Key Performance Indicators for the Builders Merchants Sector

Benchmarking Guide

Acknowledgements
The following builders merchants took part in this benchmarking survey and are thanked for their participation:

Travis Perkins Group Wolseley UK Bradford and Sons Ltd Buildbase Ltd Long & Somerville Ltd UGS Ltd The BSS Group Saint-Gobain Building Distribution In addition, the Construction Products Association and Builders Merchants Federation are thanked for their important contributions.

Contents
1 Background
1.1 Measuring Performance in Your Own Business 1.2 What Should a Key Performance Indicator Be? 1.3 Which KPIs Are Right for Me? 1.4 External Benchmarking 1 1 1 2 4

The Builders Merchants Benchmarking Survey

2.1 The Nature of the Builders Merchants Sector 2.2 The KPIs 2.3 Survey Statistics

5 5 5 6

Survey Results
3.1 Number of Runs per Day 3.2 Number of Drops per Run 3.3 Kilometres per Drop 3.4 Number of Drops per Day 3.5 Value per Drop 3.6 Fuel Consumption 3.7 Fuel Used per Drop 3.8 Cost per Drop 3.9 Percentage of Contrained Loads 3.10 Deviations from Schedule 3.11 Time Utilisation

8 8 9 10 11 12 13 14 16 17 17 18

4 5

Summary The Builders Merchants Transport Efficiency Road Map

19

19

ii

Background

Every successful organisation needs to manage its assets effectively and can benefit from benchmarking its performance against that of direct competitors and those held to be excellent in its sector. The Department for Transport, through its Freight Best Practice programme, has supported a series of benchmarking surveys that have developed a range of key performance indicators (KPIs) in a variety of industry sectors. Already published are KPI survey guides for the following sectors: Key Performance Indicators for Non-food Retail Distribution Key Performance Indicators for the Food Supply Chain Key Performance Indicators for the Pallet Sector Key Performance Indicators for the Next-day Parcel Delivery Sector All of these publications are available FREE of charge from the Freight Best Practice programme website www.freightbestpractice.org.uk and from the Hotline 0845 877 0 877. KPIs used in external benchmarking are essential tools for the freight industry to understand and then improve its performance. They provide a consistent basis for measuring transport efficiency across the fleets of different operators, comparing like with like. This benchmarking survey, instigated by the Construction Products Association and conducted with their help and with the assistance of the Builders Merchants Federation, considers the delivery activities of builders merchants and provides KPI comparisons between the participating fleets. It aims to: Show participating companies how their own performance compares with that of others Highlight how the best operators in class are able to achieve their ratings Identify recommendations on how to improve efficiency

Operators in the sector, whether survey participants or not, can use this benchmarking guide to identify real opportunities to maximise transport efficiency, reducing both running costs and environmental impact.

1.1

Measuring Performance in Your Own Business

If you want to make well-informed, tactical and strategic decisions about your operation, you will need to be able to accurately measure the resources you use to deliver your services. Only then can you identify areas for improvement and assess how effective any operational changes have been. The starting point for any performance improvement programme should be to understand the current performance of your operation. This means collecting data on key aspects of your operation and turning this information into specific measures that can help you to identify areas for improvement - for instance, how much it costs you to deliver products to your customers, how many miles your vehicles run empty or the number of late deliveries you make. These measures are known as KPIs. A KPI on its own will not tell you much. Individual measures and data need to be turned into information that can help you to make decisions. This means setting a target and measuring and monitoring KPIs over a period of time to see how your operation performs against this target. Weekly, monthly and annual reports allow you to monitor progress and see which areas need the greatest improvement. Producing graphs or charts will often be the best way of showing performance progress.

1.2

What Should a Key Performance Indicator Be?

There are many different KPIs that can be used to measure performance in a freight transport operation and it can be difficult to know which ones might be right for you. This section is intended to explain the characteristics of useful KPIs that can be applied in various types of operation and by different people. However, there are a number of things you can consider beforehand in order to decide which ones may be right for you. A KPI should be relevant and it should also be SMART - Specific, Measurable, Achievable, Realistic and Timed.

Specific
KPIs should be specific, simple to use and easy to understand. Complicated statistics and formulae can lead to confusion and uncertainty about what is actually being measured in the first place. If KPIs are specific and kept simple, they can be easily communicated across the business and there is no need for staff to have an in-depth knowledge of the area being measured.

Timed
The frequency of monitoring is an important consideration. Weekly or monthly monitoring is recommended for many KPIs but this can depend on the measure and the needs of a particular business. Some information may have to be collected on a daily basis, such as staff absences in the warehouse, daily delivery drops or nightly trunking volume. If certain measures are not recorded and presented to the agreed timescales, the risk of changes in performance going unnoticed rises.

