How To… identify savings & drive efficiencies in delivery fleet contract procurement

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Author: Wayne Shepherd 

Here, Wayne Shepherd, leader of National Sales and Business Development for ANC gives his top tips on the process for selecting partners to deliver accurate price comparisons and ongoing savings in delivery fleet service procurement.

Building efficiencies and cost savings in logistics and delivery management for any organisation is a complex challenge. Here, Wayne Shepherd shares his experience and insights on identifying true efficiencies for the business during the tender process and for the duration of a logistics and delivery services contract.

Rate cards won’t show you the true cost or value

RFIs have a prominent place in compliance, but beforehand it’s best to have subject matter experts  review the current logistics procedures to understand historical data, pain points and required outcomes.

Tender periods are an appropriate time for the business to thoroughly review processes, and logistics can offer substantial savings when well set up. As a procurement team you can challenge your logistics team to think differently. Internal logistics teams tend to brief procurement divisions on what they’ve been doing to date, but that doesn’t mean it’s the most efficient way of working.

When it comes to cost analysis, by comparing standardised rate cards you’re in danger of failing to calculate the total cost of ownership.  Where possible, do not ask suppliers to quote on the current incumbent’s model, as you’re going to receive quotes on a pre-determined solution rather than the best solution.

View fleet delivery providers as logistics/delivery consultants

Once a provider has satisfied your RFI requirements, don’t cut anyone out purely based on rate cards at this stage. Hold a discussion with those you deem to be potential providers, and challenge them to respond based on the outcomes you’re looking for. Look for a provider who’s willing to undertake a logistics process audit of your business, and then you can review their suggested solutions based on what you want to achieve through bespoke modelling. At this point of the tender, ANC sees itself as a logistics and delivery consultant and like many other providers, is happy to offer our services to review your processes.

Tender respondents may come back with recommendations on efficiencies that carry huge cost savings, such as loading dock management plans, procedures aimed at reducing demurrage, different fleet configurations, cut-off times for delivery zones and windows designed to create density and maximise vehicle utilization percentages. These will all have a significant positive impact on the total cost of ownership.

Realistic quotes require accurate data

We realise that procurement teams are faced with short turnaround times and other business restraints. Having access to all accurate historical data will enhance the offerings you can receive through the market engagement. Data accuracy is paramount for scoping and quoting.

Be flexible in your approach for greatest efficiencies

Don’t limit your thinking to feeling the need for a dedicated or full-time fleet, as the costs for ‘set-and-forget’ type plans are expensive. If your core fleet is designed to cope with your biggest days, by definition, you are overpaying on your low volume days. Your model needs to minimise its fixed cost component and build a variable top-up model to match your fluctuating volumes. Consider fleet sharing on longer or low-volume routes to bring down costs without compromising service quality.

True savings should evolve with the partnership

The tender process and account set-up are just the beginning of the journey to establish real value in a fleet delivery partnership.  Exercise caution with any provider who tells you they’ll have the entire service up and running perfectly from day one. Even with the best due diligence there will be ongoing learnings so be sure to look for a partner who is willing to be open and transparent, a partner who strives to deliver continuous improvement and share in these gains.

Creating a 360° review and recommendation process throughout the life of the contract is the best way to drive innovation and efficiencies, and at its best when managed by Category or Relationship Managers.

Putting a value on KPI management, including customer service

The service provider should be able to tailor KPIs to monitor DIFOT, demurrage, and any other key deliverables that enhance the end user experience and drive cost efficiencies. Delivery fleets are an extension of your business, your customer service and your brand, therefore all stakeholders should have input into KPI measurement. Look for suppliers who tangibly measure customer satisfaction and ensure this can be quantified for continuous improvement because “if it can be measured it can be improved.”

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About ANC

ANC is a privately-owned company specialising in dedicated fleet home delivery and dedicated fleet corporate delivery services in metropolitan areas around Australia.

ANC traces its history back to 1921, and today employs 800+ staff and contractor drivers across the country, with an annual turnover of $69million; making it one of the country’s largest Australian-owned fleet services.

Today, ANC provides critical dedicated multiple-person delivery teams for client’s last mile delivery to their customers home, business or work site. Clients include major Australian and international brands such as IKEA, Bunnings Warehouse, Telstra, Fuji Xerox, Fantastic Furniture, Laminex, Cement Australia and Bunzl, to name a few.

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