Small Fleet Performance Management Tool (SFPMT) helps A1 Paper improve efficiency Case Study Company: Location: Fleet Size: A1 Paper Plc West Midlands 11 vehicles (four 1 Tonne, two 7.5 Tonne and five 3.5 Tonne)
The Company A1 Paper are a leading paper stockist and distributor based in the West Midlands. The company has a turnover of approximately 9 million and employs 50 staff, including 11 drivers. A1 Paper also own A1 Trade Print Services, who have been producing cheques and security products for over 30 years. A1 Paper has a single site base in West Bromwich, but purchase through a co-ordinated buying group AIMS (Associated Independent Merchant Stockists). The group consists of 10 independent buying companies, with materials being sourced from around the world. A1 Paper holds stock of around 2,000 tonnes and provides a same or next day nationwide service in quantities ranging from individual boxes to multiple pallets. Performance issues in 2004 John Claffey, the Transport Manager for A1 Paper, has extensive experience in the logistics industry and recognises the importance of measuring performance in order to effectively manage the fleet. With increasing fuel prices and fuel costs representing 30% of vehicle fleet costs, A1 Paper set out to improve their operational efficiency. In order to achieve this, they required a system that could tell them exactly how much they spend per vehicle on maintenance, tyres, insurance and perhaps most importantly, fuel. When John took over as Transport Manager, there were no Key Performance Indicators (KPI s) in place. In January 2004 John introduced a simple monitoring system, which was developed inhouse and maintained throughout 2004. After learning about the Small Fleet Performance Management Tool (SFPMT), available FREE of charge from the Freight Best Practice programme, John attended a seminar about the tool in November 2004. A1 Paper introduce the SFPMT Recognising the limitations of their in-house system (based simply on measuring fuel consumption and miles travelled), A1 Paper began using the SFPMT in January 2005. The tool covers a range of indicators designed to give operators a consistent basis from which to measure their performance. There are 22 Key Performance Indicators (KPI s) included in the tool, covering five core areas: Fleet costs Operational efficiency Standards of customer service Compliance and Maintenance 2
A1 Paper developed their own driver run and vehicle check sheet based on the inputs required for the KPI s to be calculated. Drivers and traffic office staff were trained on how to go about inputting and collecting data, which has enabled the company to monitor and measure performance effectively on a daily and weekly basis. Once you have entered all the information required for your vehicles, the spreadsheet works everything out for you. John Claffey (Transport Manager, A1 Paper). How the SFPMT works A1 Paper currently make use of all the 22 KPI s which they believe provide them with essential information for each of their vehicles. The individual KPI s in turn include: average cost per unit delivered average running costs (pence per mile) Once staff at A1 Paper have entered the required input data, the tool automatically produces a number of weekly, monthly and annual reports. The weekly report gives a simple overview of the fleet s activities in terms of operations and costs. The monthly report provides more detailed information on the performance of the fleet and also details individual performance on a range of compliance KPI s (eg vehicle infringements and maintenance). The annual report builds as the year progresses and gives information on operational performance, operating costs and customer satisfaction. The report shows a cumulative figure for the year (year to date), which is presented as either a total or average, according to the performance measure. Each vehicles level of activity, operating costs, number of complaints is presented and compliance information aggregated. average standing costs average driver cost total mileages (laden and empty) per vehicle average vehicle fill percentage of late deliveries volume of damages and complaints overloads vehicle traffic infringements drivers hours infringements traffic accidents We decided to use all 22 of the KPI s in order to build up a comprehensive health check of our operation. percentage of MoT failures and percentage of reported vehicle defects John Claffey (Transport Manager, A1 Paper). rectified within 24 hours 3
