“You’re mad, bonkers, completely off your head,” said Charles Dodgson’s Alice in Alice in Wonderland. “But I’ll tell you a secret. All the best people are.”
Sometimes it’s hard to know if challenging conventional wisdom is crazy or brilliant until hindsight reveals the answer.
That’s what happened to an exclusive kitchen manufacturer when circumstances forced them to act boldly while others were playing it safe. In this case, flexis AG was able to reveal what the future held for this customer’s plan with a proof of concept, and the results were surprising.
Logistics is a Strategic Asset
This story is about a high-end kitchen manufacturer that uses its private transportation fleet as a strategic asset. Like Amazon, they understand that delivery is the physical touchpoint of the supply chain, and it affords a powerful opportunity to create a connection with the customer.
The idea is as old as the milkman with his team of horses. In the modern context, the team of drivers and trucks that arrive with the much-awaited kitchen are a welcome sight. The truck that arrives with the company logo, the driver attentively addressing concerns, and sharing the customer’s delight as they receive their dream kitchen creates a memorable experience.
Compare that scenario to Brand X Logistics uncrating a shipment in a race against the clock. No apparent interest in you or your kitchen and doing the minimum so they can fly off to the next delivery.
The competitive advantage of a crafted face-to-face encounter is clear. Old-school sensibility never gets old and this strategy strengthened this manufacturer's brand.
Rules Can Suddenly Change and So Should Logistics Strategy
But things suddenly changed in 2020 when lockdowns ignited a supply chain wildfire. Volatility, shortages, bottlenecks, inflation, and fuel prices recalibrated the economics of operating a private fleet. Conventional wisdom became “play it safe.”
This kitchen maker's competitive advantage looked like it might become a liability, and there was no easy way out of this predicament.
- Outsourcing delivery to a third-party logistics firm was not an option.
- Production couldn’t relocate closer to customers.
- Offsetting higher costs with price increases would erode customer value and reduce demand.
- More economical transportation modes and equipment were limited.
- Shipment consolidations would degrade service with longer lead times.
Defying Conventional Wisdom Can Be The Best Choice
Playing it safe wasn’t an option either. There was little choice but to go back to the drawing board and change their successful logistics strategy. How could they know whether this was a crazy or brilliant decision?
They came up with a surprising idea, and if they could pull it off, it would be a significant improvement. The new plan not only preserved the company's competitive advantage, but also
1. increased profitability
2. downsized fleet size
3. increased productivity
4. improve driver job satisfaction
5. reduced fuel consumption and carbon emissions.
Here’s how the new plan would work for delivering kitchens from the factory in Germany to customers in Italy:
- The legacy process had fifteen trucks drive from the factory in Germany to Italy each week, each delivering their trailers and then returning.
- The new process drives five trucks from Germany to Italy, and the remaining ten trailers arrive in Italy by train.
- Each driver delivers their initial trailer from Germany and then swaps the empty trailer for a new one at the train station. The empty trailer is returned to Germany via train.
- Each delivery route begins with exchanging an empty trailer for a new one at the train station. These exchanges continue until no more trailers arrive by train.
- Each driver drives back to Germany with the final empty trailer ending the week of deliveries.
A Brilliant Plan Needs A Brilliant Technology Partner
On paper, there was a brilliant plan, but it wasn’t going anywhere without a technology partner that could resolve three critical issues:
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The new process was more complex than the existing approach, and they didn’t know if the technology even existed to support their requirements.
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Could defying conventional wisdom be jumping from the frying pan into the fire? They would need a proof of concept before deciding to jump.
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The new plan assumed that dependable, highly-trained drivers would be available, but a driver shortage made it difficult to find and retain drivers. The yet-to-be-defined solution would also have to make life better for drivers to attract and retain good drivers.
One-Click Optimization - The Ultimate Proof of Concept
Imagine optimizing every delivery route across the European continent with a single mouse click. That’s what this manufacturer wanted, and that’s what flexis demonstrated with ProfiTOUR, flexis’ routing optimization solution.
Few routing solutions currently optimize the level of complexity required in this case, let alone simplify it down to a mouse click.
- ProfiTOUR produces a weekly delivery plan for each driver, which begins with the driver departing on a Sunday night or Monday morning and arriving home to his family by Friday evening.
- Each driver delivers multiple trailers, and each trailer is assigned a delivery route with multiple stops.
- ProfiTOUR coordinates driver and train schedules to ensure delivery routes are completed so an empty trailer can be swapped to return to Germany with a new trailer arriving by train.
- Each trailer swap kicks off the next tour, which must be complete in time for the following scheduled exchange.
- A delayed train might rearrange the weekly plan for any affected drivers, even reallocating and splitting deliveries to maintain delivery commitments and trailer swaps.
- The operating costs and carbon footprint of each vehicle’s characteristics and driving conditions could be measured, adjusting routes to ensure profitability and sustainability goals are met.
- The end-user can also manually edit any detail in the delivery plan and run multiple what-if scenarios with a single mouse click to see how it impacts outcomes.
- Compliance with driving regulations like digital tachographs in the EU would be automatically factored into each route, preventing penalties and removing this burden from the driver and logistics planner.
- Drop-off hours, delivery windows, national holidays, traffic patterns, weather, road conditions, and equipment constraints are evaluated to reduce exceptions and wait time. This results in satisfied customers, trouble-free deliveries, and happy drivers who go home on time and frustration-free.
- Routes are directed through preferred border and ferry crossings to prevent delays. For example, a particular location may have higher throughput than others at certain times of the day for truck freight.
- Trailer capacity can be reserved for spare parts for ad-hoc deliveries to service depots. For example, 10% of the trailer space can be allocated to accept parts orders that trickle in over the week before a trailer is dispatched for delivery.
Conclusion
As supply chains continue to undergo change, companies must continue to adjust. Following conventional wisdom and the status quo is not a reliable standard for evaluating process improvements. Instead, find technology partners that provide proof of concept, user-configurable solutions, and modeling what-if scenarios.
flexis AG offers these capabilities and for improvements like optimizing vehicle routing, they can help a company decisively navigate challenges with a brilliant plan.
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