We make it easy to connect your businessto the whole of the UK and beyond

With over 200 depots and 7 hubs, handling in excess of 20,000 pallets every day in the UK and

mainland Europe, providing unrivalled express delivery for small consignments of palletised freight.

www.palletways.com

POWER OF LOGISTICSTHE DEFINITIVE GUIDE TO SUCCESSFUL LOGISTICS AND SUPPLY CHAIN MANAGEMENT

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JANUARY 30 2007

ARKILL MATTHEWS

Lloyd Arkill and Ross Matthews, who betweenthem have over 25 years experience in thelogistics industry, have formed a public rela-tions partnership. Arkill Matthew Ltd offers aquality press relations service and publishingconsultancy for leading organisations in thelogistics and materials handling sector.

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A responsibleapproachAchieving an efficient and sustainable distribution system for products and services is clearly one of the greatest challenges facingthe UK today, writes Roger Williams

The UK freight logistics industry is respon-sible for some 6% of gross domestic prod-uct and employs in the region of one millionpeople nationwide. The efficient operation ofthe sector is essential to the performance ofthe British economy with industries such asmanufacturing, construction and retailingparticularly dependent on the physical move-ment of goods.

However, decades of underinvestment andneglect coupled with the rapid increase in roadtraffic (since 1997 the number of cars usingBritain’s roads has increased by a staggeringfour million) have placed a huge burden onthose companies who rely on the road networkfor the supply of finished products and rawmaterials to their factories, warehouses andretail outlets.

The Government is quick to point out thatspending on transport will top £12.8 billion by2007 and that we are in the first year of a threeyear £1.9 billion programme to improve strate-gic and local roads. However, there are manythat believe that even these substantial sumsare unlikely to bring tangible improvements ordeliver real value for money.

Congestion in our towns and cities isarguably one of the biggest threats to econom-ic expansion that we face over the next 10 to15 years. Deliveries by freight and servicerelated vehicles account for approximately14% of all vehicle kilometres driven on majorroads in London and total goods vehicle trafficis projected to rise by over 10% by 2011.

It is now accepted that continuous invest-ment in the transport infrastructure of the UK isessential – something that, in the past, has notalways been recognised. However, if the con-gestion crisis is to be effectively tackled variousnew initiatives will have to be considered.

Of course, congestion isn’t just bad forhauliers and the economy. It’s bad for the envi-ronment. Transport CO2 emissions are risingand 20% of total CO2 emissions in Britaincome from road traffic, so innovations that canbe shown to cut pollution must surely be worthexploring.

Global economyEconomic forecasts suggest that the globaleconomy is set to increase by 40% by the year2015. Furthermore, within the next ten years aquarter of the world’s industrial output isexpected to come from India and China.

The strength of the Chinese market, in par-ticular, will put growing pressure on ouralready stretched ports. The Governmentappears to have woken up to the notion that, asan island economy, Britain’s ports provide thegateways for international trade, and in recentmonths various plans to expand terminals atHull and Harwich have been approved. With,among others, P&O’s London Gateway devel-opment and HP (UK)’s South Felixstowe pro-posals still awaiting decisions, it is to be hopedthat the country’s major ports are on the vergeof significant expansion.

More traffic through the ports is likely to meangreater opportunities for rail freight. Rail freighthas been a UK success story – which made lastyear’s Department of Transport announcementthat it was to merge rail freight grants with thosehand-outs allocated to road and water-basedtransport particularly disappointing. Indeed thenews led many in the freight industry to con-clude that public investment in rail freight iseffectively being cut. If true this would be abizarre stance for the government to take in lightof its Kyoto Treaty targets and pledges to pro-duce safer, less clogged roads.

This is all very frustrating for those privatecompanies who have invested over one and ahalf billion pounds in rail freight over the pastdecade (during which time the amount offreight transported around the UK by rail hasincreased by 45%). It seems reasonable toassume that unless the government adopts aconsistent and supportive rail freight policy thetask of persuading British businesses to makethe switch from predominantly road-basedtransport solutions will not get any easier.

Efficient and sustainableAchieving an efficient and sustainable distri-bution system for products and services isclearly one of the greatest challenges facingthe UK today. I have no doubt that the compa-nies who serve the logistics sector are capableof rising to the challenge but they will needthe support of a Government that understandsthe problems they face and, more importantly,is prepared to take appropriate steps to helpsolve them.

Roger Williams is chief executive officer ofthe United Kingdom Warehousing Association

– the trade organisation representing thecountry’s third party logistics sector.

CONTENTS

Addressing the imbalance 3

Helping women succeed in logistics 3

Talk of the logistics industry 4

‘Tis always the season to be online! 4

Is road pricing the best solution? 5

A better place to do logistics? 7

Fresher looking label technology 7

An order of magnitude 10

Lot of bottle 10

Outsourcing Logistics – logically speaking 12

Logistics: The overlooked element of WEEE 12

Supply chain risk management 13

Power shift 13

Make room for safety 14

POWER OF LOGISTICS A TITLE FROM MEDIAPLANET

Project Manager Shola Adeniran, Production Editor Ulrika Fallenius, Editors Ross Matthews and Lloyd Arkill,Design/Production Jez MacBean, Print News InternationalFor more information about supplements in the daily press,please contact Freddie Ossberg 020 7563 8883

www.mediaplanetgroup.co.uk

Mediaplanet is the leading European publisher inproviding high quality and in-depth analysis ontopical industry and market issues, in print, onlineand broadcast.

www.mediaplanetonline.com

� Roger Williams, chief executive officer of theUnited Kingdom Warehousing Association

info@am-pr.net

www.cevalogistics.com

EXCELLENCE REBORN.From our extraordinary past as a division of TNT, we proudly announce the beginning of an evengreater future. Please welcome CEVA. At CEVA we are dedicated to continuous innovation thatwill lead the industry and always be focused on improving our customers’ supply chains. Whether itis through operations excellence or new technologies, this is what the new CEVA name represents.This is our promise. We will not let you down.

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According to a recent survey bytransport training specialistsMentor, no more than 15% of com-panies who use workplace transportequipment employ female operators.

While this figure might appearlow, Mentor point out that, fiveyears ago, over half of the compa-nies surveyed did not employ anywomen workplace transport opera-tors at all.

The logistics industry has a longhistory of gender imbalance, as IanHetherington, chief executive ofSkills for Logistics, the Sector SkillsCouncil for the freight logisticsindustries, is quick to acknowledge.“Women account for only 22% ofthe logistics workforce in Englandcompared to a national figure ofwomen accounting for 46% of theworkforce,” he says.

Skills for LogisticsIn an attempt to redress the balance,Skills for Logistics has just beenawarded £1.65 million in fundingfrom the Department for Educationand Skills for its new Women andWork Project. “The project has threemain aims,” explains Hetherington.“Firstly, we intend to encourage thosewomen currently employed by trans-port companies in non-driving rolesto consider developing skills as anHGV driver. Secondly we will providereal career progression opportunitiesfor those in warehousing and finally,we will develop a support structurefor smaller organisations that cur-rently don’t have strong staff devel-opment and HR resources,” Hether-ington explains.

Roger Williams, chief executiveofficer of the United Kingdom Ware-housing Association, whose mem-

bers operate nearly 100 millionsquare feet of warehousing and dis-tribution centre space from around1300 sites across the UK, comment-ed: “In the past, the logistics sectorhas not addressed the gender imbal-ance in the workforce with anyenthusiasm. However, historicalattitudes are changing fast – notleast of all because of particularskills gaps and manpower shortages.In the last few years the number ofwomen taking on what might bedescribed euphemistically as ‘men’swork’ has soared, and governmentfunding of the SfL’s Women andWork project will add to thatmomentum. But there is no denyingthere is much to be done if women

are to be truly represented in thesector. SfL claim that 22 per cent ofthe logistics workforce in the sectorare women, but I suspect that percentage is much, much lower atboard level.”

Perhaps, the woman with thehighest profile in the logistics sectoris Hilary Devey, founder and manag-ing director of pallet distributionnetwork Pall-Ex.

Award winning pioneerHilary pioneered the concept ofbringing together a number ofhauliers to deliver small consign-ments of palletised freight through a‘hub and spoke’ network when shelaunched Pall-Ex in 1996. She isregarded as a trailblazer for theindustry and is seen as one of thetransport and logistics sector’s mostrespected personalities.

Since re-mortgaging her house toprovide the initial funds to launchher company, Hilary’s success atturning Pall-Ex into one of the mostpowerful brands in the logistics sec-tor in just ten years has broughtmany personal accolades: last year,for example, she was named FirstWoman in the Business Services cat-egory of the prestigious First WomenAwards organised by the CBI andReal Business Magazine and nomi-nated as a finalist in the Veuve Clic-quot Award for Businesswoman ofthe Year 2006. Moreover, Hilary wonthe coveted Entrepreneur of the Yeartitle, from the Chamber of Com-merce, East Midlands Region.

“The logistics industry is tough anduncompromising and, yes, it’s domi-nated by men!” she says. “I haven’tset myself up as a role model forwomen in the logistics industry but if

other people see me as that, thenthat’s fine by me. I’m running a busi-ness because I’m capable of running abusiness and the fact that I’m femaleshouldn’t be an issue to anyone.”