SFPMT outputs Presentation of results for the fleet as a whole is made more effective by bar charts, line graphs and pie charts, which are automatically generated upon entering the data. A key benefit of the SFPMT is its ability to highlight problems and start to identify potential causes and solutions. This information has proved to be pivotal in A1 Paper s drive to achieve operational efficiency and reduce operating costs. Below are some examples of A1 Paper s SFPMT outputs in 2005. Cost Per Unit Figure 1 shows the Cost per Unit ( ) delivered and provides a comparison with the target A1 Paper has set in the KPI Cumulative Summary Report. A1 started using the SFPMT in January 2005. For each month (January - August, 2005), the actual delivery cost can be compared against A1 Paper s target of 30 per unit. It is apparent that significant savings had been achieved within a few months of A1 Paper using the SFPMT, with Cost Per Unit delivered decreasing significantly between April and August 2005. 40.00 Figure 1: Cost per Unit Delivered ( ) 35.00 30.00 25.00 20.00 15.00 10.00 5.00 0.00 1 2 3 4 5 6 7 Period (January - August, 2005) Actual Target Whole Fleet Cost Figure 2 shows the total fleet cost, average running cost, average standing cost and average driver cost for A1 Paper in the period January - August 2005. This shows that A1 Paper were able to achieve significant savings in total costs in the months April - August 2005, when compared with February and March 2005. In addition to monitoring costs, the SFPMT covers other aspects of fleet operation, including customer service and maintenance. Figure 3 shows how A1 Paper are able to track the number of late deliveries, damages and complaints during each month. lower repair costs, shorter vehicle downtime and much reduced vehicle hire costs. Finally, the section of the SFPMT relating to compliance enables A1 Paper to record the total number of overloads, traffic infringements, drivers hours infringements and any traffic accidents. The tool is very comprehensive and very user friendly. I find it extremely useful for measuring performance. John Claffey (Transport Manager, A1 Paper). The maintenance function of the SFPMT also provides A1 Paper with effective information on ensuring that potential problems are spotted and rectified earlier. This assists in the delivery of 4
100.0 Figure 2: Whole Fleet Cost (pence per mile) 0.0 60.0 40.0 20.0 0.0 1 2 3 4 5 6 7 Period (January - August, 2005) Total Running Standing Driver 1.4% Figure 3: Customer Service 1.2% 1.0% 0.% 0.6% 0.4% 0.2% 0.0% 1 2 3 4 5 6 7 Period (January - August, 2005) Late deliveries Damages Complaints SFPMT outputs inform key decisions With monitoring showing increasingly high fuel costs, A1 Paper recognised the potential of improving their fuel efficiency through training and took the decision to put their drivers through the Safe and Fuel Efficient Driving (SAFED) programme. All drivers were SAFED trained in February and March 2005 - a key factor in delivering improved fuel consumption. Copies of this guide can be obtained FREE of charge by calling the Hotline on 0300 123 1250 or visiting the website www.businesslink.gov.uk/ frieghtbestpractice A1 Paper have also applied aspects of the Freight Best Practice Fuel Management Guide in their drive to reduce fuel consumption. Drivers are trained and updated on a regular basis to ensure continuous improvement of their operation. Improved security and better monitoring of fuel use has also meant that less fuel is unaccounted for. Copies of this guide can also be obtained FREE of charge by calling the hotline or visiting the website. The SFPMT calculates the amount of empty running in a fleet. To reduce their own level of empty running, A1 are considering collecting materials from their suppliers where possible. In addition, the process of monitoring has also been key in informing A1 Paper s decision to replace one of their 1 Tonne vehicles with a 26 Tonne vehicle in 2006. 5
SFPMT helps deliver improved fuel consumption The in-house monitoring system was in place throughout 2004 and the SFPMT was implemented in January 2005, recording vehicle mileage and fuel consumption. In order to assess the performance following the application of the SFPMT, miles per gallon (mpg) can be compared between 2004 and 2005 for the period January - August. Although A1 Paper currently operate a fleet of 11 vehicles, the analysis has been carried out on the basis of the 7 vehicles which operated throughout 2004 and 2005. This ensures that the impact of any new and potentially more fuel efficient vehicles can be eliminated. Figure 4 presents average fuel consumption (mpg) by month in 2004 and 2005 for the Heavy Goods Vehicles (3 of the 7 vehicles). This shows that there was little change in fuel consumption between 2004 and 2005 for the months of January and February, but mpg is consistently higher in 2005 for the months March - August. The increases in mpg can be linked directly to the SAFED training, which all drivers completed in February and March 2005. It is apparent that the improvement in fuel consumption in March 2005 was particularly significant, as the training had been recently completed. A1 Paper also recognise the potential of SAFED training to deliver safety benefits and continue to monitor the number of accidents through the SFPMT. 20 Figure 4: HGV s - Average Fuel Consumption (mpg) 1 16 14 mpg 12 10 2004 2005 6 4 2 0 January February March April May June July Month August 20 Figure 5: All Vehicles - Average Fuel Consumption (mpg) 1 16 14 mpg 12 10 2004 2005 6 4 2 0 January February March April May June July Month August 6
