TDG’s seven year partnership with steel giant Corus launched it into what it considers its most significant venture in fourth party logistics. Corus was formed from the merge of British Steel and Dutch rival Koninklijke Hoogovens almost a decade ago, and was bought by Indian conglomerate the Tata Group last year.
Before the deal with TDG, made in 2006, Corus had 60 production and distribution sites operating across three divisions and multiple business units, and was forking out £76 million a year moving steel around the UK.
Without a centralised view of operations, empty trucks were passing each other on the road, duplicating journeys, and racking up expensive miles. What with driver shortages and fuel price increases putting pressure on costs, and environmental issues, Corus needed a partner who could provide the necessary technology and support to provide a solution which would also protect its established contracts with existing suppliers.
TDG was tasked with optimising Corus’ road transport services, which it did by creating a centralised planning platform, based in Scunthorpe, using its Integrated Transport Management system. This provided core management functions and generated best routes and loads through its analysis of Corus’ order pool.
One of TDG’s targets was to slash Corus’ transport spend. “The main crime of the old system was empty running,” says Mark Starosolsky, TDG-Corus business director. It increased efficiency levels by linking outbound journeys with return legs – combining the requirements of more than one Corus business unit.
Using trucks for round trips rather than single is more cost effective for Corus, and also benefits the third party hauliers, who don’t then have to find other jobs to maximise the efficiency of their own operation. As a result, vehicles are fully loaded 87 per cent of the time. One of the goals for this year is to double the number of core vehicles out on the road. The financial benefits have been significant, with weekly savings of around £70,000. Starosolsky says the central control plan, which took two years to develop, has put it well on its way to achieving the predicted annual savings of 7.6 per cent in transport costs.
TDG is currently developing a new product – the steel concept trailer project – to help reduce empty mileage even more. With the new trailers it predicts it will be able to make 44 per cent savings on loop journeys, cutting out 1,415 miles. The lead time is about ten weeks.
Applying the fourth party principle to the deal, meant existing working relationships weren’t disrupted. This came as a particular relief to the hauliers, whose initial scepticism didn’t last long.
“Resistance dissipated within the first few weeks,” says Starosolsky. The concern hauliers felt at the start was that the deal would entail more work for less money. “We took on the less pretty tasks from hauliers, which went down well. The only thing they stood to lose was their direct relationship with Corus.”
The first Corus site went live in August 2006. Now, 41 out of the total 85 sites have switched over to the platform. Roll out of the remaining sites will take place this year.
The Tata takeover, says Starosolsky, won’t affect the ground level. He expects more cooperation with the sharing of production technologies and other synergies and reckons it could also lead to wider transport movements.
TDG’s IT system enables staff to see the sequence of loads, delivery times, and details of each consignment. Once the system has all the details, it can recommend which transport company is best suited to make the delivery. It’s also planning to assess providing access to real time information for Corus’ customers.
The company is looking to develop more deliveries into Europe in the coming years.