More women of authority “I think it’s fair to say that, histori-cally, the transport industry hasattracted a number of misogynistsand so, in a lot of respects being awoman has not made building mybusiness any easier. But, things arechanging and I find that I am dealingwith more and more females in posi-tions of real authority these days.”

Despite her modest reluctance toconsider herself a role model, thetruth is that Hilary Devey – togetherwith a growing number of other sen-ior female executives now com-manding significant salaries in thelogistics sector – is probably one ofthe industry’s best recruitment toolsin the campaign to encourage morewomen into the sector.

“If I can succeed in this businesswhile, at the same time, bringing upmy son as a single parent, I thinkeveryone can do it,” Hilary adds.

Addressing the imbalanceWhat is the industry doing to encourage more women tosee logistics as an attractive career? Lloyd Arkill finds out

Funding of £580,000 from the European Social Fund and Hull University BusinessSchool, has been secured for EMPATHY Net-Works – a project designed helpwomen across the region progress their careers in the field of logistics and supplychain management.

“There is evidence of under-representation of women in the logistics and supplychain industries in the Humber sub region, with only 13 per cent in the logisticssector,” said Barbara Allan, project director. “There are higher level skills shortagesand an under-representation of women in management positions, which place thesector and region at a competitive disadvantage.

The free 10-week part-time programme of study will use both traditional andinnovative methods of learning, including accredited face-to-face and onlinelearning and E-mentoring and coaching which will connect the women benefici-aries with role models to provide advice, guidance, knowledge and skills. A web-based collaborative system will also provide opportunity for women to engage intheir learning and development activities from their homes, at university or inter-net cafes.

Graduate or professional woman interested programme contact Jane Craig ontel: 01482 463273 or email: j.l.craig@hull.ac.uk

If you wish to inspire the next generation of female managers by becoming amentor then contact Barbara Allan on tel: 01482 463067 or email:Barbara.allan@hull.ac.uk

£580,000 PROJECT TO HELP WOMEN SUCCEED IN LOGISTICS

� EMPATHY Net-Works projectdirector Barbara Allan� Hilary Devey, pioneering Managing

Director of Pall-Ex

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Everybody seems to be talkingabout voice recognition in thelogistics world at the moment. Whyso? Well, enter any large distributioncentre and it’s common to see staffbusy picking or putting goods awayand then either scanning the barcode or tapping in data on a key-board to wirelessly update, in realtime, the warehouse managementsoftware. This not only providesdata for relevant managers in thesupply chain to see what’s currently

in stock but feeds essential data in tosupply chain software systems dohelp make decisions on issues suchas production, forecasting and rout-ing. Clearly the faster and moreaccurately one can capture thatdata, the better.

Many companies have now intro-duced voice recognition as a way ofdoing just that by freeing the handsof warehouse staff through hearinginstructions via a headset andspeaking their responses through a

microphone. The technology hasdeveloped over the last decade into avery reliable solution.

Duncan Smillie, managing direc-tor of the mobile computing compa-ny Psion Teklogix, believes that theshift towards a greater use of voicetechnology is probably one of themost significant events in the logis-tics industry at the moment.

“The major benefits of ‘voice’surround the return on investmentwhich comes through significantincreases in operator efficiency andaccuracy,” he says. “Voice technol-

ogy allows warehouse staff to havea terminal on a belt linked to aheadset which directs the weareraround the distribution centre andtells them which locations to pickfrom, the right quantities to pick,etc. Enabling order pickers to havetheir eyes and hands free duringtheir daily routine has a dramaticimpact on their productivity levelsas well as significant health andsafety benefits.”

Smillie adds: “Voice technology isnot only beneficial in an order pick-ing scenario although this is where

most productivity gains are made.The system can also be applied toachieve significant efficienciesthroughout the entire supply chainoperation - from goods-in to put-away, replenishment and even dis-patch. In fact, one of our clients runstheir entire operation on voice tech-nology and the gains they havemade been phenomenal.”

Talk of thelogisticsindustryRoss Matthews finds out why so many people want to talk about voice recognition technology for theirlogistics operations

Figures released in January byIMRG reveal that £7.66 billion wasspent online by British consumers inthe ten-week run-up to Christmas(between 16 October and 24 Decem-ber). That’s 54 per cent more than the£5 billion spent online during thesame period in 2005. E-retail salesworth £3.6 billion were recorded forDecember. Online sales for the wholeof 2006 were worth £30.2 billion.

“Consumers gave retailers a strongmessage at Christmas - they want thechoice and convenience offered byonline shopping. In this context,convenience means a suite of deliv-ery options and much better first timedelivery success rates,” says James

Roper, chief executive of IMRG(Interactive Media in Retail Group),the industry body for UK onlineretailers and compiler of the figures.

He sees specialists logistics com-panies having a key role to play tounlock billions of pounds worth ofnew, additional trade not only at thiscritical time for the retailing indus-try but throughout the year.

“Online shopping growth is ram-pant, with no sign of abating andconsumer demand is outstrippingsupply ,” continues Roper. “Nowhereis this more obvious that in the fulfil-ment and delivery arena, where lackof sufficient investment by retailersin high-quality services risks not onlylosing sales opportunities and marketshare, but also brand damage.”

Bearing witness to this was, one e-fulfilment company, iForce, reporteda 65 per cent increase in the numberof orders it processed on behalf of itsretail clients in the 7 weeks up toChristmas, with the busiest peak weekseeing an increase of 58 per cent inorders handled. During 2006, thecompany packed over 7 million indi-vidual items in to parcels for its retailclients, dispatching them to their cus-tomers within the time frame prom-ised on its clients’ web sites.

“On an annual basis, we have seenour existing clients grow by a totalrate of 50 per cent in terms of theorders we have handled through2006, on a like for like basis,” saysMark Hewitt, CEO of iForce. “Whenthe effects of new clients are fac-tored in to the equation, iForce hasbeen able to deal efficiently with anincrease of around 180 per cent interms of the volume of orders wehave dealt with in 2006, when com-pared to 2005. This ability to scale

our business to such an extent is oneof the keys to our success.”

However, online retail is not justabout delivering the goods, there arealso the inevitable returned productsto handle, which is an important andcomplex consideration for anyretailer, as Hewitt points out: “Nowthat we have hit the year’s outwardbound peak online retailers need tobe able to handle the subsequentpeak in returns and therefore requiresuitable reverse logistics solutions.”

‘Tis always the season to be online!Online sales hit an all time high during Christmas2006, marking a significant development in the impactof online retail

PALLETWAYS LAUNCHES INTO FRANCE

Palletways, Europe’s largest and fastest growing logisticsbusiness dedicated to the express delivery of small consign-ments of palletised freight, has launched a new distributionnetwork in France.

The development means that the Palletways UK network isthe first pallet freight operation to provide an express distri-bution service to the whole of France. Already customers inthe UK are benefiting from Palletways distribution services tothe Benelux countries, Denmark, Germany and Switzerland.

Delivery servicesPalletways has introduced a new hub in Troyes in order toprovide delivery services from the UK to France.

Adam Shuter, European Development Director at Pallet-ways, said: “Our expansion into France further consolidatesour position as the number one provider of express distribu-tion services for small palletised consignments in Europe.”

Palletways express delivery services to mainland Europe,including France, are provided with full track and trace capa-bility. By accessing the Palletways website and entering theirunique login name, customers are ‘transported’ to the loca-tion of the consignment – from point of input into the net-work, through to final delivery. Scanned images of PODs can

also be accessed by users via the internet the day followingthe delivery.

Palletways pan-European network comprises seven hubfacilities and 200 plus member companies, all independentand established transport operators who between them han-dle some 20,000 pallets every day.

� Voice recognition can be applied toachieve significant efficiencies through-out the entire supply chain operation

� Goods at an e-fulfilment centre

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Road pricing is the tool the gov-ernment intends to employ totackle the country’s ever growingcongestion. During the Queen’sSpeech on the 15th November 2006,plans were detailed for a pilot roadpricing scheme. Furthermore, in aneffort to cut congestion a draft RoadTraffic Bill, to be published this year,will examine the scope for the intro-duction of a national road pricingscheme. If implemented then driversin the future could possibly face:

• The introduction of differentialprices being charged on roads,from 2 pence to £1.34 pence permile.

• The installation of a high-techelectronic black box in vehicles,tracked by satellite

• Congestion charging zones inmore cities

• More roads tolled

It is understood that these meas-ures will form part of the govern-ment’s attempts to curb congestionand hit the target to reduce CO2 by60 per cent by the year 2050.

A Treasury sponsored report, pub-lished in early December 2006, a fewweeks after the Queens’ s Speech,and headed by Sir Rod Eddington,advocated demand managementpolices be adopted, concluding thatcongestion could be cut if people

were charged to use the roads.According to the report users shouldmeet the full economic and environ-mental costs of road travel. It sug-gested charges up to £1.28 a mile,rising with inflation to drive on thebusiest roads during rush hour.

