In the previous three articles, we initially focused on the process of placing orders, then on the different possibilities and characteristics of transport systems and finally on the indispensable role of transparency for effective control and optimization of transport management. In this fourth part of the series, we now look at the challenges of transport logistics to adjacent internal or external service partners.

Particularly in the course of cross-departmental or cross-company process steps, problems can arise in the interfaces – in the absence of a holistic view – which in the worst case lead to a deterioration of the overall situation. As a result, new structures and processes are not lived and the original status quo is continued without having solved the problems.

Some of these challenges have been identified several times in different projects and their effects should definitely be analysed and considered before intervening in the transport system:

Provision and loading

Asynchronous deadlines

A problem, which probably every dispatcher knows, is the call from the sales department after the final daily order deadline. The last item ordered is then given the highest priority and must therefore be delivered the same day. In everyday business, informal process variants have been developed for this purpose, in which the regular process is bypassed by the personal commitment of individual employees and the delivery of the products is still made possible on time. If these “exceptions” increase uncontrollably, this leads to tensions with internal stakeholders (e.g. sales) or external service providers.

The core cause of these tensions are often asynchronous deadlines between provision, loading and order acceptance. Orders outside of deadlines (and their consequences) are very expensive for a company, as they immediately lead to overtime and waiting times of internal or external service partners. Possible further effects are the non-adherence of delivery time windows at the end customer and possible further cost-intensive waiting times.

  • As a matter of principle, current deadlines should be documented and transparently communicated to all internal and external parties involved in the process in order to create greater awareness of the overall process. Tracking of KPIs for compliance with these deadlines and the consistent derivation of measures in case of non-compliance reduces the occurrence and frequency of overruns, thus reducing tensions between process participants in the medium term. In the case of changes in the transport system, it is also absolutely essential for successful implementation to involve all internal and external service partners as early as possible to avoid asynchronous deadlines before they occur.

Insufficient control & prioritization of the internal material flow

The control and planning of internal material flows are essential to ensure the synchronous provision of goods and materials for transport. When transporting several semi-finished products to downstream production sites, it must be ensured that the semi-finished products of different production lines arrive synchronously in the loading & staging area. If this cannot be guaranteed, only individual semifinished products are shipped. In the destination, these products first generate effort in production planning and (since they cannot be processed further in isolation) lead to higher stock levels.

A similar problem arises in the B2C area in the picking and, if necessary, aggregation of several customer orders to a consolidated delivery. Often this summarization/ picking is uncontrolled and randomly driven. If the individual degrees of freedom are too great and there is no control according to clearly measurable criteria (e.g. time stamps or geographical location of the recipient), “unpopular” orders (heavy, bulky, fragile) are shifted further and further. This results in peaks and resource bottlenecks at the end of the day, so that tours to far-flung delivery areas cannot start or are delayed due to individual deliveries.

  • Regular controlling of throughput times for semi-finished products (including a deviation analysis with hit lists) enables asynchronous provision to be identified at an early stage and measures to be taken to prevent this before it occurs. In addition, the degrees of freedom in the warehouse should be reduced and clear rules for the processing of picking orders should be defined and communicated.

Lack of consideration of the operational process in the layout of the staging areas

To reduce long distances or increased search effort in loading, the staging logic can be changed from a customer-specific to a tour-specific staging. This change often leads to distinctly visible problems in the warehouse. If new staging areas are not defined and labelled, picked pallets will quickly fill the aisles and access routes. In addition, the warehouse staff is not sufficiently informed and trained in advance. An additional problem arises when no reliable planning and timely extrapolation of the volumes per tour is possible. In this case, no actual picking and staging can be carried out before departure. The result is that tours are not loaded on time or external service providers can only feed partial deliveries into the main run.

  • In the event of changes, it is important to ensure that warehouse personnel are trained, at best in advance, for new processes and that new/changed staging areas are marked before the pilot or go-live. To ensure timely staging, the route planning must also be completed before picking. To carry out this planning with a sufficiently high level of stability, good availability of master data is essential.

Unloading

Lack of knowledge about cost drivers

Project experience shows that when trying to optimize direct transport costs, the transparency of downstream process steps often receives too little attention. The cause-related allocation of the total transport costs is influenced not only by the distance and the tied up transport space, but also by the duration of unloading. This is mainly determined by the transported product and the respective conditions during unloading. If the transported products are not “simple” piece goods or if destinations that are particularly difficult to reach are planned, the requirements generate additional effort and become a decisive driver of transport costs.

Does the vehicle drive from A to B or is more demanded? Is a tail lift required for unloading or is it docked to a ramp? Is a crane vehicle required or is a tarpaulin vehicle sufficient? Does the customer have delivery time windows or is the arrival time generously dimensioned? All these factors influence the effort and thus the costs.

Even larger blocks of costs can arise if further additional services are required. An example of this would be transport over kerbs and door thresholds, sometimes to hard-to-reach destinations or with obstacles such as stairs or other differences in level.

All additional services become a real problem if there is insufficient transparency regarding the existing demand, if billing is based on revenue and the costs are difficult to understand. This imbalance of information can lead to tensions with third-party providers or wrong decisions in the upstream selection and allocation process, as these costs were not taken into account in the desired comparison. In addition, as a recipient of these services, you put yourself in a bad negotiating position for the next tender for the services, which in turn can lead to higher future costs. If the service package with the largest scope of services (“premium package”) is ordered usually and the order is not formulated in sufficient detail, the resulting total costs are particularly high.

  • In order to get this imminent cost increase under control, some preliminary work is needed. First of all, complete transparency of the actual demand for the required services should be developed. Based on this knowledge, processes and the demand can be managed or optimized. In addition, this catalogue of requirements should always be part of a tender as well as of the agreements with third party providers in order to obtain competitive prices and to be contractually secured. The less imbalance in information between the parties, the fairer a partnership can function. Furthermore, the formulation of the exact requirements (including all relevant information on additional services) in the individual order is essential afterwards, so that a needs-based and cost-optimised order can be performed.

In the next article we conclude the series on transport logistics with an insight into different transport systems that can enable efficient operations, increase transparency and support the analysis and optimization of processes.