Measurable
KPIs can show changes in performance over time. For this to happen it is essential to compare like with like data. It is easy to fall into the trap of comparing two drivers on different routes for time utilisation or miles per gallon (MPG). If one route is more demanding than the other, this could be misleading. Similarly, comparing drivers when they drive vehicles of substantially different age or vehicle type can also be deceptive. There are ways you can get around these problems however, such as rotating drivers onto different vehicles and different routes and then monitoring both driver and vehicle performance, to spot consistently high and poor performers.

1.3

Which KPIs Are Right for Me?

The size, type and management structure of a company is likely to influence the range of KPIs you might use. KPIs can be used to help managers develop strategy, plan and make decisions, while at the operational level they can show clearly the areas that need improvement, or a change in approach. An individual KPI can tell you how well you are performing at an operational level. However, when looked at in combination with other measures, a picture can be provided of how you are performing in terms of revenue and profitability and overall fleet efficiency and in relation to customer service and legal obligations. Figure 1 shows a basic step-by-step process for measuring performance. The checklist on the following page shows some important questions you can ask to help set up a performance measurement system in your organisation. See the Freight Best Practice Guides Performance Management for Efficient Road Freight Operations This guide explains the process of measuring performance effectively. It includes advice on how information is best collected and interpreted to allow informed decision making in order to achieve operational efficiency improvements. Fleet Performance Management Tool This spreadsheet tool is designed to help operators measure KPIs and manage performance.

Achievable
Any targets that are set should be achievable. It may seem beneficial to set high targets in the hope that this leads to greater improvements in performance, however, people can become disillusioned when they continually fall short of the targets set for them. Regularly reviewing performance towards targets and then resetting the targets to encourage smaller incremental (but cumulative) improvements may work much better in the long run.

Realistic
Remember that decisions and management actions will be taken as a result of the data collected and presented, so the data collection method needs to be realistic, reliable and consistent. It is important that the data required to produce the particular KPI can be collected easily and on a regular basis, as comparison over time forms the basis of benchmarking and then improving performance.

The 11 KPIs developed and used by the companies that participated in the builders merchants benchmarking survey are detailed in Section 2.2 of this guide. 2

Figure 1 The Process of Selecting and Measuring KPIs

Performance Management Checklist:

Select KPIs

or

Have you reviewed your existing KPIs or looked at those that might be appropriate for your type of operation? Are they Specific, Measurable, Achievable, Realistic and Timed? (SMART) Have you set targets for these KPIs?

Set and Review Targets

Data Collection

Do you know how well your operation is performing against your targets? Do you need to raise or lower them?

Review/Evaluation (Including Benchmarking)

Have you considered external benchmarking to compare your operations performance with that of others? Have you reviewed or set up a data collection system to give you the information you need?

Reporting & Feedback

Do you have a good system in place for analysing and reporting your KPIs?
Results Targets met? No Yes

Do you use information technology systems to help you? Have you considered actions that can be taken to improve your operations performance and meet new, higher targets in the future?

Targets too high? No

Yes

Identify Strategy for Performance Improvement

Take Action Implement Strategy

1.4

External Benchmarking

The basic process of measuring performance internally is extremely useful but to fully understand how your operation compares with that of your competitors, you must benchmark your performance with the best-in-class performers in your sector. This process of external benchmarking will enable you to understand the characteristics displayed by the best-in-class performers across a range of KPIs. In other words, understanding exactly why some operators perform better than others in certain KPIs will help you to decide the best measures to implement in your own operation to improve operational efficiency.

This benchmarking survey guide for the builders merchants sector is designed to highlight the performance of some of the best-in-class operators within the sector, enabling you to compare the relative efficiency of your own fleet operation and identify measures that you can take to improve performance. Throughout this guide you will see charts showing the KPI survey results. Each chart shows the participating depots relative performance (see the example chart below).

