The fuel price in South Africa has sky rocketed in the past two years. In March 2021 petrol and diesel where roughly 25% less expensive than they are today.
There is a combination of factors forcing this price to rise including the Rand/Dollar exchange rate, various government levies and taxes and of course the price of oil.
The knock-on effect of rising fuel costs is tremendous. Almost every item available to consumers and businesses is transported in one way or another.
The first to be affected by the price increase are transport companies and the knock on progresses from there. The best way of negating these increases is to reduce the amount of time and distance that vehicles travel and thus reduce the amount of fuel consumed.
Reducing The Cost Of Logistics
“The key to securing savings of anywhere from 10-25% on logistics costs – savings that will endure long after the fuel price drops – is to focus on greater efficiencies in terms of distribution,” says Grant Marshbank, CEO of VSC Solutions.
According to Marshbank, most of the technology solutions that can bring about these efficiencies can be implemented quickly, and will result in a favourable return on investment from the very first month.
VSC Solutions have the tools, expertise and experience to reduce your overall logistics costs.
Strategise
Applying smarter strategy by using a periodic exercise called Network Modelling allows a business to determine the most efficient way of executing its operations. Network Modelling includes determining the best possible geographic location of warehouses, comparing supply chain costs, determining the impact on transport costs when using the business’ own, comparing the CO2 footprint of the supply chain, and so on.
“This exercise is vital for determining whether the business’ current operation is optimised, and if going after certain new business will be profitable,” explains Grant.
Optimise routes
“Ensuring that the least number of vehicles drive the least amount of kilometres without compromising service levels and compliance is the goal of route optimisation” says Grant.
Route optimisation works by feeding data on the where and when of collections, deliveries or services into a system that generates a set of routes to ensure that the load is spread evenly across available delivery days.
“Our optimisation tools are available for use from SMEs to the very largest enterprises. There’s no excuse for not utilising vehicles in the most efficient manner!”
Ensure proper execution
Next, a business needs to ensure that these optimised routes are being used.
“By comparing data from each vehicle’s tracking device to the routes generated by the optimisation tool, a business can see on a map and Gantt chart where a vehicle is versus where it should be. We use that visibility to generate exceptions, alerts, KPIs and dashboards surrounding compliance which allows business to both respond in real time and analyse trends,” explains Grant.
Automate processes
While automating route optimization processes won’t directly decrease fuel costs, it will remove inefficiencies that result in other cost and time savings. Typical examples of inefficiencies are human error costs and inconsistency in service.
“Manual delivery processes waste time. By integrating data from an ordering system with a driver’s smartphone, acceptance of goods can be automated, and an electronic proof of delivery sent immediately, enabling invoicing to take place that much faster. Businesses can get more from their resources like their people and their trucks,” adds Grant.
Integrate systems and measure performance
By integrating its various systems, a business can transfer data seamlessly, enabling more effective reporting that gives complete visibility of the entire supply chain in real time.
“By combining salary and overtime data, data from distribution systems, and data such as revenue, costs, and margins, a business can calculate the profitability of routes and key sources of inefficiencies all in real time,” says Grant.
VSC Solutions’ strategic and tactical approach to reducing logistics costs is proven.
For more information contact Grant Marshbank, CEO of VSC Smart Supply Chains, for more information on 072 241 1811 or email grant.marshbank@vscsolutions.co.za