The message is clear. Britain willface total gridlock in forthcomingyears unless plans are put in placesoon to prevent this happening. TheEddington report estimates that aroad pricing scheme could save £28billion a year in transport delays andhalve congestion. The report alsopoints out that without road pricing

taxpayers would have to fund alarger roads programme than wouldbe needed if the road pricing schemewas in place by 2015.

Normally, a road pricing scheme iscontrolled and implemented underthe auspices of an authoritativebody, such as government or a localauthority. The practical aspects ofimplementation are not so simpleand include tollbooths and road pric-ing corridors, cordons and regions.

Differing perspectives on road pricingHowever, it is believed that the gov-ernment’s intention is to implement anational road scheme using satellitenavigation systems, thereby makingsome of the above methods obsolete.The speed of change in electronictechnology, especially mobilephones, may be a solution. The sys-tem will require all road vehicles tocontain a satellite tracking device

(the electronic black box), having thecapability to identify which roadswere driven along and in terms oftime and distance travelled.

With growing numbers of foreignvehicles on UK roads the argument isadvanced that if road pricing is intro-duced then all trucks pay the sametoll rate, but for British hauliers therewould be a reduction in fuel duty,assuming it is neutral revenue. Ini-tially, the government had plans tointroduce a Lorry Road User Charg-ing scheme, but this was abandonedin 2005. Making foreign trucks paytheir fair share of wear and tear costs– estimated at £240 million each year- has long been an aim of road pric-ing advocates. Rubbing salt into thewounds foreign vehicles tend to driveon cheaper European fuel while usingBritish roads.

Generally, there is consensus thatsome form of road pricing isinevitable. The main industry tradeassociations, the FTA (Freight Trans-

port Association) and RHA (RoadHaulage Association), adopt a cau-tious approach to road pricing. TheFTA points out that road congestionis the curse of modern logistics,because it causes unpredictability injourney times, resulting in morevehicles needing to be used to meetcustomer deadlines and stay withindriver hours regulations (all themore important since the introduc-tion to the Working Time Directive).The RHA draws attention to the factthat British road users already payover £43 billion in taxes yet only £7billion is used for the road system;the remaining £36 billion beingsiphoned off for purposes not asso-ciated with roads.

Additionally, the FTA and RHApoint out that, unlike private cars,hauliers have limited options intravel times as they have to competein the open market, often beingrequired to meet tight delivery andcollection windows demanded bytheir customers. Consequently,hauliers may have no option otherthan to travel during peak hours.Furthermore, in an economy such asBritain, heavily dependent upon theroad freight sector, road pricing willbe inflationary (unless the scheme isrevenue neutral).

Consideration also needs to begiven to the aspect of perishablegoods. It is essential that a largeproportion of goods delivered orcollected by truck, such as newspa-pers, fresh foods, chilled foods, mar-ket garden and diary produce, isundertaken as and when the marketrequires. When a truck can travel ishighly inelastic, which means theindustry would be subjected to roadpricing at the highest toll to a muchgreater degree than private cars.

While road pricing in the foresee-able future is no longer a matter ofspeculation there is, however, noguarantee that it is the solution tocongestion. Furthermore, there isconsensus that it is merely part of asolution. Its implementation, enforce-ment, fraud counter-measures andthe administration of tracking of over30 million vehicles makes for a poten-tial major headache. The reality is thatmore failure to deliver what is prom-ised for the future will mean roadusers being left with an expensivesystem and unbearable congestionlevels. Not a pretty prospect.

Is road pricing the bestsolution for congestion?With the parlous state of Britain’s congested road net-work set to get worse the introduction of a nationalroad pricing scheme has been suggested as a possiblefuture solution. Freight transport expert Frank Wors-ford assesses its impact

� Lorries may soon be tracked by satel-lite as part of a national road pricingscheme

5

“STEPTOE AND EASYPACK RECYCLED PACKAGING”

European cushion void fill specialists Easypack manufac-ture paper converting packaging machines producingquality void fill in the form of crimped pads, Spiral tubesand recycled box shreddings. These have proven results inprotecting the goods they are used to pack during transitand filling any voids to eliminate migration within the box.

All the paper used is 100% recycled kraft paper. Repre-sentative Anthony Moorhouse states: “As a company man-ufacturing systems that pruoduce large quantities of paperpackaging, it’s an ingrained ethos to contribute in a positiveway to protecting the environment. It may be a well usedcliché, but being environmentally friendly is not about being politically correct – for us it makes goodbusiness sense as well being responsible and accountable.”

Of course, recycling is not a new concept. From 4000 year-old composting evidence in China to theage-old tradition of the rag-and-bone man, reuse and recycle was commonplace, even the norm. Theiconic TV figure Steptoe may well have provided many belly laughs, though he was based on a practicethat at times verged on the ritual through necessity.

Today, and in Britain alone, we produce over 10 million tons of waste packaging a year, of whichalmost half is paper and card. So it’s good to see packaging companies such as Easypack leading theway in manufacturing for easy reuse and recovery.

Easypack - 0845 838 0168 or www.easypack.net

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Ultimately, the key to success insuch an unpredictable anddynamic business environment isadaptability - the new buzz wordcurrently resonating throughoutthe UK logistics and supply chainmanagement sector.

The adaptability factorGrowing numbers of businesses areseeking to overhaul their existingsystems with more sophisticatedWMS solutions that provide com-prehensive functionality on flexi-ble product architectures. Theadaptability factor empowers busi-

nesses to optimise warehouse activ-ity while continuously trackinginventory flow through stream-lined collaboration with customers,suppliers and trading partners.

WMS vendors are under pressureto deliver such solutions that, aboveall, must provide businesses withfast, substantive ROI and low totalcost of ownership. For some this is adaunting challenge but for others,such as 3M Supply Chain Solutions,this is an exciting opportunity.

3M’s warehouse advantage3M Supply Chain Solutions, with

their HighJump Software areranked in the top three global sup-ply chain software vendors with acustomer base of over 1300, includ-ing brands such as Starbucks, Rose-bys, Vestas, Bridgestone Firestone,Quiksilver, Wolseley, MAP Mer-chants, as well as 3M itself.

In 2006, seven UK customer siteswill go live using 3M’s adaptablesupply chain execution softwarethat streamlines manufacturingand distribution from the point ofsource through consumption.

Its WMS product set offers supe-rior configurability and systemflexibility over legacy solutionsused by many large companiestoday. Feedback from customers hasshown that implementing even thesmallest business process changeswould have taken them three to sixmonths to achieve previously. 3Mprovides training and an advancedadaptability toolkit that customerscan use to update their systemthemselves in hours without havingto use expensive custom code.

3M’s WMS is also unique in itsutilisation of one technology plat-

form to facilitate integration andspeed upgrades. For high volumewarehouses this Power of ONE™approach is a major benefit making itsimpler and more intuitive for users.

As a global manufacturer doingbusiness in over 200 countries andwith its own supply chain opera-tions in around 60, 3M knows thechallenges that supply chain and IT

executives face, and believes it hasa compelling proposition for UKcustomers.

For further information on 3MSupply Chain Solutions and its

HighJump software contact:Tel 01344 858165 Fax 01344 858195

Email mbennett@mmm.com Web www.highjump.com

Facing change with adaptable WMSIn an ever-evolving industry where customer expectations, compliance requirements and competitive pressures increase by the day, logisticsand supply chain executives demand WarehouseManagement Systems (WMS) that conform to existing business processes today, while respondingquickly and cost-effectively to the unforeseenchanges of tomorrow’s marketplace

PERFORMANCE MEANS LOGISTICSBEST LOGISTICS MEANS GEFCO

An interruption in your supply chain means business performance suffers. GEFCO understands the language, practices and requirements

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www.gefco.net LOGISTICS FOR MANUFACTURERS

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With the sudden and continuingimpact of China on the globalmarket, deep-sea container traffic isexpected to more than double in thenext ten years. In its QuarterlyTransport Activity Survey, theFreight Transport Association pointsout that imports to the UK from theFar East continue to rise steadilywith no signs of slowing down. UKports are starting to be seen asuntapped opportunities for hubs oflogistics operations. Hutchison Ports(UK), owner of the Port of Felixstowe,Harwich International Port andThamesport, was recently given thego-ahead from the government tobegin reconfiguration of Felixstowesouth and Bathside Bay, Harwich, tocreate the largest deep-sea containerhandling complex in the UK withinthe Haven ports.

ChallengeWork is expected to start on theFelixstowe South project in early2007. Development of Bathside Bayis subject to securing the necessaryapprovals for the upgrade of theA120 and work needs to have begunon road improvements before theconstruction of the first phase of theproject is allowed to commence. Thisis not expected before 2009.

Murray Gibson, general manager oflogistics development for HPUK,was given a challenge of leveragingthe assets at his disposal at the Portof Felixstowe and creating a newlogistics operation.

“Why haul a container 100 milesinland to unload and then have thecost and inconvenience of haulingthe empty box all the way back,when a port can be a specialist stor-age and distribution centre?” saysGibson. He points out that the com-pany’s message to him has been notto compete with the existing distri-bution companies.

