Wednesday 28th Sep 2016 - Logistics Manager

New ways of thinking

Companies bring in consultants for a range   of reasons, but perhaps the most valuable is to bring new thinking to a business problem. Alex Whiteman reports.

First published in Logistics Manager, August 2015.

First published in Logistics Manager, August 2015.

No business wants to remain stagnant, but sometimes it can be hard to pinpoint exactly which direction you not only want to head in but which direction you should head in. Fortunately there is a group of people out there that believe they can help you over this hurdle, experts they may say: logistics consultants.

Michael Marienfeld, managing director of The Logistics Business, says that consultants bring together knowledge from a variety of fields.

“Consultants brings a new way of thinking to companies,” says Marienfeld. “We bring retail thinking to the automotive sector and, from this, we innovate.”

Jack Pool, managing director of Districon, partner to Oliver Wight, agrees, noting that consultants bring a multitude of skills to a company: “The support provided by consultants brings flow into an organisation by adding smart, intelligent, pragmatic solutions,” he says. “Pragmatism is vital to consultants and, in particular, to us which is why we have existed for 40 years.”

The Logistics Business specialises in logistics in supply chain activities, with an equal split between the two. The bulk of its logistics business focuses on transport and warehousing for the retail, automotive and pharmaceutical sectors.

“We also work with some specialists,” says Marienfeld. “We have provided support to a firm of boat builders.”

Marienfeld and his consultant contemporaries claim to be able to cover the areas that in house staff will likely lack the resources or skills to deal with.

“How often do you design a warehouse?” asks Marienfeld. “We have done 250 in the last decade. We also develop these skills continually, and having worked across a broad range of industries, whether pharmaceuticals or boat building, we bring an innovative, outside trail of though into a business.”

One of the claims made by most consultants is that they have the ability to reduce a company’s expenditure.

“Consultants drive cost out of the supply chain,” says Jack Pool. “It is our key selling point.”

Andy Keith of Total Logistics says that Total forensically analyses each constituent part of a project it works on: “If the overall project has a low return on investment, we know which aspect is failing and strive to fix this.”

 

Measuring ROI

Of course, what about measuring the return on investment of a consultancy? Simon Terry, CEO of 4C Associates says that this can be incredibly easy sometimes, depending on the project being worked on.

“For instance,” he says, “If we are simply helping to negotiate a new procurement contract, the client can see the cost before and the cost after.”

Likewise, says Marienfeld, if a consultant is assisting in labour management things like picking performance can be evaluated to gage the impact a consultancy has had.

“The difficulty,” says Terry, “comes when we are have been tasked with improving, say, service capability – but more often than not this is a goal the client has set and believes is imperative, so measurable ROI may drop down the pecking order.”

Aside from assessing value, consultants profess to a provision of added value. However, Keith asserts, this is project dependent: “We get through work quickly due to our vast reserves of knowledge,” says Keith. “Reduction of risk is what we are here for, and that in itself is an added value.”

In 2001 The Logistics Business was called in to by a bank to restructure an SME’s business as the bank was concerned the firm was not moving in the right direction. Marienfeld says that his team succeeded in assisting this turn around.

“Two years ago, we were called in by this no longer so small SME,” says Marienfeld. “They had expanded and were looking to build a new warehouse.”

After assessing the operation, Marienfeld and his team informed the firm’s management that a new warehouse was not necessary, rather the issue could be resolved with a change in stance.

“The firm needed to refocus on areas it had lost focus on,” he says. “The management accepted this assertion and were at not having to build a new facility.”

And this is the added value that consultants bring, an ability to assess situations from an outside perspective and increase cost savings – to go beyond the remit that they are hired for.

 

Viewpoint: Consulting the big boys

A consultant’s remit may change depending on the size of the client company, but all companies will find themselves in need of an outside skill-set, points out Michael Marienfeld of The Logistics Business.

Likewise, Andy Keith of Total Logistics says that no one has the resources to handle all projects.