KPI
Figure 2a Heavy Deliveries - Runs per Day

Sector Average

Individual Depot

Unique Number of Each Depot

2
2.1

The Builders Merchants Benchmarking Survey

The Nature of the Builders Merchants Sector

Table 1 Categories of Deliveries and Examples of their Load Type

Delivery Light Deliveries

Load Type Heating and Plumbing equipment Tools Fasteners

Transport Van Light/ Medium Truck

Builders merchants supply a diverse range of materials essential to the construction industry, with a significant proportion delivered as well as over the counter trade where the buyer collects the goods. These include the so-called heavy materials such as bricks, blocks, sand and aggregate, and light materials such as fixtures, fittings, tools, plumbing and heating supplies. The sector comprises national, regional and local merchants. Like many industries, there has been a trend in recent years towards the acquisition of smaller companies by larger national or even Europe-wide businesses. Although many of the larger builders merchants have either national or regional distribution centres (RDCs), their customer interface is typically through local depots serving a relatively small geographical area. The survey detailed in this report deals with the transport efficiency of these local depots. The transport function of these depots in the sector tends to be seen as very much a derived demand. It is there to serve a purpose, that of delivering goods to the customer, and not as an entity in itself. A site or depot might typically have a small fleet of three or four vehicles that serve a local network of customers. These include the general public, local builders and large construction companies. Journey lengths are normally short and road access to delivery sites can be tight, limiting the type and size of vehicles used. Journey planning is based very much on the personal knowledge of staff as to local routes and locations of customers. Vehicles of 7.5 tonnes gross vehicle weight (GVW) to 32 tonne GVW rigid vehicles form the mainstay of the sectors fleet for carrying heavy materials. To facilitate site unloading these vehicles are often equipped with lorry-mounted cranes. Whilst light materials may be carried on the larger rigid trucks (particularly when part of a mixed light and heavy load), they are more normally carried by vans and 7.5 tonne GVW vehicles.

Heavy Deliveries

Aggregates Bricks Blocks

Medium Rigid Trucks Large Rigid Trucks

Whilst regional and national merchants maintain overall control of the fleet centrally and will have a nominated transport manager or director, on a day-to-day basis most vehicles are managed by the depot manager who is very often not a transport professional by trade. Their focus can be on customer service and not necessarily transport efficiency. Orders are typically taken for delivery of the goods on the next working day. Builders will usually expect deliveries to arrive early in the morning, to supply them with materials for that days work. This early morning delivery pattern compresses lorry activity into a narrow delivery window, potentially leaving other parts of the day with less work to do.

2.2

The KPIs

In any benchmarking survey it is essential to establish and use the most appropriate set of KPIs possible and ones that everybody in the survey can accurately measure. A working group was established to develop the KPIs for the sector. Members of the group included representatives from the Construction Products Association, the Builders Merchants Federation and eight builders merchants. The five core KPIs used in previous benchmarking surveys (vehicle fill, empty running, time utilisation, deviation from schedule and fuel consumption) were considered, but not all of them were deemed to be relevant to builders merchants transport operations. Further KPIs were carefully considered and a set of 11 finally agreed, shown in Table 2.

Table 2 The KPIs Measured during the Survey were:

KPIs
Number of Runs per Day Number of Drops per Run Kilometres per Drop Number of Drops per Day Value per Drop Fuel Consumption Fuel Used per Drop Cost per Drop The number of times the vehicle sets out from the depot with a load The number of deliveries made per run The average distance between deliveries The total number of deliveries made by a vehicle in the day The invoice value of the goods being delivered per drop The number of kilometres run per litre of fuel used The amount of fuel in litres consumed per delivery The total cost per delivery (including fixed and variable costs) The proportion of vehicles that during the loading process ran out of payload capacity, deck length or cubic capacity The percentage of trips that incurred a journey or unloading delay of over half an hour The use of the vehicle throughout the day: Running on the road Break from driving Loading in the depot Pre-loaded, awaiting departure Significantly delayed Idle (empty and stationary) Maintenance or repair These KPIs were selected because they: Are effective reference points for monitoring efficiency and identifying improvement Are relevant to the interests of operators Quantify the levels of fuel and vehicle use

Owing to the significant operational differences between the delivery of heavy goods and light goods, these activities were separately benchmarked. However, the same KPIs were used for both light and heavy activities. Additional data was also collected from participants to help further investigate the reasons for either above average or below average performance. This information, including the fitment of auxiliary equipment such as lorry-mounted cranes or tail lifts and the use of in-cab telematics equipment, can be found in Table 4.

2.3

Survey Statistics

Eight builders merchants businesses participated in the benchmarking process. They represented national, regional and local merchants operating heavy, light or mixed depots. Table 3 provides further information on the participating depots and fleets.
Table 3 Builders Benchmarking Survey Participants

Depots Light No. Depots Vans Up to 7.5t GVW Up to 18t GVW Up to 26t GVW Up to 32t GVW Total 25 7 8 17 12 Heavy 21 Mixed 7 6 10 Total 35 14 39

Percentage of Constrained Loads Deviations from Schedule

31

40

Time Utilisation

19

15

34

1 63

2 42

3 130

Light depots are those primarily supplying heating and plumbing equipment, tools, fasteners and so on. These goods are generally transported by van or light/medium truck. Heavy depots are those principally supplying aggregates, bricks, blocks and so on and are typically transported on medium/large rigid trucks, often with lorry-mounted cranes. Seven depots in the survey operated fleets for deliveries of both light and heavy goods. These are identified as mixed depots.