The term ‘Port-centric’ is beingused to describe this approach. Gib-son says: “When you think about thetraditional supply chain model, con-tainers move inland and then have tofind their way back to the port empty,the restitution costs for a containerfrom Felixstowe to Colchester, forexample, is between £135 and £140.”

Port-centric offers users a stepback to when ports were very muchthe single point of access for goodscoming into the country, and busi-nesses worked solely from the quay-side, loading/unloading and ship-ping out goods inland.

TraditionalPort-centric logistics is challengingthe traditional model by offering asupply chain solution for goodsarriving at the port. Using theadvantage of all goods comingthrough one point, it works by offer-

ing de-vanning, consolidation andbonding solutions all within theexisting security of the complex. Thesystem enables whole sections of thesupply chain to be removed;increasing efficiency and early visi-bility, while claiming to eliminatedemurrage and helping to drivedown inventory levels.

Murray Gibson says: “In effect, weoffer an alternative to the conven-tional distribution centre model, witha highly responsive service whichcuts out wasteful legs of the supplychain and saves time and money.”

An education thingSimon Fraser, chairman of theFelixstowe Port Users Association,points out that international compa-nies in particular, can be naturallydrawn to build facilities in the centreof the country without really con-sidering the possibilities of using theports to their full potential. He saidthat the big retailers are gettingmore involved but he said that usingthe ports as logistics hubs “is aneducation thing”.

Fraser says that being near a portallows a much greater flexibility andresponse time to attend to problemswith deliveries, late arrivals and soon. “I don’t think that we’ll ever seethe end of the regional distributioncentre because a lot of money hasalready been committed to them.”

But, he says: “I think that we’vegot to get a bit smarter really, wehave all these pre-conceived ideasthat if you plonk it in the middle ofthe country, it’s got to be betterbecause we can feed out from it, butif your source it in one place (i.e. aport) then why have your RDC 200miles away?”

A better place to do logistics?With the increasing cost and difficulty of setting updistribution centres in traditional areas, should supplychain professionals be looking towards the ports totake on an enhanced role in the supply chain? JamesFalkner of Logistics Manager magazine looks at whatschemes are currently underway to develop UK portsinto centres for logistics operations

Aversatile technology to assureconsumers food is fresh to eatand medical staff that vaccines aresafe to use also has benefits for thesupply chain.

Modern packaging is designed tobe space efficient and to keep pro-duce fresh during distribution and aslong as possible once in the con-sumer’s larder.

“ Timestrips are alsoof value within the sup-ply chain, particularly incold chain managementwhere food that needs tobe maintained at chilledor refrigerated temperatures ”But once a pack is open, food candegrade quickly. For fresh foodwithout a sell-by date, it is often

hard to remember when it wasbought or opened. If, for example, aperson pours out fruit juice from acarton or pasta sauce from a jar theydid not buy, or forgot when theyopened it, then there is no way ofknowing how fresh that product is.Any doubt over freshness will seethe product thrown in the bin, whichcan mean unnecessary waste.

A new label is now available toindicate how fresh that product

actually is. The single-use, dispos-able, smart-label, automaticallymonitors lapsed time, ranging fromunder one day to 6 months.

The technology behind the labelsworks by capillary action, allowinga tinted liquid to migrate through amicro-porous material at a consis-tent rate. This acts as a gauge thatcan be calibrated to the requirednumber of days by the producer orstore. The labels - which cost “a mat-ter of pennies” according to ReubenIsbitsky, CEO of the company behindthe technology, Timestrip - can beplaced on a product at source andare simply activated by pressurewhen applying them. The labels canalso be provided for customers toactivate.

In retail stores the technology canclearly show shelf packers whichproducts are nearing their sell bydate. Indeed, the labels can bedesigned to automatically indicate a

Fresher lookinglabel technologyRoss Matthews finds out about a new smart label thatmight make people take a fresh look at their produce

� The Bathside Bay plan. Developmentof the site depends on approval for roadimprovements and not is expected tostart until 2009.

� Can youtell if the mint mayonnaise is really fresh?

DUBAI: THE EMERGING MIDDLE EAST LOGISTICS HUB

As the auto after-market hub of theMiddle East, Dubai has the leadingrole to play in driving an estimatedregional market worth in excess ofUS$18billion with accelerating aver-age annual growth rates of over10%, according to Dubai LogisticsCity (DLC), CEO, Michael Proffitt.

DLC is at the core of Dubai WorldCentral, a 140 square kilometreurban aviation community beingbuilt in Jebel Ali, just 40 kilometresfrom Dubai city centre with customsbonded access to Jebel Ali Port andFree Zone.

“The continuous growth in auto-motive sales in Dubai, and across theGCC, can only further encourageafter-market demand,” commentedProffitt. “With the emirate’s flour-ishing import, export and re-exports

market showing no signs of slowing, the question is to what level the growthwill reach before a lack of space curtails it,” said Proffitt. “With Dubai LogisticsCity, we are answering that question.”

7

discount for products nearing theirsell by date, which can save a lot oftime when it comes to carrying outthe mark down process.

Cold chain management“Timestrips are also of value withinthe supply chain, particularly in coldchain management where food thatneeds to be maintained at chilled orrefrigerated temperatures is moved

between controlled environments,”says Isbitsky. They can monitor anybreaks in that cold chain where pro-duce may have been exposed to highertemperatures, and for how long. Thereare many sectors, such as seafood,where this is a crucial issue,” he adds.

The technology can also be usedto monitor vaccine products, whichare at risk of breaking down whenfrozen.

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It started around ten years agowhen the first pallet distributionnetworks were launched. Put sim-ply, pallet networks enable regionalhauliers to work together to providenext day delivery virtually any-where in the UK for a highly com-petitive price. Consignment sizedoesn’t matter - one pallet can besent from Carlisle to Exeter the nextday as easily as ten.

Such has been the success of pal-let networks that an estimated100,000 palletised loads are nowdistributed via these operationsevery single night of the week.Leicestershire-based Pall-Ex hasemerged as the dominant brand inthe increasingly competitive palletnetwork arena. Just one of themany reasons for this differentia-tion is the extreme level of careafforded to freight as it is handledthrough the network. The ethoswithin the Pall-Ex network is suchthat each member regards all trans-shipped freight as their own, andtreats it as such.

Ten years of excellenceLaunched 10 years ago, Pall-Ex hasattracted the UK’s top hauliers intoits network of some 100 memberdepots. The organisation has accessto over 7,500 vehicles and morethan five million square feet of

warehousing. Volumes areapproaching 10,000 pallets a night– with growth rates at a constant 18per cent – and last year Pall-Exmoved its 11 millionth pallet offreight. The company isISO9001:2000 accredited, and con-trols a network revenue of circa£65m.

Pall-Ex remains 100 per cent pri-vately owned – which makes itunique among pallet networks –and its founder and owner, HilaryDevey, is widely accepted to be thepower and inspiration behind thecompany’s unparalleled success.

Pall-Ex benefits everyone!“Pall-Ex has been successfulbecause our business model bene-fits everyone – not only haulierswho make up our network, but alsotheir clients,” says Hilary Devey.“Our haulier partners make farhigher margins than non-networkfirms and, in many cases, havebeen able to grow their businesssignificantly without risking capi-tal, while manufacturers and retail-ers enjoy important supply chaincost efficiencies by using Pall-Ex todistribute their products.”

Savings and efficiencies for TheBody ShopMany of the high street’s dominantnames use Pall-Ex’s services. TheBody Shop, for example, recentlyoutsourced product distribution toits 294 UK stores to the company.

Besides the significant cost sav-ings and supply chain efficienciesgained by using Pall-Ex, TheBody Shop was attracted to thecompany by the environmental

benefits offered by a pallet net-work. “Before the establishmentof pallet networks local hauliersneeded three times the number ofvehicles to move the sameamount of freight around thecountry that they do now,”explains Hilary Devey. “Pall-Extakes vehicles off the road and,

equally importantly, because ofthe way our system works, ourhauliers never run empty lorries.We have even designed a specialdouble deck trailer, to maximisecapacity.”

Faster, cleaner, safer In fact, environmental considera-

A revolution in distributionAlthough, outside the logistics industry, it has gonelargely unnoticed, there has been something of a revolution in the way goods are transported in the UK

� Freight awaiting delivery inside Pall-Ex’s state-of-the-art hub

� Pall-Ex’s extensive forklift truck fleetis powered exclusively by compressednatural gas (CNG)

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tions have always been a priorityfor Pall-Ex. The company’s pur-pose-built hub facility locatedbeside the M1 in Leicestershire,was built to exacting environmen-tal and operational standards andis designed to be faster, cleaner,safer and much more efficient thanany other pallet hub operating inthe UK.

The hub’s design – which HilaryDevey oversaw personally fromconception through to completion– enables lorries to unload and loadgoods without entering the build-ing. Inside, Pall-Ex’s extensiveforklift truck fleet is poweredexclusively by compressed naturalgas (CNG). This keeps the atmos-phere cleaner and safer for staff,and has obvious benefits forfreight, which may be adverselyaffected by pollutants.