“The larger firms will tend to have a team of experts for on-going operations, but when a new project comes along, especially a particularly large one, they will have an interim team of consultants for planning implementations,” he says. “All the team at Total have come into the role having first had operational responsibilities.”

Total Logistics pools this depth of expertise, which collectively equates to more than 100 years.

Simon Terry of 4C Associates, echoes the views of Marienfeld, noting that the type of work carried out by consultants tends to change the larger the client becomes.

“The work we do, of course, alters to suit the clients’ needs. Smaller firms tend to have less expertise due to their size, and it is this expertise that SMEs go to a consultant for.”

As examples, Terry says that while an SME may have logistics expert it can lack a procurement expert: “A consultant marries these two things together with outside knowledge.”

However, says Terry, as a firm gets larger its wants will change. Specifically, Terry cites augmentation of new projects.

“For instance, we have worked with food services companies that you think would have distribution expertise,” he says. “But often they lack the depth you may expect. We have provided this depth to firms with a value in excess of £1bn.”

Managing director of Oliver Wight partner Districon, Jack Pool, says that the view consultants are for smaller firms is nonsense: “There are larger firms that have in-house intelligence and believe they do not need the help of others,” he says. “But they do, consultants provide faster analysis.”

Marienfeld concludes by stating that 15 years ago The Logistics Business worked with an SME that has since grown to a pan-European operation business with in seven countries.

“That customer came back to us to seek our assistance in a major new project,” he says.

 

Case Study: Reworking Nestlé’s warehousing

In the UK, the Nestlé UK business had traditionally operated from three separate distribution sites: Bardon in Leicestershire; Scunthorpe in Lincolnshire and York in North Yorkshire.

In the light of one of the contracts approaching review and the end of lease agreements at two of the sites, Nestlé decided to review its warehousing and distribution strategy in the UK, turning to Total Logistics to undertake a thorough and independent assessment of its current and future supply chain needs.

Ian Hill, director of logistics at Nestlé UK, says: “For many reasons, we had reached a point where we were faced with various options on our three-site strategy. The time was right to bring in a fresh pair of eyes to review our distribution network. With our complex mix of dry and wet goods, including water, coffee, confectionery and mix of perishable goods, we wanted to explore what options were there for us.”

While the York, Bardon and Scunthorpe sites handled foodstuffs, including water, confectionery, cereals and coffee, the latter also coped with the seasonal demands for confectionery products during periods such as Easter and Christmas. Scunthorpe also used different technologies to service the international export market, despatching product to Europe and further afield via deep-sea routes.

Whereas Scunthorpe was characterised by high-density, drive-in racking, with temperature and humidity controls, Bardon and York used automated high-bay storage units that did not require as sophisticated environmental management.

Peter Roan, partner at Total Logistics, says: “This project was complex from a supply chain modelling perspective, as it included not only an analysis of inbound and outbound flows, transport costs, road links and inventory issues, but also risk and service factors created by any new network proposed.”

Total Logistics developed an assessment tool to look at the impact of putting different business streams into the same or new facilities – for example, the benefit of keeping seasonal and export confectionery streams in the same facility, as they have largely counter cyclical storage needs, was a major consideration. Another key consideration was quality assurance, as a large number of confectionery items had to be stored at a temperature of 8ºC and 65 per cent relative humidity.

A further element to the assessment model included an analysis of transport and warehousing costs, including inbound and outbound flows. Particular attention was paid to the potential synergies that could be obtained by combining different streams to increase drop size, thus reducing the number of road miles and journeys required.

In all, 16 different scenarios were developed based on the existing facilities and other potential locations in the UK.

It was decided that a twin-site solution provided the greatest cost saving to Nestlé, while enabling it to improve flexibility and delivery performance to supermarkets and other key retailers in the UK and further afield. Owing to its central location and existing potential for development, it was decided that the Bardon site was the obvious choice to centralise supply chain operations.