Bigger lorries a mixed blessing
Andrew Tinkler, chief executive of Eddie Stobart, recently revealed on Radio 4 that he was talking to the transport secretary about plans to increase the size of company trailers by just under a metre. Obviously, this extension would translate into an increased load capacity.
Tinkler's argument was that it would reduce the number of its lorries on the road. This is certainly a laudable motivation. But what does it mean for the people managing supply chains and the planning of inventory levels?
To put Tinkler's idea into perspective, let me describe the dilemma one of our manufacturing clients faces weekly. For some of its customers, this business manages finished goods on the basis of vendor managed inventory (VMI).
That means its inventory planners manage the stock located in the customer warehouse, and the latter only pays as it uses it. But when replenishing the customer stock, the planners often ship some extra to fill the lorry, so they have to produce extra and procure more raw materials.
That means tying up extra cash, which they have not got! This business is moving away from optimising individual resources (like the lorry), to optimising the whole supply chain. The last thing it needs is even bigger lorries to fill.
Many companies are challenging minimum order and batch quantities to reduce stocks. They are slowly getting used to moving material through the supply chain in smaller (leaner) batches. This way, they can be more flexible to market demands. Yet Tinkler is offering to drive them in the opposite direction.
To be fair, Eddie Stobart tries to optimise routes and minimise the number of empty journeys by coordinating its customer needs. But not every logistics company is able to do so, especially when its trailers are client-branded. So do we need bigger lorries right now? As far as I know, supply chain managers have got more than enough dilemmas on their minds.
Hugh Williams
is founder of supply chain planning specialist consultancy Hughenden.
[http://www.hughenden.net]