“We are really proud of our site,”says Hilary. “Some of our competi-tors still operate from a combina-tion of converted aircraft hangarsand warehouses, so we believe thatour hub helps to reinforce the mes-sage that Pall-Ex is a brand thathaulage companies and our corpo-rate customers want to be part of.What’s more, we have installedcomprehensive security measuresto safeguard valuable freight inour care.”

Real time track and traceOf course, at the centre of Pall-Ex’soperation is the company’s IT infra-structure. Pall-Ex has continuouslyupgraded its information manage-ment system to provide the veryhighest levels of customer service.The result is a sophisticated net-work-wide web based informationsystem, offering real time track andtrace, and incorporating electronicsignature capture for proof of deliv-ery, together with document scan-ning for back-up.

The system is accessible to Pall-Ex depots and customers alike, andhas won a number of prestigiousawards, including Technology inBusiness (Growing BusinessAwards, organised by the CBI) andthe Technology and InnovationAward of the United KingdomWarehousing Association. Hilary

explains, “Pall-Ex has pioneeredthis approach and was the firstcompany in the sector to roll outthis technology across its entirenetwork. The logistics business iswithout doubt a service industryand we have established our ownin-house software company anddeveloped our own proprietaryinformation management systemthat offers both cost savings andmassive advantages in customerservice. We are delighted to passthese on to both our growing num-ber of member depots and corpo-rate customers who use Pall-Ex.”

The expansion continues Having set new standards in UKdistribution, the future will see Pall-Ex expanding its profile furtherinto Europe with the introductionof deep sea and air freight services.

The company already operatesPall-Ex Europe and Pall-Ex EuropeExpress. The former is a ‘groupage’service for non-urgent traffic, whilethe latter provides express distribu-tion throughout Western Europe,the Baltic States as well as toTurkey and Cyprus. Deep sea trafficis already being handled, with

cargo going to North and SouthAmerica, South Africa, Australasiaand the Far East. Throughout its tenyear history Pall-Ex has changedand adapted to maintain its leadingedge in a competitive market andinnovation remains a cornerstoneof the company as it continues itsmove into containerised freight andthe international marketplace.Based on the needs, aspirations andfuture objectives of the business,Pall-Ex’s innovations in facilities,operations, IT and the environmenthave enabled the company to main-tain a competitive edge in a toughlogistics market. With ambitiousplans to expand its client serviceportfolio still further, Pall-Ex canlook to the future with understand-able optimism – thanks in no smallmeasure to the foresight, drive anddetermination of Hilary Devey.

� Pall-Ex’s award-winning, emission-free hub attracts business from bluechip retailers and manufacturers

� Pall-Ex continuously upgrades itsinformation management system toprovide the best customer service

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Committing substantial capitalsums to an automation projectrequires complete confidence in theforward strategy of the company, afull understanding of present andfuture supply chain requirements,and a detailed knowledge of theproduct profiles being handled.

Get it wrong and the consequencescan be serious, both for the financialwell being of the company and foryour own career prospects. But, get itright and fortune will smile uponyou, bringing far lower logistics costper unit sold, fewer headaches overlabour resources, greater efficiencyin controlling the flow of orders,increased capability, and a far higherutilisation of expensive land. Theresult: higher margins and greatercustomer satisfaction.

‘Automation, when planned prop-erly – and there is a solid businesscase – brings big benefits. In fact, weare seeing an increasing interest inwarehouse automation. Most bigretailers already have some level ofautomation somewhere in their dis-tribution operations – very fewdon’t,’ says Rick Ballard of logisticsconsultants, The Logistics Business.

Business caseBallard emphasises strongly theneed to look carefully at the busi-ness case. “You need to look atwhether you go for full automation,or automate only some of theprocesses. For the big retailers 30million Euros is a small budget, sosmaller may not find that level ofinvestment attractive.” In somecases it can be quite marginal onwhether to automate or not. “Wehave helped several major organisa-tions examine whether the businesscase stands up. You have to lookcarefully at the volumes and growth

forecast. It can be quite sensitive asyou are looking 7-10 years ahead.”

It may be the case that a moremanual operation with some ITautomation is most suitable. Heremechanisation could be used to helpmove items around. You can still usetrucks for moving goods, with peoplewalking the pick floor, but make surethey are very well controlled withtechnology such as voice picking.

Where there are measurable gainsto be secured from automatedprocesses what factors influence thesuccess, or failure, of automation?Mike Cogger, managing director ofKnapp UK, believes that a key factoris discipline. “The project needs to begiven a huge amount of discipline byboth the client and the automationsupplier. This means setting out allthe parameters for the project in thefinest detail. No stone should be leftunturned in the examination of everypossible business scenario that mayoccur.” It is important to rememberthat automated logistics systems arealways computer-controlled, andthat a computer will do whatever youask it to do, but it won’t do what youhaven’t asked it to do.

Cogger explains, “If flexibilityand adaptability is required, theseobjectives need to be designed infrom the very beginning of the proj-ect, if the client is to avoid unneces-sary costs later.”

Continuing the point on disci-pline, Ballard sees automation as away of imposing discipline on ware-house processes. In manual ware-houses those disciplines have to bemanaged all the time by supervisors.With voice picking/RDT you are stillimposing some level of discipline,although staff can make mistakes ordecide not to do something, but it isless likely and can be identified. Theautomated warehouse ensures disci-pline throughout.

Generally, warehouse automationcan be justified given one or more ofabout a dozen circumstances: thewarehouse is large; stock volumesare high; many lines are carried;throughputs are fast and high vol-ume; flow rates reach extremepeaks; many outlets require frequentconsignments; picking schedules areintricate; maintenance of stock lev-els is critical; dwell times are short;extreme storage environments arerequired; interest rates are low andstable; there is three shift working.

Analyse the processesBut, one very important point whenconsidering automation is that youshould take care that you do not

automate a bad process. This is whya thorough analysis of the processesinvolved and careful planning areessential. Alan Braithwaite of LCPConsulting has always maintainedthat if an automated system failsearly it’s usually due to the businessspecification not being right, say thestock profile was wrong. And prob-lems later on can be caused by thestock profile changing.

To a great extent the success of aproject depends on the vision of thosegiving you the input data. This mayaccount for the frequent accusationsof ‘inflexibility’ levelled againstautomated systems. Could it be thatnot enough consideration is given tothe planning process? Or perhaps, aproject is starved of the oxygen ofreliable and accurate information?

Frequently the customer’s expecta-tions and requirements change duringthe build process, but unfortunatelythe equipment has been specified andbought to achieve the original criteriamost effectively. The customer is then

left with an inflexible system thatcannot meet their changed require-ments and therefore the throughputenvisaged is not achieved.

It’s a sorry tale, but there are toolsavailable to help smooth the plan-ning process and calm nerves – thatis, of course, depending the dataused is accurate and, as far as possi-ble, future proof. Simulation is agood example.

Ultimately, adopting automationis all about improving the valueproposition for the customer, deliv-ering productivity gains in the dis-tribution operation, and managingthe processing and movement ofgoods at a lower cost.

Nick Allen is editor of SupplyChain Standard - the new name for

Logistics Europe. Supply ChainStandard organises the EuropeanSupply Chain Excellence Awards

and contains the official journal forthe European Logistics Association.

For more information visitwww.supplychainstandard.com

An order ofmagnitudeChoosing to fully automate a warehouse is a big deal.Capital is allocated and the project is implemented –once it’s in place it had better be right. So every aspectof the future demand patterns of the business have tobe anticipated and planned for. The risks are great, butthen, so are the rewards. BY NICK ALLEN

LOT OF BOTTLE

Quinn Glass, a leading manufacturerof glass containers for the food andbeverage industries has substantiallyextended its production, filling andstorage capacities in the UK. The plantproduces in the region of four millionbottles per day, equating annually tomore than 1.3 bn units. Of the overall70,000 m2 site footprint the area ofthe high bay warehouse itself meas-ures 180 x 290 m, corresponding insize to the equivalent of seven footballpitches. If the storage capacity of overa quarter of a million pallets wereplaced end to end, the resulting queuewould be approximately 335 km inlength. Stöcklin Logistik was the gen-eral contractor and integrated theentire conveying and storage.

� 24 stacker cranes handle over1.3bn units a year at Quinn Glass

� Construction of one of the largestautomated warehouses in Europe at thenew production facilities of Quinn Glassin Elton, near Liverpool

� Nick Allen, editor of Supply ChainStandard

� The project needs to be given a hugeamount of discipline by both client andsupplier says Mike Cogger, Knapp UK

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The cost versus reward equationof automated warehouses con-tinues to defy resolution for many.Companies tend to expect greatthings of their newly automatedwarehouses, from improved pickingaccuracy to faster throughput andbetter staff utilisation, and general-ly they find they can indeed handlelarger volumes more quickly andaccurately. But, even if the new sys-tems cope adequately, there is oftena sense they are not delivering totheir highest potential and, overtime, that their contribution to per-formance is becoming degraded.Rarely does automation result in ameaningful reduction in manpower.