The publication Companies and Drivers benefit from SAFED provides a selection of case studies profiling the savings that can be achieved. Copies of this guide can be obtained FREE of charge by calling the Hotline on 0300 123 1250 or by visiting the website www.businesslink.gov.uk/frieghtbestpractice Figure 5 compares average fuel consumption (mpg) between 2004 and 2005 for all 7 vehicles in the fleet sample. In addition to the 3 HGV s, this includes 4 vans, which form a key part of A1 s fleet. This shows that the increase in mpg is greater when looking at the whole fleet - a result of more significant fuel efficiency savings amongst the vans. Table 1 presents average fuel consumption (mpg) by vehicle type. This shows that between 2004 and 2005 (January - August), the average mpg has increased by 29.2% across all vehicles in the fleet operating throughout 2004/05. Whilst there has been a significant contribution from HGV s (+4.1%), much of the improvement can be attributable to the increased mpg of the vans (+69.2%). A1 Paper consider that the standard of van driving was particularly poor in 2004. The combined impact of SAFED training, a general emphasis on improving fuel efficiency and fewer shorter distance trips has led to the improved mpg. Table 2 shows the total mileage, total gallons used and average mpg for the 7 vehicles which operated throughout 2004 and 2005. It is therefore apparent that the same vehicles travelled over 4,000 miles further in 2005 (January - August), but only consumed marginally more fuel in total. Savings If A1 Paper had operated with the same mpg in 2004 as 2005, the number of gallons used to cover the 2005 mileage would have been 13,1 (62,734 litres), which represents a saving of 3,123 gallons (12,17 litres). With the average price for a gallon of diesel being 430.5 pence (almost 96 ppl) in August 2005 (AA Motoring Trust, 2005), this represents a monetary saving of 13,444. This equates to a saving of 3 tonnes of CO 2 (based on 2.6 kgs of CO 2 per litre). Table 1 Average Fuel Consumption (mpg) by Vehicle Type As a caveat to these figures, it should be noted that although this analysis had sought to provide a consistent comparison by eliminating the benefits from new and more fuel efficient vehicles, the impact of fewer shorter distance trips is likely have been a factor in improving fuel consumption. However, this should not detract from the benefits that A1 Paper have been derived from improving the efficiency of their operation. Vehicle type Year (Jan - Aug) HGV s Vans All Vehicles (in Sample) 2004 12.6 16.4 13.9 2005 13.1 27. 17.9 % Change +4.1 +69.2 +29.2 Table 2 Mileage, Gallons Used and Average MPG Year (Jan - Aug) Total Miles Gallons Used Ltrs MPG 2004 143,593 10,344 46,961 13.9 2005 191,2 10,696 4,560 17.9 7
Freight Best Practice publications, including those listed below, can be obtained FREE of charge by calling the Hotline on 0300 123 1250 or by downloading them from the website www.businesslink.gov.uk/freightbestpractice Conclusion A1 Paper s application of the SFPMT shows how the tool can be used to get a clearer understanding of an operation and how this can very quickly assist in the delivery and demonstration of cost savings. Key points arising from this case study can be summarised as follows: Average fuel efficiency, across the fleet in operation in 2004/05, increased by 29.2% between 2004 and 2005 (January - August). Improved mpg has been achieved for both HGVs and vans. Fuel savings have been particularly significant for the vans - the standard of driving for the vans was considered to be particularly poor in 2004. A1 Paper saved 3,123 gallons (14,17 litres) of fuel ( 13,444) and 3 tonnes of CO2 in 2005 by improving fuel consumption. All drivers have been SAFED trained - a key factor in delivering improved fuel consumption. A1 have applied the SFPMT in conjunction with the Best Practice Fuel management Guide as a means of reducing fuel consumption. Drivers are trained and updated on a regular basis to ensure continuous improvement of their operation. Improved security and better monitoring of fuel use through the SFPMT has meant that less fuel is unaccounted for. To reduce empty running, A1 are considering collecting materials from their suppliers where possible. Outputs from the Small Fleet Performance Management Tool have been an important factor in informing A1 Paper s decision to replace one of their 1 Tonne vehicles with a 26 Tonne vehicle in 2006. The maintenance function of the SFPMT provides A1 Paper with an effective maintenance system, ensuring that potential problems are spotted and rectified earlier. This assists in the delivery of lower repair costs, shorter vehicle downtime and reduced vehicle hire costs. Our transport team now operates as professionals. Thanks to the SFPMT we are now seeing rewards in reduced fuel use, greater staff retention and much better overall operational efficiency. John Claffey (Transport Manager, A1 Paper). Copies of the SFPMT can be obtained FREE of charge by calling the Hotline on 0300 123 1250. Alternatively, it can be downloaded from the website www.businesslink.gov.uk/ freightbestpractice February 2010. Printed in the UK on paper containing 100% recycled fibre. FBP1001 Queens Printer and Controller of HMSO 2010.