Optimising the supply chain

Aggregate Industries gains a high performance managed transport platform

Aggregate Industries (AI), produces a range of aggregates, ready-mixed concrete, asphalt and pre-cast concrete products as well as construction and surfacing services. Environmental responsibility is high on the AI agenda.  As part of its commitment to reducing environmental impact, the company knew it needed to optimise supply chain management processes. Their existing supply chain involved approximately 500 hauliers and a variety of local processes and systems.  With lengthy journey times, inadequate service performance and rising costs, change was clearly needed but proving difficult to deliver.

AI needed a company-wide solution to maximise operational efficiency, reduce empty miles travelled and cut logistics costs from £48 million per year.

AI was aware of TDG's existing transport management platform (4PL) with Corus, and approached TDG for a similar solution.  The ‘fit' between TDG and AI was good and the two agreed to build a ‘true' 4PL transport management solution, that is one where TDG would take purely a management role, with no assets of their own deployed.

In July 2008, TDG and AI entered into a partnership with the aim of saving over three million road miles per year and cutting carbon emissions by 12%.  The eight year contract covers the entire UK road transport operation for AI and is being rolled out to 69 sites nationally.

In order to give AI the confidence to enter into this arrangement, the two businesses worked together to develop a business plan.  This involved site visits, process mapping, modelling and many other cross business workstreams each undertaken jointly. 

These gave TDG the confidence that it could have a significant impact (base line savings of 10% were agreed), and allowed AI to see TDG staff in action.

After a two-month exercise, the business plan was signed off by the AI CEO in June 2008.

In November 2008, a new transport platform, managed by a TDG team, opened at Linby in the Midlands. This was an incredibly tight schedule and required a great deal of collaboration from both sides. However, the programme was implemented on time, on budget and to plan.

AI preferred hauliers, all of whom remained in place, were contracted to work for TDG, who co-ordinate their day-to-day activities using TDG's specialist IT infrastructure in order to maximise delivery efficiency. Drivers now have their own laptops, giving them access to up-to-date information and enabling them to view jobs in realtime. In addition, all the warehouse systems are linked, giving both the transport and warehouse teams access to the most current information.  The new state-of-the-art technology, which had already been trialled within TDG, gives greater business clarity for AI.

With access to key figures, order information, customer and supplier details, TDG are now able to oversee the entire operation from end-to-end and deliver a completely optimised solution.

TDG is now operating to four KPIs, including on time delivery, Health & Safety measures, customer service and continuous improvement. TDG and AI have set performance achievement targets, which TDG looks set to achieve. Should any results fall below the agreed levels, TDG take on the associated costs - which means minimal risk for AI.

Since the initial platform implementation and launch, TDG and AI have identified many areas for future development. Projects include production management developments, stock management initiatives, streamlining supplier operations and a pallet management programme.

Further integration projects are also being considered with other companies to deliver even bigger reductions in CO₂ emissions. AI is keen to push forward with industry-wide initiatives involving both customers and competitors, to reduce carbon emissions and costs. Through collaboration, they can see opportunities streamline the supply chain and reduce empty miles travelled. TDG's 4PL platform is a model that enables collaborative programmes such that shared benefits become a reality. 

 "Aggregate Industries were open with us from the start. They were keen to share any issues with us and we were quick to unearth any potential problems from the outset. In that respect, we were ideal partners - both teams were really driven to make this work," says Paul Hayes, 4PL general manager at TDG.

Bridging the knowledge gap

Conservative estimates suggest that the UK construction industry could achieve efficiencies in excess of £250 million by rationalising its approach to logistics, but transferring best practice from retail and manufacturing is a highly complex task.  TDG's new strategic partnership with construction logistics provider Wilson James seeks to bridge the knowledge gap by combining TDG's Fourth Party Logistics (4PL) capability with Wilson James's expertise in construction consolidation centres and site logistics. 

TDG already works with more than two hundred hauliers on behalf of Corus and Aggregate Industries and its 4PL approach has led to massive savings with the elimination of a million miles worth of unnecessary journeys each year. 

"We want to replicate a similar step change in the construction sector, " says Mike Branigan, CEO at TDG.  "4PL is the ideal methodology for construction, because it works by synchronising logistic solutions across different organisations within the supply chain."

Wilson James deliver savings and environmental benefits through its approach to construction logistics, which has been deployed on major projects such as Heathrow Terminal 5 and Bart's Hospital.  The company adapts proven logistics solutions from other industries to meet the needs of the construction sector. Its consolidation centres deliver programme certainty to projects, which would otherwise be vulnerable to delays. Combined with the focused handling of material deliveries and waste removal, the efficient flow of construction goods from a supplier to the building project workface is optimised, taking goods onto site on a ‘just in time' basis.

"Our experience is in supporting construction in demanding operational environments such as central London," says Gary Sullivan, managing director of Wilson James.  "We've proved that by smoothing the flow of materials over the last few miles to the work-face, we reduce project costs, risk and congestion.  This also improves the carbon footprint of a project. Through TDG, we now have an opportunity to apply the same rigour to the rest of the supply chain."

TDG and Wilson James will maximise the efficiency of the pre-consolidation supply chain to give an end-to-end construction logistics solution.

"Our centralised system creates a live window on logistics throughout the UK," explained Mike Branigan. "We currently use the information and tools to ensure optimum transport plans are created to reduce cost, improve service and give considerable environmental benefits. Working with Wilson James will allow TDG to expand this solution to more suppliers and determine the optimum method to deliver either direct into construction sites or through a consolidation centre".