As experience shows, the risks ofautomation are high. In the firstplace, the investment is substantialand the payback period long. Fur-thermore, automated systems haveto be designed specifically to thecustomer’s requirement and theyare inherently inflexible. They can-

not easily be adapted when volumesor products change or when thesupply chain pushes new demandsonto the warehouse. In a conveyorbelt system, there is the constraint

of pre-determined capacity and,with fixed equipment, space forexpansion is often a problem.

The control system is anotherarea of risk. It is a brain of many

parts and if the parameters areincorrectly set, there will be anuneven spread of activity acrossthe operation, leading either togridlock or inadequate throughput.The system designer and ware-house solutions team may get theinitial balance about right but thenit is passed onto the operationsteam and, invariably, they cannotfully understand it. As a result,there is a drift towards sub-optimalworking.

Yet, all of these difficulties couldbe substantially reduced if man-agers modelled the automatedwarehouse in a risk free computerenvironment at an early planningstage. Specialist software is avail-able that allows users to run anynumber of ‘What if?’ simulations.These help them identify the scaleand mix of automation required aswell as the control system parame-ters necessary to achieve optimalperformance; then as increasedthroughput impacts performanceacross the warehouse and into theyard outside, helps them establishhow best to meet new needs.

Some companies, particularlythose handling large volumes, arecorrect to anticipate strong rewardsfrom automation but they shouldembrace the opportunity of simu-lation to reduce the risks andachieve a return on their invest-ment more quickly.

Robin Vega, managing director,Cirrus Logistics

www.cirruslogistics.comwww.classwarehouse.com

Reaping the Rewards ofWarehouse Automation

Content just getting by? Or do you want to get ahead?Register for FREE tickets to Logistics Link South by visiting www.logisticslink.co.uk

Brought to you by the publishers of:

� Inside a Class 9 warehouse

Adecade ago, it was mainly liti-gation-conscious food manu-facturers and pharmaceutical com-panies who switched to easy-to-clean plastic in line with ever-tighter health and safety regula-tions. Since then, the market hasevolved rapidly.

“Successful businesses have tobe ahead of the game,” says JimHardisty, MD of the UK’s fastest-growing plastic pallet company,goplasticpallets.com, “in just a fewyears, the benefits of dust-free,mould-free and pest free plastichave become the accepted norm inultra-clean, closed loop opera-tions”.

Exporters made nervous by thenew regulations on wood packag-ing have also discovered that light-

weight ISPM15-exempt plasticalternatives designed for one-waytrips can be as cost effective aswood. There are other benefits too,as Hardisty explains, “plastic pal-lets aren’t at risk of beingimpounded for weeks by officialswho doubt the authenticity of newor unclear markings.”

In fact, plastic pallet manufac-turers have responded to thesechanges by developing a wholerange of innovative new products;nest-able, rack-able, full perimeter,non-perimeter, lightweight, medi-um weight, super hygienic, anti-static, recycled, non-slip. Hardistysays: “We are able to source thesenew products from manufacturersaround the world, we hold thewidest range in stock in the UK and

deliver within 24 hours.” Expertspredict that higher timber costs andshortages are set to continue andthe industry’s association, Timcon,have warned suppliers of woodpallets to ‘quote realistic prices andlead times’. Hardisty says that thisisn’t a problem for his customers:“In the past, cost may have been anissue,” points out Hardisty, “nowwe have products that are seriouslycompetitively priced. On top ofthat, wooden pallets aren’t expect-ed to last more than two yearswhile most of our products have alife span of 10-15 years. Plasticpallets offer a serious return oninvestment.”

For more information:www.Goplasticpallets.com or call

01323 744057

Plastic moulds a newlook pallet market

The rising price of timber is the latest development tointensify the battle over market share in the palletindustry. This follows the recent introduction of strictnew regulations on wood packaging, known as ISPM15,which significantly boosted sales of plastic pallets

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What do we actually mean whenwe talk about logistics? As adiscipline, it covers so many differentareas. Many see it as the transportoperation, others as domestic distri-bution, while some view logistics asthe management and co-ordinationof a business’ entire supply chain.

Many would outsource, automati-cally, a businesses’ transport divisionand lots of organisations would seekexternal partners for the wider pic-ture of domestic distribution. Yetonly a minority, at the moment,would seek to outsource the efficientrunning of their entire supply chain,including the care of ‘stock’. It is inthe context of the complete supplychain that business must see the term‘logistics’; it is that fundamental tothe successful running of a business.

Utilising this wider definition oflogistics, the question of whether out-sourcing is the correct route is a fasci-nating one. Yet the arguments for itare compelling and the first of those isthe reduction of cost. One of thequickest ways to reduce fixed costs isthrough the reduction of stock. Animaginative logistician should beproactively searching for initiatives toimprove both stock turn and reduceinventory for a client. Because they’vedone it again and again, acrossnumerous continents and in manydifferent vertical market sectors,experienced logistics personnel are anextremely valuable commodity.

Indeed, organisations should belooking to make cost variable ratherthan fixed, for example by exploit-ing shared multi-user warehousefacilities, meaning that costs can belinked directly to product sales. Inaddition, firms in tandem with their

logistics partner, should be aimingto move as many functions as possi-ble to the point of source; we are inan age of globalisation and thelogistics functions should be makingthat wider stage work for the per-former. Operations such as qualitycontrol, pricing, fitting, coding andlabelling can save significant cost,not just through cheaper labourrates but also via a far more efficientsupply chain overall.

Yet, while cost stabilisation andreduction is important, customerservice is critical to any business –and the logistics function plays aninvaluable role in that respect. Bythe logistics operator managing sup-pliers more effectively, the end cus-tomer will benefit by getting his orher goods on time and in full. This isbecause the logistics operator has adelegated obligation to not onlydeliver but also reduce damage ratesand ‘picking’ inaccuracies that mayhave been inevitable when the func-tion was in-house.

So, what should an organisationbe looking for from a logistics part-ner? It is vital that a company picksan organisation that understands itsneeds and is on the same wavelengthfrom a cultural perspective, be thatgeographical or in terms of the verti-cal market sectors in which the com-pany operates. Of course, demonstra-ble expertise is paramount. There aremany competent logistics operatorsin the marketplace – so pick the onewho understands your business andyour industry.

Outsourcing the logistics operationbrings so much scope – and can go asfar as a customer wants it to, includ-ing assembly. So, while outsourcing

is relatively mature in the UK market-place – and more so than in otherareas of Europe, it can still go furtherand many more organisations shouldbe benefiting from its imaginativeexploitation. The only limiting factoris what a customer feels is core to itsoperation and skill-set. Anythingother than that is up for grabs…

Outsourcing Logistics – logically speakingJamie Cuthbert, managing director of Geodis UK, takesa look at the question of outsourcing of the logisticsoperation by a business. But he thinks that before thepros and cons are tackled, it’s important to get anactual definition of the word ‘logistics’. It seems tomean different things to different people…

Over the next few weeks business-es with an obligation under thenew WEEE legislation will be focus-ing their minds on their choice ofcompliance scheme. By mid-March,all companies affected by the newenvironmental laws will need to reg-ister with one of the schemes set upto administer and discharge theirmembers’ responsibilities under theWEEE regulations.

However, while there are a host ofregulatory and data managementissues that should not be underesti-mated, the biggest cost of WEEE willcome from transport. Recent studiespredict that as much as 60 per cent ofall WEEE costs will relate to the collec-tion of discarded product. And ourexperience supports the view that pro-portionately these costs may wellincrease as time goes by with the costof recycling reducing as processingcapacity increases. Clearly, getting thelogistics element of WEEE implemen-tation right is a key business issue.

It is therefore surprising that whilemany businesses have already pre-registered with one or more compli-ance schemes to hedge their bets onwho will offer the lowest rates, farfewer have taken the time to consid-er the finer detail of the logisticschallenge created by the WEEE leg-islation. Effective logistics will notonly lead to lower costs but, whencollections are to be undertakenfrom business premises, can alsoenhance the customer’s experience.

Many businesses believe that bypre-registering with a compliancescheme, they have effectively passedon their WEEE obligations to a thirdparty. This attitude could proveproblematic for businesses that havenot carefully thought through thepractical implications from a logis-

tics and customer service perspec-tive. A poorly executed collectionfrom one of your customers canleave a lasting impression on yourbrand.

Some products affected by WEEEcould fit into a simple returns enve-lope. However, specialist kit such asindustrial equipment, medicaldevices, imaging equipment andautomatic vending machines are justfour examples of objects that would

require specialist knowledge to safe-ly transport. Heath and safety hasreceived very little coverage whenthe implications of WEEE are dis-cussed, but the fact is that whethercollecting from a local authorityrecycling centre or an office, schoolor hospital safety needs to be thenumber one priority. Giving consid-eration to whether products are like-ly to be presented for collection onthe ground floor or not, are in a suit-

able container, are in areas wheremembers of the public circulate, orrequire specialist handling due totheir size or risk of hazard. Theirpotential for value recovery or re-useis another important considerationthat should be part of a professionallogistics solution.

For further information, pleasecontact Paul James, head of WEEE

services at DHL’s EnvironmentalCompliance Solutions.

