When Leo Group decided to seek a 3PL to develop its logistics operation, one of its directors decided not just to oversee the process, but to link up with some colleagues and put forward his own tender. The result is Haulage Holdings, and the partnership is going from strength to strength.
Leo Group’s search for a 3PL to upgrade its logistics operation ended on its own doorstep. Leo Group specialises in the collection and processing of animal by-products into meals, oils and pet food ingredients, which are distributed and exported worldwide.
When it put out a tender for a 3PL to run its logistics supply chain, it asked director Jim Hutchinson to help oversee the process.
The group was looking for a partner that could develop the firm’s logistics and supply chain in the key areas of route to factory, fallen stock returns, production, fulfilment and warehousing.
Hutchinson decided the answer lay closer to home. He recalls: “I’d worked for a number of third-party logistics suppliers for around 40 years and had significant experience of open and closed book contracts.
“After working with Leo Group for three years I had a good understanding of its business, so I decided to give it a go. I put a tender together with some colleagues and presented it to the board in November 2013.”
The board was impressed, not only with Hutchinson’s experience in both sectors, but also the team’s plans to embed the logistics operations in the business in a way that would deliver significant efficiencies.
As a result, the team was awarded a contract to set up as a separate entity, dubbed Haulage Holdings, which would take over ownership and control of Leo Group’s transport division.
The deal presented a golden opportunity to Hutchinson. He explains: “I had been striving for best part of three years to try to change the haulage side of the business.
“The Leo Group’s main focus is on production and sales. Coming from a transport and distribution background, I could see that the transport side was just an add-on – just a net figure on the bottom line of the firm’s P&L.
“I had been trying to change the perception of the transport division for some time and so this gave me the opportunity to do so – to make it more of an innovative operation and make it much more part of the business and improve service levels.”
With just three months to implement the new system, the partnership set about reviewing the entire supply chain, focusing on collection and delivery schedules, product categorisation, sales profiling and production output.
Project teams
Project teams with members from both businesses were set up during January 2014 to work together to develop a logistics solution.
Meanwhile, a new distribution hub was built in Halifax, which was to become the heart of the partnership, allowing effective liaison between the two organisations.
As the April 2014 deadline loomed all teams attended regular project meetings, with operational teams kept abreast of key dates and performance and staff kept in the loop via regular communication bulletins.
In addition, supervisors and trainers were appointed from various parts of the business to ensure a smooth transitional period and support the delivery of the new logistics strategy. This was supported by daily planning and operational conference calls between Leo Group and Haulage Holdings key stakeholders.
One of the first tasks under the contract was to transfer over the drivers to Haulage Holdings under TUPE regulations and switch from a manual to a digitalised transport management system to better monitor and manage driver hours.
With major changes planned to the collections and deliveries made to Leo Group production plants, customers and suppliers under the new strategy, Hutchinson knew it was paramount to involve the drivers in the process.
“It was a substantial change – we had group briefings for all drivers explaining the fundamental changes to the business,” he explains. “Up until that point there had been no clarity in terms of the collecting process by category and no waving profiles for different types of product. While the group understood the quality of the product coming in, they had been unsure of how to succeed in improving that in terms of logistics.”
The solution was to introduce timed deliveries and the categorisation of products, which quickly saw a net improvement in the quality of the animal by-products being picked up from the abattoir and delivered to Leo Group’s processing plants to be processed into pet food, tallow oil, poultry oil, cosmetics and renewable fuel for power stations.
“Obviously animal by-products are a very volatile product and can be affected by the weather, for example. Before the partnership there had never been any timed collections from the abattoirs – they could be made anytime between when the abattoirs shut at 10pm and when they opened at 6am and that delay had affected the quality of the product and how it is processed,” says Hutchinson.
After speaking to all of the operators of the abattoir collection sites to explain the benefits of the new collection profile, the partnership narrowed down the collection time down to a one-hour window.
“We also had to bring on board the production teams at the processing plants who had been used to vehicles arriving at the plant and being told to just park the trailers up. We explained the benefits of this new concept to them in terms of how the product would arrive in a smoother flow, how they wouldn’t have to park as many vehicles up and how they could man the plant more efficiently,” Hutchinson recalls.
In addition, staff from both businesses also visited customers and abattoir sites to help gain a greater knowledge of product quality, so they could better understand the need for time constraints in relation to collections, route to factory and the need to optimise driver hours.
The revised collection schedules have made a marked difference, with lead times reduced in some cases by up to 24 hours and most produce from abattoirs collected by the end of the production cycles to ensure the quality and freshness of the product.
Fleet investment
Since 2015 the partnership has also made major investments in its fleet, which consists of around 85 trucks and 300 trailers. A £5m refreshment programme has funded the development of new trailer designs to tackle the issues of leaks, spillages and odour.
“Our technical experts in the transport team worked with our trailer supplier to develop a new style of trailer. It took almost 18 months to come up with the new design, which has made a massive difference to collections.
“The trailer has a sealed unit, which deals with the issue of spills and leaks and odour – a common problem in our industry because of the volatility of the product. And it is much more user friendly and hygienic for our drivers as it works on automated closure,” Hutchinson explains.
Leo Group’s purchase of Mercedes-Benz franchise dealership Bell Truck and Van in June 2017, which runs six sites in the north-east of England and Scotland, has also enabled the partnership to open a dealership branch on the Halifax site, giving Haulage Holdings access to an in-house repair and maintenance facility.
The group has also installed a new MoT lane at Halifax and an automatic vehicle wash that incorporates a wash water recycling plant to ensure the fleet is kept to a high standard of cleanliness.
So what’s next for the partnership? “We have no plans to stand still,” says Hutchinson. “We are looking at extending our relationship with customers where we can expand into the haulage side and looking at a reverse logistics plan to reduce empty running.”
Earned Recognition
Haulage Holdings is in the process of gaining Earned Recognition accreditation. Under the voluntary scheme operators have to demonstrate compliance with nine key performance indicators. In return, operators benefit from a greatly reduced number of roadside checks and visits from enforcement officers.
“We have just finished trialling a couple of the telematics systems and are now fully digitalised with Check Pro’s defect reporting procedure and maintenance records, so we are hoping to put in our submission by early next year,” Hutchinson reports.