For the purpose of the KPI survey analysis only like-for-like fleets are benchmarked with each other - heavy against heavy, light against light. For mixed depots, the light and heavy fleets were reported and analysed separately and are benchmarked only against the relevant activity, light or heavy. Thirty-five depots representing a total of 130 vehicles took part in the survey which averages between three and four vehicles per site. The survey was synchronised over a 48-hour period from 07:00 on Tuesday 7th March 2006 to 07:00 on Thursday 9th March. Collectively, during the audit period participants delivered heavy products to the value of 312,594 and light products worth 402,462. Some 23,120 km were run over 379 trips and 1,291 deliveries for heavy depots. Light depots accounted for 10,839 km, 665 deliveries and 99 trips.

The builders merchants trade has a winter off-peak period when often the poor weather impacts on the construction industry. March generally represents the beginning of the trade building up to strong demand between Easter and the autumn. The survey was conducted in March to try to reflect an average level of demand. Table 4 summarises the additional information collected about any specialist equipment fitted to participating vehicles (seven out of eight companies provided data about vehicle equipment). None were fitted with satellite navigation equipment. Over half of the rigid HGVs in the up to 7.5 tonne GVW category were equipped with tail lifts. Typically for the type of operations conducted, large rigid trucks were fitted with lorry-mounted cranes.

Table 4 Additional Fleet Information - Vehicle Equipment

Vans up to 3.5t GVW Total Number of Vehicles Air-flow Management Kit Sat nav Equipment In-cab Engine Management Display GPS Tracking Equipment Vehicles with Crane Equipment Vehicles with Tail Lift Equipment 4 14

Rigid up to 7.5t GVW 39

Rigid up to 18t GVW 40

Rigid up to 26t GVW 34

Rigid up to 32t GVW 3

32

22

20

See the Freight Best Practice Guides Truck Specification for Best Operational Efficiency A step-by-step guide to the process of correctly specifying an efficient and fit for purpose vehicle. Information Technology for Efficient Road Freight Operations This guide provides an overview of the available and relevant systems, covering their uses, likely benefits, issues to consider and associated costs.

3
3.1

Survey Results
Number of Runs per Day

This simple KPI measures the number of times the vehicle sets out from the depot with a load. The relatively small delivery area covered by many merchants depots means that vehicles can often return to depot for more than one load per day. Overall vehicle utilisation can be maximised and fleet size minimised by ensuring that vehicles undertake second and third runs during the working day. High customer service levels can also be offered in terms of same-day or next-day deliveries. However, a high number of runs per day must not be taken to mean an efficient operation if the vehicles are only partly loaded or are making special one-off trips.

Figure 2a shows that overall for the heavy fleets, the typical number of runs per day is two. For the light fleets in the survey (shown in Figure 2b) the average number of daily runs per vehicle is 1.4, reflecting a combination, depending on depot, of a higher number of drops per run and a larger delivery area. Some of the depots achieving the highest number of runs per day in the survey are also those that pre-load vehicles. For example, the highest run rate of 3.2 is achieved by a depot in the light category that pre-loads its vehicles for the next mornings work. For light deliveries there was no difference in runs per day between vans and 7.5 tonne GVW trucks. For heavy deliveries, vehicles in the 18 tonne category actually averaged the highest number of runs per day at 2.3.

Figure 2a Heavy Deliveries - Runs per Day

Figure 2b Light Deliveries - Runs per Day

3.2

Number of Drops per Run

The number of drops or deliveries made per run can depend on several variables including consignment size, vehicle type, distance between drops and scheduling practices. In both the light and heavy delivery fleets, the number of drops per run varied greatly across the entire survey sample as well as between companies own depots (see Figures 3a and 3b). Not surprisingly, light activities overall averaged a higher drop rate than the heavy deliveries - 6.7 drops per run for light goods versus 3.7 for heavy goods.

Interestingly, the two heavy goods depots that show a drop rate of double the sector average are operating 7.5 tonne GVW vehicles with tail lift equipment. This suggests good vehicle specification for the tasks being undertaken which most likely assists in maintaining a high drop rate. On average, 7.5 tonne GVW vehicles working on light deliveries achieved over nine drops per run, compared with around five for vans. Commentary on light delivery activities for lorries and vans is provided in Section 3.4.