Logistics:The overlooked element of WEEEMany businesses preparing for the implementation of WEEE have overlooked the important role – andpotentially significant cost – logistics could play inbringing the new legislation into force, explains PaulJames, head of WEEE services at DHL’s EnvironmentalCompliance Solutions

� Paul James of DHL’s EnvironmentalCompliance Solutions says it’s time tofocus the mind on WEEE legislation

NEWS IN BRIEF

3M’s HighJump Software meetsthe demand for multi-languagewarehouse management sys-tems in the UK With growingnumbers of Eastern Europeansentering the UK manufacturingworkforce, 3M Supply Chain Solu-tions has added a Polish languageinterface in the latest version of itsHighJump Software “Supply ChainAdvantage” product suite. Thesoftware’s latest release addressescustomer demand to run differentlanguages on different terminals atthe same site as well as including ahost of new platform capabilitiesintended to help global companiesroll-out the product across multi-ple countries and businesses.

“The adaptable architecture ofour software allows users tochoose the language they work in,so a Polish worker can work in hisnative language alongside col-leagues working in English. Cus-tomers tell us this improves pro-ductivity as well as job satisfac-tion” commented Hugh Murphy,UK Business Manager of 3M’sSupply Chain Solutions Division.

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Supply Chain Risk Managementhas received increased attentionin recent years from board roomdirectors however its roots go backfor thousands of years. In biblicaltimes Joseph managed to secure thefood supply chain for Egypt aftersome insightful forecasting of poten-

tial problems ahead! He was able toput in place a major warehousingoperation and tax system thatsecured supply during the 7 years ofhard times that “plagued” the ancientworld. However, supply chain pro-fessionals in more recent years havehad to deal with a variety of modern“plagues”, for example, 9/11, the footand mouth outbreak and hurricaneKatrina have all impacted on organi-sations and the global supply chainsthey are part of.

Research at Cranfield School ofManagement (i), sponsored by theDepartment for Transport, into theorigins of supply chain risk and vul-nerability identified the followingdimensions of risk in the supplychain.

Risks external to the corporationcan be found in disturbances to flowof product in demand and supply aswell as uncontrollable, environmen-

tal risk. Risks internal to the corpo-ration relate both to how the firmaddresses the external risks and itscompetence to plan and execute itsown business. These are companyprocesses, controls, mitigation andcontingency.

The latter two are internal driversthat can be put in place to compen-sate for some aspects of supply,demand, environmental, processand control risks. The absence ofmitigation and contingency is there-fore a risk in its own right.

Mitigation of Supply Chain RiskAn emerging role of supply chainmanagement is to identify and‘manage to mitigate’ structural riskwithin extended global supplychains – both external and internal.It must shape and deliver sourcing,product design, channel manage-ment, logistics networks and cus-tomer service that creates a differentkind of risk profile.

This new profile will inform man-agement’s choices in relation to theirmarket place and strategic develop-ment. This thinking will likely be atthe heart of any firm developing aBalanced Scorecard but supply

chain risk thinking introduces anentirely new risk agenda as a policyengine for the business.

Supply chain and logistics theoryhas relied in its development on thefollowing classic “headline” riskmitigations of inventory, capacityand dual (multiple) sourcing. Thereare variations on these themes, thatwhen combined, can help to miti-gate the risks that are no longersolved by the headline measuresoutlined above, for example:

Generic material inventory – thecompany commits to generic mate-rials, which it is confident, can beconverted into a number of productsor disposed of at market price. Thisreduces the lead time to procurematerial and make the products, soincreasing responsiveness

Capacity booking with postponedordering where the company com-mits to manufacturing capacity for arange of products to be made by thevendor. The actual commitment interms of SKU (Stock Keeping Unit)and quantity is made based on thelatest forecast just before the runstarts

Postponement – the design andsupply of manufactured parts that

Supply chain risk management: themanagement of 21st century plagues!What does the Bible tell us about supply chain risk?Professor Richard Wilding, explains

With greenhouse gases andexhaust emissions growingcauses of concern and health andsafety legislation demanding thehighest levels of welfare within theworkplace, a forklift truck’s ‘green’credentials are a major considera-tion for today’s truck specifier. Andwhile, in recent years, there has beensignificant progress in both thedesign of ‘clean’ IC-engine powered

trucks and the control of exhaustemissions, more and more compa-nies are seeking more environmen-tally-friendly fuel sources for theirforklift fleets.

Natural gas is regarded by many asthe world’s cleanest burning fossilfuel and over the last decade or sosales of lift trucks powered by Com-pressed Natural Gas (CNG) have beenenjoying steady growth. Accordingto Benchmark Research’s highlyregarded survey of the lift truck mar-ket, some 11 per cent of all counter-balanced trucks sold in the UK during2005 were CNG-powered and thisfigure is expected to continue to rise.

Because it contains significantlyfewer harmful pollutants than otherfuels, CNG exceeds all current andanticipated indoor and outdoor airquality standards. It offers signifi-cantly reduced air pollution since itproduces little smoke, odour or car-bon dioxide emissions and, in addi-tion, carbon monoxide emissionsand other exhaust hydrocarbons arereduced. Furthermore, CNG is virtu-ally free from lead, sulphur particlesand aromatic hydrocarbons that

cause general air pollution. In sim-ple terms, all of this means thatexhaust emissions from CNG-pow-ered trucks are so low that the truckscan be operated both outside andinside a building without puttingstaff at risk or creating an unpleas-ant working environment.

In addition to offering greatlyimproved workplace air quality,CNG-powered forklift trucks’ per-formance characteristics and run-ning costs also compare favourablywith the more conventional liquifiedpetroleum gas (LPG) and battery-powered alternatives.

The process for ‘topping-up’ aCNG-powered truck is relatively sim-ple and, while set up costs must beconsidered, the long term pay-backfrom CNG means that truck operatorscan achieve sizeable cost savingsover the lifetime of their fleet – evenallowing for the installation costs ofstorage and compressor facilities.

The actual refuelling operation isextremely safe. It is a sealed processso there are no hazardous spills andthe operator does not need to wearspecial protective clothing. Also,because the fuel is delivered under-ground via the national gas supplynetwork, the need for hazardous fueltanker deliveries is removed.

“Safety is a vitally important fac-tor in the workplace and neither per-sonnel nor product safety can becompromised by the presence of lifttrucks,” says Tom Pickering, productsales manager of Yale Europe Mate-rials Handling, which includes CNGpowered machines in its range.“Since CNG is lighter than air andhas a narrower flammability rangethan LP Gas and diesel, accidentalignition is almost impossible.

Yale supplied CNG-poweredtrucks to one of the earliest convertsin the UK, Bulmers – the Cider mak-ers. Based in Hereford, the companyfirst took delivery of a fleet of CNG-powered counterbalanced truckssome five years ago.

Worldwide, there are more than1,000,000 vehicles operating onCNG and despite the fact that publicrefuelling stations remain scarce

Power shiftSignificant progress has been made in the design of‘clean’ engines and the control of forklift truck exhaustemissions but, with no let up in the amount of newenvironmental legislation emerging from Europe, truckusers are seeking more eco-friendly fuels to provide agreen logistics environment

� Richard Wilding looks to biblicalinfluences to manage supply chain risk

AT A GLANCE: BENEFITS OF CNG

Clean• No smoke or odour• Virtually lead-free• Reduced levels of Carbon Dioxide• Reduced levels of carbon Monoxide• Other exhaust hydrocarbons reduced

Safe• CNG is lighter than air, thereby eliminating fuel puddles at ground level,

which can be ignited• CNG containers incorporate special vents, which overcome excessive pres-

sure, build up if exposed to fire• CNG has a narrower flammability range than LP gas or diesel making it less

likely to ignite

Low maintenance levels• CNG produces less engine stress resulting in longer engine life, reduced

maintenance and longer service intervals

Performance• The performance of CNG powered trucks compare favourably with other LP

gas models• A full CNG tank supports a typical eight hour shift

Cost• Natural gas cost is comparable with LP gas• Rates are stable – unlike other fuel sources• Costs are minimised – you pay for what you use

� Eco-friendly: a Yale CNG-poweredcounterbalance forklift truck

13

can be configured or localised in thedestination markets. This enablesgeneric parts to be directed to wherethe demand is and avoids productobsolescence. It also reduces inven-tory levels in the chain as a whole

Consolidation / deconsolidation /speed management – logistics oper-ations that can identify, combineand route products through thechain to increase the frequency ofshipment and reduce unnecessarytime through the chain.

The net effect is to make the chainmore responsive, increase availabili-ty and reduce inventory risk.

Cranfield School of Management –“Creating Resilient Supply Chains:A practical guide” Cranfield Schoolof Management & Department forTransport (ISBN 1 861941 02 1)2003

Richard Wilding is Chair in Sup-ply Chain Risk Management atCranfield School of Management andhosts the Cranfield Supply ChainRisk Forum

www.supplychainriskmanage-ment.co.uk he can be contactedthrough www.richardwilding.info

(although more are being introducedat motorway service stations), manyhaulage operators are being temptedby massively reduced running costsand significant tax incentives toswitch a proportion of their lorryand van fleets to CNG. With theirown depot-based refuelling facilitieson-site these companies are turningthe CNG for their forklift fleets ingrowing numbers.

