During that all-too-familiar morning gridlock, town centre motorists will as always be irritated by lorries: retailers need daily deliveries of new merchandise, those deliveries need – usually – to arrive first thing in the morning when customer flows are minimal and staff have the time to handle goods inward, and that means a great many trucks in the town centre at peak traffic times.
As traffic levels continue to grow so does managing the delivery problem for town centre retailers. Traffic congestion is not only irritating and polluting, it is also expensive. Fleet managers at distribution centres regularly have to contend with drivers missing their delivery windows because of traffic jams. At best, that can upset planned work schedules in the retail store – at worst it can mean a store manager refusing to accept a supplier’s delivery and the risk of empty shelves and the need to reschedule the load.
DHL Exel Supply Chain have been working on a highly innovative concept in partnership with Bristol City Council: the urban consolidation centre (UCC). This is an out-oftown staging post where retailer or supplier deliveries are consolidated into, a reduced number of full loads – ensuring that far less empty space is traveling into the city centre. These deliveries are made on cleaner vehicles at times convenient to the retail community and because the vehicles are full, far less vehicle trips are made into the city centre.
DHL Exel Supply Chain began working with Bristol City Council in 2004. Thanks to a grant from the EU’s Civitas transport management initiative, the council has been able to use a 7,000 sq ft warehouse at Avonmouth, some eight miles from Bristol city centre. Retailers – currently all in the non-food sector – have their supplies delivered to the consolidation centre instead of direct to their stores in the city’s Broadmead shopping area. This saves them time and aggravation as trucks coming from their regional distribution centres no longer have to waste time at the crowded service delivery areas at Broadmead or clog Bristol’s streets.
The consolidation centre operates 24 x 7 so companies have much more flexibility in scheduling their deliveries to Broadmead and save significant amounts of time in the process, so improving truck utilisation and enabling double shift operations. Currently around 50 retailers are using the consolidation centre and in total they have reduced the number of visits their vehicles make to the city centre by more than 70 per cent.
Suppliers, too, can deliver to the UCC. Currently most are dropping off goods for a single retailer but as the scheme develops we can envisage a supplier delivering goods for several retail customers at the centre which would then be re-caged and delivered along with other consignments for that store in a single drop at a time to suit them.
For Bristol City Council the UCC is also about much more than retail convenience. There are EU targets for controlling emissions of carbon monoxide and nitrous oxide, as well as particulate levels, and local authorities can only meet these targets if they cut the level of heavy goods traffic in their town centres. This is a pan-European requirement and interest from Germany and other countries in the UCC concept is high. The German Federal Ministry of Transport, Buildings and Urban Development has already launched a call for expressions of interest in the area of innovative mobility and transport solutions. The topics include logistics, urban areas and environmental impacts all of which relate to current consolidation activity. The call specifically includes the possibility of transferring successful pilot schemes to applications in Germany.
There is also pressure to create a better consumer experience in our town centres and that also means cutting traffic levels and taking vehicles off the road. It is now appreciated that some form of congestion control and road charging may be increasingly likely in the
medium term. Innovations such as the UCC concept, which forward-thinking councils like Bristol are now exploring, are vital to achieve these various targets – but we also cannot forget the commercial realities of such initiatives.
Thanks to the Civitas grant, Bristol was able to launch the UCC as a free service for a trial period and this certainly helped to launch the experimental project in its initial stages of operation. Obviously – going forward – DHL Exel Supply Chain and Bristol City Council are working towards the creation of a sustainable business model for using and operating a consolidation centre which couples the commercial challenges with the environmental and experiential imperatives.
For an operator such as DHL Exel Supply Chain, the opportunity to provide added value services at such a centre is one way to support the commercial model. In the fashion sector, for example, emphasis continues to be on floor-ready merchandise with goods hung on garment rails – ironed, tagged, labelled and with extraneous packaging removed – ready to move straight onto the shop floor. Providing such services at the UCC can ease the workload at stores or further back the supply chain in distribution centres helping to smooth supply chain peaks. In the grocery sector, too, retail ready packaging is fast becoming the norm and that can mean loading reusable display cages or ensuring smaller more frequent deliveries of goods that can be moved directly to the shop floor.
All retailers are under pressure to make the most profitable use of their space as possible – that usually means converting back room storage facilities to selling space – again reinforcing the need for smaller, more frequent deliveries.
Town centres are not the only areas where consolidation centres can help: both airports and regional shopping malls are also showing interest in the concept but for reasons other than the environmental ones. At airports, for example, there are infrastructure and access challenges that need to be managed. The Heathrow Consolidation Centre currently makes more than 600 deliveries a week to 220 retail stores and has been providing a high level of service to both land – and airside retailers since 2001.
At the Meadowhall Shopping Centre near Sheffield an accelerated response centre (ARC) has reduced response times for centre retailers and enabled low volume deliveries at the times the stores need them in to keep shelves full.
To succeed, UCCs must have public authority support as well as that of other key stakeholders such as the local Chamber of Commerce, shopping centre management, landlords and developers. There has to be willingness to tackle the congestion problem from local councils as well as investment and the effort needed to bring a town’s retailers on side. Creating and delivering a UCC tends to evolve over the longer-term: work on the project at Bristol began in early 2004 although planning and discussions had started some nine months before that. Political will is also a key requirement for delivering a project of this kind and it is important that political support and inclusion is created from the outset.
There is increasing interest from other local authorities in the Bristol UCC – both from the UK and Continental Europe – especially as they start to see the longer-term benefits and some level of RoI being achieved as part of the overall business model. At Bristol we are beginning to move towards a contribution model – we work with each retailer on a bespoke basis to understand the value created for them by using the consolidation platform and then create a contribution mechanism that is commensurate with the identified value.
Presenting the business case
These customers must in turn create their own business cases for continuing to use the centre. They benefit from better staff planning, compliance to tight delivery windows, off-site storage and drip feed replenishment on request, as well as floor-ready products. Suppliers using the centre also benefit from faster vehicle turnaround, reduced transport costs with more efficient vehicle utilisation and labour productivity and improved driver welfare. It is up to the host stakeholders to demonstrate the value of this product to the retailers and suppliers so that the UCCs can recover an appropriate level of contribution to make them commercially viable in the long term.
We have proven that the urban consolidation centre concept works very well in delivering the key environmental and consumer benefits required to justify its existence, particularly reducing vehicle traffic among participating users by 70 per cent within a single city centre – now, in partnership with all the stakeholders we have to move to the second phase of demonstrating a sustainable business case.
Chris Hudson is Account Director for Consolidation Centres at DHL Exel Supply Chain. He can be contacted at firstname.lastname@example.org