Figure 3a Heavy Deliveries - Drops per Run

Figure 3b Light Deliveries - Drops per Run

3.3

Kilometres per Drop

Overall, the nature of builders merchants activities in the survey means that, in comparison with many other transport activities, delivery distances are short. The regional and local merchants participating in the survey did not report any drop distances above the sector average. It can therefore be assumed that their depot delivery area is similar to those companies operating a national network of depots. Figure 4a shows the average distance between deliveries for heavy activities. When comparing the heavy drop distances with those of the light activities

(see Figure 4b), it can be seen that the spread is remarkably similar 5.9 km to 35.5 km for heavy activities and from 7 km to 35.9 km for vehicles engaged in light activities. Depots within the same company can show large variations in drop distance. Whilst this is most likely a historical matter of depot location, significant deviations from the sector norm merit investigation in terms of depot location, delivery area and vehicle routing and scheduling.

Figure 4a Heavy Deliveries - Km per Drop

Figure 4b Light Deliveries - Km per Drop

10

3.4

Number of Drops per Day

Figures 5a and 5b show the total number of deliveries made per day by vehicles operating from heavy and light depots. Once again, there is a wide spread of performance both across the survey sample and between individual company fleets. The best in class performers are those making the highest number of runs per day and the highest number of deliveries per run. This is often facilitated by short drop distances. Delivery scheduling and vehicle routing play a key role in maintaining good performance in terms of drops per day. Overall, when investigating the relationship between vehicle type and drops per day, most vehicle types show the same performance levels (see Table 5). This suggests that operators are generally specifying vehicles correctly for the nature of the activity to be performed. The one marked difference is the performance comparison on light activities between vans and 7.5 tonne GVW trucks.
Figure 5a Heavy Deliveries - Drops per Day

Here, the vans in the survey averaged six drops per day, whilst the 7.5 tonne GVW vehicles averaged 11.2 drops. The average value per drop was also higher for the 7.5 tonne vehicles - 670 in comparison with the average value for drops by vans of 460. The average distance between drops was reported as 16.7 km for 7.5 tonne GVW vehicles and 19.5 km for vans. The greater drop rate and shorter drop distance result in a 22% lower fuel use per drop for 7.5 tonne vehicles 2.7 litres per drop compared with 3.5 litres for vans. Overall, the cost per drop for 7.5 tonne vehicles delivering light goods is 16.30, some 38% lower than the 26.50 cost per drop recorded for van operations. This again reflects the operational efficiencies and cost savings achievable where the vehicle is well suited to the type of work being undertaken. Issues regarding value per drop and vehicle specification are further highlighted in Sections 3.5 and 3.9 respectively.

Figure 5b Light Deliveries - Drops per Day

11

Table 5 Drops per Day by Vehicle Category

Activity Vehicle Category

Up to 3.5t GVW Van Up to 7.5t GVW Rigid Up to 18t GVW Rigid Up to 26t GVW Rigid Up to 32t GVW Rigid 6.2 7.2 6.5 7.2

Heavy

Light
6 11.2

3.5

Value per Drop

The invoice value of the goods being delivered per drop has not typically been used as a benchmarking KPI for transport activities. Measures related directly to trucks, such as vehicle fill and running time, have more usually been adopted. However, the survey participants adopted this measure as an important business indicator. Whilst it is not directly an indicator of either efficiency or profitability, it is a useful starting point to identify where delivery activity can be of most value to the creation of profit for the business. Seven of the eight participants have provided information on value per drop.
Figure 6a Heavy Deliveries - Value per Drop

From the data the average invoice value of a heavy delivery has been identified as 355, and the average for a light delivery as 720 (see Figures 6a and 6b). For light activities, the variation in drop value across the depots is very large from less than 60 to nearly 2,000. The difference in value per drop across the participating heavy depots is relatively modest. With the exception of two depots reporting very high values of over 1,000, values range from 150 to around 540. A break down by vehicle category of delivery value and delivery cost is shown in Section 3.8.

Figure 6b Light Deliveries - Value per Drop

12

3.6

Fuel Consumption

Table 6 Fuel Consumption by Vehicle Category

Kilometres per Litre of Fuel Used

Fuel consumption, measured in kilometres per litre, was recorded by vehicle type for each fleet during the survey period. The results are shown in Figure 7a for heavy activities and Figure 7b for light activities. They provide an overall fuel consumption figure across all vehicle types. Table 6 provides a more detailed breakdown of fuel consumption figures by vehicle category. It should be noted that good consumption figures returned by the long wheelbase van and 32 tonne GVW truck categories may not be representative, as these vehicle types were operated only by two survey participants and in small numbers. Vehicle Category Van - Short Wheelbase Van - Long Wheelbase Up to 7.5t GVW Rigid Up to 18t GVW Rigid Up to 26t GVW Rigid Up to 32t GVW Rigid