There is growing emphasis on theneed for warehouse and distribu-tion centre management to modifythe environment in which lift trucksoperate to ensure that the risk of aserious mishap is minimised.

Factors such as training, supervi-sion, truck maintenance and com-pliance with instructions are, ofcourse, important measures toreduce accidents, but workplace lay-out is increasingly perceived asplaying a crucial role in promotingon-site health and safety.

Ill-designed and dysfunctionalindustrial environments are nowaccepted as a significant contributo-ry factor to accidents. Managementmust be able to demonstrate thatthey have undertaken a thoroughrisk assessment at their facilities toensure that their site is laid out in away that minimises danger toemployees and visitors alike.

In truth, it is probably only possi-ble to design a safe environment

when the cause of truck-related inci-dents is known.

A number of studies have shownthat most fatalities occur whentrucks overturn, but the most fre-quent forklift accident types report-ed involve pedestrians being struckor run over by a truck. Problemsoften arise when workers step outfrom behind things – such as lorriesparked in a yard – giving the truckoperator insufficient time to stop.Poor visibility (for pedestrian andtruck operator alike) and lack ofmanoeuvring space are also fre-quently cited as major contributorsto pedestrian injuries. It is highlydesirable therefore to separate sitetransport from pedestrian whereverpossible. Of course, complete sepa-ration of pedestrians from FLT work-ing areas is always a headache whenspace is at a premium - but it can,and increasingly must, be done.

Managing for safety is aboutreducing risks and every employer

has a legal obligation to take steps totry to ensure that accidents areavoided through ‘risk assessment’.Failure to apply due diligence tosafety considerations can now landcorporate bodies in court onmanslaughter charges and manag-ing directors in prison.

The Corporate Manslaughter andCorporate Homicide Bill was intro-duced to the Commons shortlybefore last summer’s recess. Whenthe Bill finally becomes law it is like-ly to allow senior managers within

an organisation to be prosecuted if amember of that company’s staff or aperson visiting the company suffersa fatal accident on site.

Whether or not the UK reallyneeds a Corporate ManslaughterLaw could be debated at length buthealth and safety matters – alreadyhigh on the corporate agenda – arelikely to be the focus of even greatermanagement attention once the lawis passed.

While the majority of warehouseor distribution centre managers will

Make room for safetyPlanning the use of space in the yard can promotesafety, writes Bernard Molloy, managing director oflogistics consultancy 3B Net-Works

TELETRUK

JCB believes that one simple way toachieve total separation - in the yardat least - is to only load curtainsiderlorry trailers and flat beds from oneside. The company produces a lifttruck designed to make this possible.Called a Teletruk it differs from tradi-tional counterbalanced forklifts inthat, instead of the conventional ver-tical mast, it is equipped with a tele-scopic boom.

“Large goods vehicles that are load-ing or unloading within a site or yardmake natural obstacles to visibility. Iflift trucks have to travel to both sidesof a lorry to pick up and put away aload they have a blind spot every timethey negotiate a manoeuvre thatentails passing the front or rear of thevehicle. This brings a greater chance ofaccidents involving not only othertrucks but also pedestrians, saysBernard Molloy of 3B Net-Works. He

adds: “With a Teletruk, when loadingand unloading curtain-sided vehicles,for example, only one curtain needs to

be opened and flatbed lorries can beparked against a wall – instead of inthe middle of the yard.”

� A JCB Teletruk loading from one side helps create space in a yard

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want to run a safe operation, it isoften the case that an accident is thefirst trigger to review their proce-dures. The provision of pedestrianonly areas in the yard is an excellentway of demonstrating that a com-pany has taken a pro-activeapproach to site safety and imple-mented remedial action before anincident has occurred. With evenmore stringent CorporateManslaughter legislation on thehorizon, this seems a particularlysensible approach to take.

To the purist, a supply chain thatcontains large warehouses hasfailed in its aim to keep businesson the move. For warehousedesigners, including pragmaticarchitects and engineers, suchconcentrations of product and itsmeans of transport are an opportu-nity to demonstrate their skills insustainable design.

Sustainable thinking is clearlynot limited to the warehouse build-ing envelope. For example, theenergy required to run the ware-house can be largely derived for themotion of the goods vehicles intoand out of the site. Electro-kineticramps, which convert the motion ofpassing trucks into electricity, are atan advanced prototype stage andare expected to be adopted bydesigners and warehouse operatorsalike.

The electricity generated fromsuch devices, up to 10kW per unit,would be channelled into the oper-ation of fork lift trucks, lightingand office equipment.

The vehicles themselves wouldbenefit, since electricity generatedfrom their motion could be used topower trailer refrigeration systemswhilst they are being unloaded andreloaded.

Experience shows that slightlyhigher capital expenditure canoften be justified by lower long

term operating costs. An example isthat the installation of modernlighting and lighting control sys-tems – nominally a more expensivesolution - has a payback of lessthan 2 years in comparison to tradi-tional lighting options.

The working conditions of ware-house staff also attract the design-er’s attention.

Warehouses contain space abovetheir working areas that is used forproduct storage, but that noemployee will ever enter. The mostefficient space heating concepts,such as radiant gas fired heating,require about 10% less energy thancomparable convection heatingsolutions, and can be used to deliv-er comfortable working conditionsfor warehouse personnel withoutexcessive wastage.

Large buildings have intrinsicallybetter heat loss performance thansmaller buildings, but the majorityof heat loss still escapes through thewarehouse doors. A package com-prising heat recovery systems, doorseals and insulation can reduceventilation heat losses by up to 60per cent.

A modern design can produce awarehouse that consumes up to24% less primary energy than abuilding designed less than tenyears ago.

But our supply chain purist isn’tfinished yet. Why should thesestocks exist at all? Has the manu-facturer considered the most sus-tainable means of transport? Theaverage truck on British roads isonly 50% full. Why is that?

At Arup, logisticians and design-ers work together with experienced

project managers to design anddeliver sustainable supply chainsolutions. The integration of opera-tional and design disciplines pro-duces design teams with an unri-valled insight into the end usersneeds and the global delivery capa-bility of one of the world’s leadingconsulting groups.

So what does the future hold? Arup’s designers have seen anincrease in demand for automatedwarehouse solutions in WesternEurope and North America, whereconsumers are driving largeincreases in the range of goods thatretailers carry.

High growth nations such asChina have a great appetite for sus-tainable design solutions. Arup aredesigning entire eco-cities, incor-porating their latest thinking intothe sustainable logistics infrastruc-ture that will serve up to a millionresidents. Smooth delivery mecha-nisms. Efficient use of transport.Low emissions, maybe even zeroemissions one day.

Arup’s designers are shaping abetter world.

Andrew GoughSenior Logistics Consultant

www.arup.com/logistics+44 (0) 121 213 3402

The sustainable warehouse:Greening the industryModern supply chains spin their webs over continents, seeking to maintain the movement ofgoods, information and funds. Products travellinggreat distances to reach their eventual markets haveto halt somewhere though, often to meet up withother goods that have been manufactured elsewhere

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Logistics Link South covers allfacets of the supply chain with over110 market leaders exhibiting everyproduct, system or service youcould possible need, whether youare running a warehouse, fleet oftrucks or even a store room or van.Not only that, you can park yourcar at Sandown Park and be in theexhibition hall within 3 minuteswithout any of the hassle and costsassociated with other venues.

New for 2007 will be a series offree seminars presented by leadingexperts in logistics to ensure youleave with plenty of insight, ideasand plenty of information. Theseminars will cover topics rangingfrom RFID logistics applications,measuring truck fleet performance,driver management KPIs, ware-house contracts, using technologyto drive down dispatch costs torecruitment in logistics. There willalso be a voice picking demonstra-tion by Psion Teklogix runningthroughout the show. For the up-to-date seminar schedule, please visitwww.logisticslink.co.uk

Keep your business ahead of thecompetition by meeting face-to-face with the diverse exhibitor baseranging from supply chain execu-tion to contract warehousing anddistribution along with a host ofsolutions covering areas such asmaterials handling, racking andshelving, wireless technology, vehi-cle fleet management and telemat-ics, packaging, printing, waste andrecycling.

Materials handlingForklift trucks, conveyors, pickersand other materials handling equip-ment will again be very prominentat Sandown Park with Yale Europe,Gardner Industrial Supplies andHerts Mechanical making their

debut alongside long-standingexhibitors including Aisle Master,Briggs Equipment, BT Rolatruc,Crown Lift Trucks, Knapp, LindeMaterial Handling, MacDonaldHumfrey, Narrow Aisle, TransliftBendi and Viscon. In addition thereare ancillary suppliers such as Log-IT Systems with technology toreduce trucks costs, Traka withMHE control and auditing and Pow-ercell with batteries.

Supply chain softwareNew exhibitors to Sandown Park,2Clix Software, Consafe Logistics,

MiS Logistic, Radio Beacon, Sybaseand Vianetic will join other leadingsoftware suppliers to demonstratehow they can ensure that logisti-cians have greater control ov