Optimized Distribution Strategies for Spare Parts Retailers

Massar Solutions was represented at Automechanika 2016 by Brent Melvin, its General Manager of Supply Chain Solutions who possesses more than 25 years of experience in sales and operations in the domestic and international freight and logistics sector. His portfolio of experience includes a wide range of senior positions in strategy, business development, training, quality and operations for Massar Solutions and other local and global corporations based in the UAE.

Massar Solutions is a government-owned freight and logistics company, offering car rental, fleet management, and supply chain management services. Established in 1998, the company’s supply chain solutions are tailored to the commercial and industrial segments in the UAE. Massar manages nearly ten thousand vehicles of its own fleet and nearly seven thousand vehicles for its clients. Originally a wholly owned subsidiary of the Abu Dhabi Water & Electricity Authority, today, Massar Solutions is jointly owned by the Abu Dhabi National Energy Company PJSC and the Abu Dhabi Investment Company. The company has grown exponentially in the recent past, acquiring franchise rights to operate Payless Car Rental in the UAE. The company is also the distributor Arvento Mobile Tracking and Telematics.

Overview

Mr. Melvin presented a brief overview of supply chain optimization from a local perspective, from the point of origin to the point of final consumption. The cost of warehousing and transportation is a significant component that influences the final sale of products. Inefficiencies in these areas generate hidden costs and cause a loss of revenue to operators. This situation can be prevented by the optimal handling of freight from the point of delivery to the warehouse to the point of delivery to the customer as a margin improvement strategy. The supply chain in itself covers the suppliers, raw material processing, production, distribution channels, and transportation. The focus of the presentation was on warehouse and transport optimization strategies as the drivers for lower cost and increased customer satisfaction.

The core responsibility of storage of goods has evolved to include operations that perform inventory management, visibility, pick pack operations, stock management, replenishment, dock management, and value-added services. Consequently, warehouse operations are vital to effective inventory management and demand planning that in turn improve lead times and speed to market, critical factors in the spare parts industry.

Challenges and Optimization Strategies for Warehousing

Some of the key industry challenges include:

• Increasing productivity

• Improving inventory accuracy

• Reducing cost

• Safety stock management

• Demand planning

• Seasonal fluctuations

• Lead time for sourcing parts

Industry optimization focus areas include:

• Space optimization as leased space is expensive

• Inventory planning and optimization by using software to analyze throughput

• Reducing capital that is tied up in stock

• Managing the arrangement of fast-moving and slow-moving stock

• Dock management

• Accessibility for the picking process

• Load planning

Challenges and Optimization Strategies for Transport

Key challenges include:

• Outsourced fleet as against an owned fleet considering the type of business

• Visibility of the cost of transport operations

• Number and size of vehicles required

• Visibility of actual delivery activities

• Delays at customer locations

• Routing and adherence to planned routes

• Limitations to working hours and customer timings

Optimization strategies include the consolidation of products, optimizing group performance, load planning by taking delivery requirements and converting them into a seamless transportation approach while maintaining a balance between reduced cost and improved customer service to secure a competitive advantage. The number and size of vehicles used also depend on the need for them to operate within city limits as large trucks cannot operate within the city. The factors influencing the choice of vehicle and activity were discussed.

Some of the considerations affecting the process include:

• The capacity and quantity of the fleet and the market reach

• Customer location and distribution centers

• Customer availability and service time flexibility

• Number of orders to be delivered

• Time

• Distance

• Vehicle-specific auxiliary attributes such as the presence of a tail lift or delivery helper

An overview of a utility that processes multiple factors such as vehicle attributes and driver timings to provide a load plan that optimizes distance, time, and market reach. The use of Massar’s optimization tool has resulted in a cost reduction of up to 20 percent.

Route Optimizations

• Minimized kilometers run to save cost

• Maximum utilization of fleet and vehicle capacity

• Maximum use of time

• Meeting customer-specific requirements

• Visibility and planned activity vs. actually performed activity based on vehicle-based telemetry

• Productivity reports

Utilization optimization software, warehouse audits, process improvements, and planning can result in cost savings and competitive product positioning.

The presentation concluded with a Q&A session.