Some 78% of retailers and 71% of suppliers believe reducing road miles to be either “the biggest” or “a significant opportunity” for cost savings in their supply chains. That’s according to research carried out by IGD’s Efficient Consumer Response (ECR) UK board for a new initiative to inspire industry to drive down wasted transport miles.
ECR UK’s Reducing Wasted Miles programme has been spearheaded and facilitated by food and grocery training and research charity IGD, to provoke dialogue and change within the industry and provide insight into how businesses can work collaboratively to deliver more efficient transport and logistics networks. The initiative has been created with ECR UK members and uses findings from a new global industry survey, workgroup experiences and one-to-one interviews with supply chain experts across the industry.
The survey identified continued pressure on margins as the greatest overall challenge facing supply chain logistics over the next 10 years, with 61% of retailers and 46% of suppliers questioned highlighting the issue.
The survey also found:
- There is a big appetite to share transport, with 55% of those surveyed considering this to be one of the top three opportunities to reduce road miles over the next 10 years
- The second-biggest opportunity to cut wasted miles – identified by 36% of retailers and suppliers – was designing logistics networks collaboratively
- More intelligent routing and scheduling was selected as the third most important option to reduce road miles over the next decade, at 31%
Using the research findings, ECR UK has identified the big five solutions to help businesses develop their transport and logistics strategies in the next 10 years:
- Shared services– working towards fewer wasted miles through better collaborative utilisation of assets in the network e.g. using shared trucks, facilities, data and systems
- Flexible flow– working towards fewer total miles by designing supply chain networks in a resilient, responsive way, by removing barriers in the chain to keep the network agile
- Data driven– using data to optimise orders and routing through access to more live insight from traffic, the weather and smart products delivered by networked, cloud-based systems
- Tailored transport– ensuring the appropriate vehicle or transport mode is used for each journey, including alternate modes of transport such as rail, and exploring developments to vehicle size and design
- Streamlined stock– ensuring efficient product and packaging design using appropriate models for ownership and customisation of stock in the network
Darren Smillie, supply chain insight manager at IGD, said: “With intense retail competition, pressure on margins and rising shopper expectations, supply chains continue to undergo huge change and levels of uncertainty. Opportunities for companies to deliver savings internally are getting incrementally harder and a collaborative approach is becoming increasingly essential across our industry.
“IGD’s ECR UK members identified reducing road miles as an area that could help solve a growing number of challenges facing grocery supply chains, from increasing costs and squeezed margins to rising road congestion and a forecast shortage of drivers. This initiative is not necessarily about cutting overall road miles, although it should help contribute to this – rather, it’s about reducing wasted miles and aiming for efficiencies across the industry, at the same time as encouraging businesses to identify opportunities for their own growth.
“We want these ‘five to drive’ solutions to become the DNA of strategy, helping industry step change its performance. We believe the way forward will consist of a combination of approaches from businesses to help reduce wasted miles. ECR will be fostering and encouraging these co-operative approaches across the supply chain, to deliver the step change the industry needs.”