Fuel Consumption (Km per Litre) Light Depots 5.6 6.4 5.9 4.7 3.3 2.2 2.5 Heavy Depots

Figure 7a Heavy Deliveries - Km per Litre

Figure 7b Light Deliveries - Km per Litre

13

3.7

Fuel Used per Drop

Measuring fuel consumption alone does not necessarily provide an accurate measure of overall efficiency or performance. An operator may show apparently good fuel performance figures, but the vehicle may only be partly laden or there may be a large proportion of empty running. Alternatively, fuel figures may look poor because of high use of auxiliary equipment such as lorry-mounted lifting equipment. What counts more is the amount of work done for a given amount of fuel. This KPI measures the amount of fuel used per delivery made and thus measures not only the energy input but also the work output. This is termed as energy intensity.

Whilst fuel use has to be monitored closely as part of the benchmarking process, only half of the participating depots actually carry this out on an on-going basis. This compares with over 70% for transport operators in general. Not surprisingly, those depots that are monitoring fuel use perform better than those that do not. Short journeys, the use of lifting equipment and limited opportunities for improving fuel use through measures such as vehicle aerodynamics mean that vehicles operating in the builders merchants sector are likely to show a higher than average fuel use. Nevertheless, the results do show that there is good reason for a number of operators to investigate the causes of poor fuel figures at specified depots. If these causes were understood and appropriate action taken, significant fuel savings could be made. Initiatives could include management actions, such as fuel monitoring, and the implementation of a fuel management programme including driver development. These actions are explored further in Sections 4 and 5.

Average fuel use for heavy activities is 6.4 litres per drop and this is illustrated in Figure 8a. For light activities it is 3.5 litres per drop as shown in Figure 8b. There is a large variance between best in class and worst in class performance. Even disregarding the very best and the very worst performers, many depots are getting three times as much work per litre of fuel in comparison to what appear to be very similar operations. Fuel use per drop also varies greatly across the depots of individual companies within the survey. For example, one participant used almost two and a half times as much fuel per drop at one depot compared to another.

14

Figure 8a Heavy Deliveries - Litres per Drop

Figure 8b Light Deliveries - Litres per Drop

15

3.8

Cost per Drop

Detailed company-based investigations will prove beneficial in helping to determine the profitability of product lines, delivery activities and locations. Table 8 shows the cost per drop by vehicle type, and also compares delivery value.

The cost per drop or delivery was calculated using the fixed and variable cost information collected from survey participants as shown in Table 7. Figures 9a and 9b show that the cost per drop varies greatly across both light and heavy depots. The average cost per drop across all vehicle types for heavy activities is 26 and for light activities it is 24. Importantly, there is no direct positive correlation between delivery costs and the value of the consignment. Indeed, for one depot the two measures were inversely related - showing a very high delivery cost and a very low load value.

Table 8 Cost and Value per Drop by Vehicle Category

Light Depots

Heavy Depots

Table 7 Cost Information Collected

Fixed Costs
Vehicle depreciation Vehicle insurance MOT Drivers wages (drivers wages include employer costs but NOT additional costs for temporary drivers covering holiday periods)

Variable Costs
Fuel Vehicle repairs and maintenance Tyres

Vehicle Category Van - Short Wheelbase Van - Long Wheelbase Up to 7.5t GVW Rigid Up to 18t GVW Rigid Up to 26t GVW Rigid Up to 32t GVW Rigid

Value Cost Value Cost per per per per Drop () Drop () Drop () Drop () 1,375 18.10

462.70

34.90

1207.7

16.30

458.70

26.70

235.90

25.60

297.50

35.90

Not available

31.80

Figure 9a Heavy Deliveries - Cost per Drop

16

Figure 9b Light Deliveries - Cost per Drop

3.9

Percentage of Constrained Loads

In this benchmarking survey, vehicle fill was not selected as a KPI by the participating fleets. The diversity in product range, size, weight etc. means that the precise measurement of load configurations in terms of weight or cubic capacity is difficult and ultimately not that important in terms of day-to-day transport activity. However, participants recorded instances where loads could exceed payload capacity, deck length or cubic capacity. Where this occurs, the load must be split and either an additional vehicle loaded or a second run made. Nearly half of the survey depots reported a load constraint by weight and a third by length and cubic capacity. Significantly, five heavy depots belonging to two different participants reported every trip to be constrained by weight - one operating vehicles plated at 12 tonnes GVW, and the other operating 26 tonne GVW and 32 tonne GVW vehicles. Load constraints were reported to be less frequent in the light fleets, although one company noted a problem with payload capacity.
Figure 10 Causes of Delays

Whilst local delivery restrictions limiting vehicle size will ultimately determine the size and capacity of the vehicle selected for a job, it seems clear that there are instances where the use of vehicles with a higher payload capacity would lead to fewer trips and greater efficiency.

