he explains. “A simple, regularly updated spreadsheet is sufficient to start with, although there are software packages to help you control inventory as you grow.” He adds: “If your infrastructure can support the extra workload, it can result in a significant uplift in profitability.” Split logistics costs When it comes to logistics and warehousing costs, much of the profit within your supply chain can be unlocked through piggybacking on the scale of larger businesses. “Transport is a great example, because if you’re shipping empty space, your cost per unit goes up,” explains Mr Trump. “Our first task when we launched into the UK with Waitrose in 2016 was to find out who was delivering into it on the same type of service, and for our volume to fill that empty capacity. This saved us about 20pc of delivery cost.” He adds: “Market challengers, being new, often have capacity that they’re eager to fill and are more willing to negotiate and more flexible in how they work, so find out who these businesses are and look to work together for mutual growth.” Procurement and sourcing are also key factors in developing a profitable supply chain, according to Mark Brownrigg and Deborah Newbury of artisan chocolate business, Urban Village Chocolates, which exports its signature single-origin tasting collections to Ireland and Switzerland. The present lack of clarity regarding future trading with the company’s closest potential export markets is also of concern. The duo advise preparing “as best one can” for the inevitable complications of Brexit and trying to be positive given the current challenges. Michael Martin, Thorn Baker Industrial Branch Manager commented; ''An interesting insight into the importance of understanding your costs and how the storage and logistics of your product/service can lead to a healthier bottom line. How much emphasis you place on getting your product to your clients can indeed have a profound impact on your companies costs, the nemesis of your profits. But as with a lot of best practice in business and life, a simple approach is the best approach. Conventional methods in terms of knowing how much stock you’ve got, when your clients are likely to buy it and in what volumes "should" allow you to hold as much as you can possibly sell at that time. Any more or less is wasted costs to store or missed sales if you run out. The ideas in the article such as relocating locations closer to your biggest client to produce a net saving are obvious, but not realistic for most SMEs. A less costly solution may simply be redesigning the layout of the warehouse, which is unlikely to yield the same return but be far more practical for most business. Similarly, contemporary software used to predict sales and infantry levels again are likely to be too costly for the majority of start-ups and small companies.'' Make sure that you don't miss out on any of the latest industrial news, tips and jobs Subscribe here