September 21 2017 - 7:42 am

CASE STUDIES

Improving Efficiency of Automotive Distribution Network
Following a review of the Logistics function of this major car transporter operation following a decline in P&L performance a number of areas were identified to improve margins:
The available Main Fleet Car Transporter capacity exceeded demand following the loss of a major contract 12 months previously and the fleet size was overstated by 20% and 20 Main Fleet transporters were removed from Fleet strength.

The growth in out-based operating centres had been poorly controlled to an extent that 65% of available fleet was out-based across 36 sites . Over a six month period the number of centres consolidated into eight sites and the out-based resource reduced to 40%. This resulted in productivity improvements with an increase in fleet utilisation as the number of trucks parked up due to short term driver incapacity was reduced.

All traction was contract hired on a 7 year lease deal with a full manufacturers Repair and Maintenance package centred on 140,000Km per year per vehicle. By establishing a monitor of the average distance operated by each transporter analysis revealed that the trucks only averaged 108,000 kms per year. A renegotiation of all of the existing R&M agreements with the two major suppliers reduced operating costs by £0.2M per year.

The operating costs of the 2 car transporter operation were separated out from those of the Single Vehicle Move operation ( Platers) and it became evident that the 2 Car operation was unprofitable and was not a viable commercial offering. A decision was taken to reduce the operation by 50% and park up 20 leased Isuzu 2 car transporters pending disposal. Subsequently ,an opportunity to contract hire the surplus vehicles on a 12 month cost plus basis to a major Auction house was identified ,and the vehicles were redeployed and began to generate a margin rather than deplete margins.

A review of overhead within the Logistics function revealed that significant duplication of roles existed and a 30% reduction ( 15 heads) was achieved by redistribution of activities and flattening of reporting lines yielding a £0.4 M saving.
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