3.10 Deviations from Schedule

Survey participants recorded significant delays (of over 30 minutes) affecting deliveries against four possible reasons: Own company actions Problems at delivery point Traffic congestion Vehicle breakdown Of the companies included in the survey, eight heavy depots and two light depots reported deviations from their delivery schedule. In total, 7.3% of all trips surveyed were affected. The main contributor to delays was problems at the delivery point. Figure 10 shows a breakdown of the contributory causes of the delays. Two merchants reported depots where 50% of all trips were subject to delay. Furthermore, one company reported regular delays at all of its depots.

17

3.11 Time Utilisation

During the survey period an hourly audit of vehicle activity was recorded. This identified what vehicles were doing at any given time. The activity categories are: Running on the road Break from driving Loading in the depot Pre-loaded, awaiting departure Significantly delayed Idle (empty and stationary) Maintenance or repair Delivery activity in the sector is currently a daytime activity - out of hours deliveries are rare. Vehicle activity, in terms of running on the road, is therefore typically between 05:00 and 17:00.

Figures 11a and 11b show the activity profile of the heavy and light fleets. It can be seen that vehicles are idle and unproductive for more than 40% of the time. This compares favourably with some other daytime-based vehicle activities such as parcels and pallet load deliveries, but less well with some retail fleets where idle time can be as low as 20%, and which can benefit from out of hours delivery schedules. Since orders for the next days first deliveries are generally processed by mid-afternoon, there are opportunities to pre-load vehicles. This can help to maximise the working and driving time available, facilitate second and third run opportunities and generally increase vehicle productivity. Over 18% of the heavy fleet in the survey was reported to be pre-loaded in this way. However, this practice is not adopted universally across all depots or by some of the survey participants and therefore could be a good way to increase productivity.

Figure 11a Time Utilisation for Heavy Activities

Figure 11b Time Utilisation for Light Activities

18

Summary

Operational conditions for truck fleets in the builders merchants sector are clearly different than those for other sectors of the freight industry. Fleets can be large but operate in small clusters that are dispersed over a number of depots, therefore journey distances tend to be short. There is a strong emphasis on early morning deliveries and even a tendency to despatch vehicles partly laden to fulfil a customer order. Taken collectively, these conditions can inhibit efficiency and make significant improvements a real challenge for those in the industry. Each depot will, of course, have its own conditions and constraints, and the survey has shown that even within the same operation, performance across depots varies greatly. Identifying the variance between depots has allowed participants to investigate best and less than best operational practices. Through the individual survey reports produced for them, many company and depot specific recommendations have been made and acted upon. Correct vehicle specification - payload and auxiliary loading equipment have been identified in the survey as critical in ensuring maximum productivity. A number of the survey participants can most probably benefit from specifying 26 tonne GVW vehicles instead of 18 tonne GVW vehicles. For some, the potential use of 32 tonne GVW rigids is noted for investigation. Maximising time running on the road by pre-loading vehicles is practised by some of the sector. For many, this pays dividends in terms of the number of deliveries that can be made in the day and represents good practice that could be employed on a wider basis. With relatively low annual vehicle mileage, fuel consumption has perhaps, traditionally not been a major focus for depot managers. Significant anomalies identified at some depots in the survey have warranted swift investigation. Variations in fuel consumption between depots show that there are potential benefits in implementing fuel management programmes. The industry culture that currently demands an early morning delivery deadline compresses activity into a period of peak-hour traffic congestion and can leave vehicles idle for significant parts of the working day. Encouraging customers to accept deliveries at other times of the day will help to maximise vehicle utilisation, reduce transport costs and avoid deviations from schedule and delays. 19

The Builders Merchants Transport Efficiency Road Map

Based on the findings of the survey, the fold out back cover of this guide sets out a transport efficiency road map for builders merchants an action plan of measures that can be considered by anybody in the sector. It identifies the measures that can be owned and initiated by those managers responsible for transport within the business, for example, fuel management and load preparation. It also shows wider strategic measures, such as nominated delivery days for less than full-load consignments. Such measures would, of course, require the close involvement of other parts of the business, for example, sales, marketing and procurement departments. The action plan is set out under the following six headings: Saving Fuel Equipment and Systems Developing Skills Performance Management Fleet Performance Supply Chain Reconfiguration Specific actions are identified under each category, together with a signpost identifying relevant guidance and support material available from the Freight Best Practice programme.

