Hauliers make up around a third of the workforce serving the aggregates sector and transport accounts as much as a quarter of industry turnover. Yet this critical area of business has often played second fiddle to planning and production. This is now changing, reports Phil Shirley
HANSON Aggregates moves a lot of material around the country. Around a million tonnes of aggregates a week by road, rail and water.
Shifting that much material has pushed the company into improving its logistics management and studying the effects that better returns for its hauliers could bring to the overall performance of the business.
A dedicated logistics team, operating in each of its four regions will, it believes, achieve a step change in customer service and shape the future of product delivery.
'One of the biggest challenges we face as an industry is how we can significantly improve our service to our customers, ' says Hanson Aggregates UK commercial director Todd Hannigan. 'A big part of customer service is ensuring that the right product reaches the agreed site at the agreed time. Our new logist ics teams help ensu re we pull together as a business to improve service levels. It's a practical approach to delivering lowest cost production with the highest quality product and service.'
According to Mr Hannigan, in a tightening marketplace one of the key ways for a company to stay ahead of the competition is by focusing on its customer service, improving delivery times and expanding its fleet of delivery vehicles.
But this forward thinking involves a return to the days of company drivers and vehicles, more than two decades after the aggregates sector signalled the end of the road for in-house haulage by outsourcing deliveries to hired hauliers and franchisees.
This took out many heavy overheads but had the potential to weaken customer service because the direct customer contact was lost.
'Twenty years ago the industry moved away from company hauliers to franchisees, a cost decision which led to widespread outsourcing.
At the time it was the right decision to make, but it went too far, ' says Mr Hannigan.
'These guys remain vital to the success of our business and although we are not completely reversing the trend, we are redressing the balance with a greater number of company drivers, albeit still a small proportion.'
In a sector that is getting squeezed by falling demand, driver shortages, cut-throat competition, a rising tide of imported aggregates, skyrocketing energy prices and an ever-increasing legislative and planning burden, the business of producing and deliver ing a load of aggregate or concrete is far from easy.
But the sector has not been idle. In the past three years the industry has sought to improve driver safety through technology and, perhaps more significantly, through behaviour. But improving overall logistics efficiency has been much harder.
'Our customers are looking to shorten the time spent on site to reduce the overall cost to the client. This has forced the industry to review how to supply the marketplace, ' says Mr Hannigan. 'A lot of effort has gone into improving the capacities of our asphalt and readymix plants to ensure we can meet and exceed demand on an hourly basis. We are now looking to improve the turnaround times of vehicles to increase both truck use and customer service.
'In terms of contribution to the customer-facing side of the business trucking is vital, and of course our drivers are on the front line of the business.We need to work closely with them to make their own businesses more successful. We both need each other.'
In the past there has been a tendency for the public to demonise the haulier but the simple fact remains that transport is absolutely critical to the UK aggregates sector.
To put this into perspective, Hanson employs 3,200 people in its UK aggregates division but also pays the wages, indirectly, to around 1,500 hauliers, including 1,200 franchisees. Transport costs accounted for around a fifth of the company's 2005 turnover of £811.5 million.
The logistic centres herald a new era.
'It is a new way of working, a logistics function that will dovetail with commercial and operations to provide a premium service to our customers' says Mr Hannigan.
What does this mean in real terms? According to Guy Edwards, Hanson's southwest regional commercial director, the new model will improve truck use, improve on-time deliveries and reduce 'non-productive' waiting time at both the production plant and the customer site. 'Our major clients are well aware that just-in-time deliveries can boost productivity and reduce costs for us all, ' he says.
'A logistics controller responsible for managing the function and measuring the performance of our customer service, from the availability of plants to the on-time delivery of products, will lead the logistic teams.
'Under the controller, a process improvement manager works closely with area operations managers, unit managers, weighbridge operators and customer service managers to reduce turnaround times, improve vehicle utilisation and get higher volumes onto larger trucks.'
Hanson Aggregates is also ploughing cash into its computer systems, which will have a big impact on logistics.
Although the focus will be on improving the process of quotations, orders and invoicing, the IT systems will also enable drivers to be in constant touch with the regional service centres via mobile phone text messaging.
Hanson is also trialling GPS satellite technology to track its trucks and maximise their use.
'We will know when they leave the plant, when they arrive on site and when they have delivered the load, making logistics planning a lot more efficient, ' says Mr Hannigan.
'We are learning from other industries. Huge progress has been made towards improving logistics in sectors such as food and retail and there is clearly much that we can learn from the way they approach things, but we still have a long way to go.
'Customer service is a classic example of a journey rather than a destination. The challenge we face in the next 12 to 18 months is to ensure our customers can begin to see tangible improvements in our overall product offering.
The whole organisation needs to be involved in this change; to be truly customer serviceorientated everybody within the business must buy in to the ideal. Changing the beliefs and culture of an organisation doesn't happen overnight.'
Up the Poles
WHILE many other businesses are busy finding ways to take out further costs in the face of unrelenting price pressure, Hanson has invested in a 20 strong fleet of trucks in Scotland which will be driven by companyemployed hauliers recruited almost exclusively from Poland. It plans to continue to recruit drivers from this source, possibly doubling this number by the end of the year.
Ageing truckers drive change
ACCORDING to Todd Hannigan, there are two reasons why Hanson is heading down the road toward more directly employed drivers - and neither has anything to do with taking out cost. In fact the main reason has more to do with booming house prices.
'The age profile of our hauliers is such that for us to continue the outsource model we would have to recruit a lot of new franchisees in the next few years and I question our ability to do that. Buying and running an £80,000 truck is a big responsibility for someone with a mortgage and a family, and good people are not easy to find. Investing in more company drivers, therefore, is an efficient solution, ' he says.
'We also believe a mix of franchisees and our own drivers can help instill better service levels. Of course, the trucking part of logistics is only small part of customer service but we have to get this right to make the rest of our logistics offer as efficient as possible, which we must do if we are to meet the challenges facing our industry today.'