Performance Management

Set targets Benchmark across depots

MONITORING PERFORMANCE Fleet Performance Management Tool

Establish relevant key performance indicators and measure performance:

LOAD PREPARATION

Increase pre-loading of vehicles of next days loads to ensure maximum productive delivery time. Preparation by yard staff of second trip loads whilst vehicle is on first run.

DELIVERY WINDOWS

Encourage customers to accept pre-8am deliveries, allowing second run loading during morning peak traffic congestion and post-peak second run. Sales staff to lead customers to available delivery times. Increase pre-loading of vehicles of next days loads to ensure maximum productive delivery time.

Fleet Performance
PRICING MECHANISM

Consider rate discounts for off-peak deliveries.

Supply Chain / Logistics Director

ZONING

Consider delivery of less than full loads on nominated days by geographical area. Consider rate discounts for off-peak deliveries.

INTER-DEPOT CO-OPERATION

Establish standardised customer service levels and serve customer from most appropriate depot for the delivery site.

SUPPLIER DIRECT DELIVERIES

Investigate benefits of supplier direct delivery. Establish economic thresholds.

Supply Chain
Reconfiguration

SUPPLIER GATE COLLECTIONS/ BACK-LOADING Make Back-loading Work for You

Investigate benefits of collecting supplies direct from suppliers supplier gate pricing. Review opportunities for reducing empty running by back-loading.

CONSOLIDATION CENTRES

Review industry-wide opportunities for trip reduction through multiple construction site delivery consolidation centres. Investigate market opportunities for further unitisation of deliveries and consolidation of orders. For example: UNITISATION OF CUSTOMER ORDERS

Brick pack bricks, cement, plasticiser Door pack door, hinges, screws Plumb pack pipe, joints, valves

Sector Initiative

Builders Merchants Transport Efficiency Road Map

Efficiency Measures for General Consideration
General
FUEL MANAGEMENT Fuel Management Guide

Specific

Description
Appoint Fuel Champion. Audit current fuel management processes. Implement effective fuel management programme:

Ownership or Initiator

Saving Fuel
Stock control Dispensing In-use control

Purchasing Data collection

ROUTING AND SCHEDULING Computerised Vehicle Routing and Scheduling (CVRS) for Efficient Logistics

Audit order processing, routing and scheduling process. Review potential benefits of computerised routing and scheduling. Optimise journey planning.

Equipment and Systems

TELEMATICS Telematics Guide

Consider benefits of in-cab telematics and communications systems to enhance expected arrival times, traffic avoidance and performance monitoring.

Consider fitment of auxiliary equipment to reduce unloading time.

Developing Skills

DRIVER DEVELOPMENT A Guide to Safe and Fuel Efficient Driving for HGVs

Conduct training review audit. Implement driver development programme. Consider implementation of driver league tables and rewards scheme.

MULTI-TASKING

Train yard staff as drivers to provide flexibility for holiday cover and sickness cover, and reduce dependency on agency staff.

Depot Manager

VEHICLE SPECIFICATION Truck Specification for Best Operational Efficiency

Review vehicle specification and potential benefits of the introduction of vehicles with increased:

Payload Load bed Cubic capacity

Freight Best Practice publications, including those listed below, can be obtained FREE of charge by calling the Hotline on 0845 877 0 877. Alternatively, they can be downloaded from the website www.freightbestpractice.org.uk

Saving Fuel
Fuel Saving Tips
This handy pocket book is ideal for drivers and managers looking for simple ways to reduce fuel consumption.

Operational Efficiency
Expert Advice Helps Cut Fleet Costs
This case study shows the savings achieved by Denholm Industrial Services Ltd as a result of the measures implemented as part of a site specific efficiency improvement plan.

Developing Skills
Proactive Driver Performance Management Keeps Fuel Efficiency on Track
This case study shows how Thorntons implemented a highly effective driver incentive scheme combining in-cab driver monitoring, service delivery levels and accident rates.

Performance Management
Performance Management in Freight Transport Operations
This guide explains the process of measuring performance effectively. It includes advice on how information is best collected and interpreted to allow informed decision making in order to achieve operational efficiency improvements.

Equipment and Systems

Information Technology for Efficient Road Freight Operations
This guide provides an overview of the available and relevant systems, covering their uses, likely benefits, issues to consider and associated costs.

Public Sector
Efficient Public Sector Fleet Operations
This guide is aimed at fleet managers in the public sector to help them improve operational fleet efficiency.

November 2006. Printed in the UK on paper containing at least 75% recycled fibre. FBP1049 Queens Printer and Controller of HMSO 2006.

Performance Management