trasporto su ruote by Nicolò Pascale Guidotti Magnani* e Andrea Bardi**29 Novembre 2013

The opportunities of collaborative logistics

Through synergy between different operators it is possible to increase the degree of saturation of carriers and reduce overall costs

Analyses of the critical issues faced by the Italian transport system compared to those of other countries point to limited adoption of intermodal transport and poor use of road transport vehicles. This is generally due to a fragmented production model, which results in a fragile offering strongly geared to the domestic market.
A series of studies conducted recently by the Institute for Transport and Logistics (ITL) shows that the very low average saturation of road transport vehicles actually corresponds to a number of very different situations. In particular, there is one subset that is consistent with European standards and another (unfortunately the majority) that suffers from severe pockets of inefficiency and focuses mainly on short-range truck transport. The studies conducted by ITL show that logistics analyses must not be restricted to evaluating average values but must adopt simulation tools that are more representative of the actual situation. What is needed is a modern approach capable of designing the service (rather than just determining costs) based on a knowledge of the current situation and possible alternative models.

The short-range project in the Ravenna cluster
One example of such an approach is the short-range truck transport project conducted by ITL during 2013 as part of the EnergyVillab programme. ITL worked with three industrial companies operating in the mechanical and machinery sector and located in the province of Ravenna (Igmi, Kverneland Group Ravenna and Marini, with a cumulative turnover of 200 million euros) and performed a structured analysis of their procurement flows. ITL's study demonstrated the feasibility of a collaborative logistics project based on the idea of integrating three procurement cycles that could potentially benefit from common synergies. The project highlighted the possibility of increasing the degree of saturation of vehicles up to 75% or more compared to the current situation of just over 40%.
Along with the reduction in transport costs deriving from improved use of vehicles, further potential benefits include higher collection/delivery frequencies and greater reliability in supplying factories (inventory reduction). The companies agreed to use a single provider capable of offering a dedicated service, with shared and constantly monitored targets. The project, currently at the start-up stage, has demonstrated the validity of approaches based on principles of collaborative logistics. At the same time, it has revealed the critical points listed in the following table, which also shows the action that needs to be taken for each stage.

Process phase	Critical point	Actions to be taken
Context analysis and model definiti	- Lack of quantitative information - Poor knowledge of processes on the part of company personnel, whose vision is limited to the process phase directly under their control.	- Definition of structures and qualitative and quantitative data - Examination of data and construction of analytical models - Technical report with a description of organisational processes, critical points and benefits that could be obtained through reorganisation.
Definition of ideal provider profile	- A focus on traditional models based on efficiency of the purchase and not of the process.	- Workshops to discuss the benefits and opportunities of collaboration with various profiles of providers - Identification of critical success factors on which to base the evaluation.
Letter of appreciation	- Limited knowledge of the characteristics, processes, management methods and IT support tools of a logistics and transport services provider.	- Request for general information and visits to the facilities of a number of providers to learn about organisation, resources and specialist teams devoted to development of the business.
Service specifications	-The company does not have the necessary expertise or organisation to draw up specifications suited to the tender requirements (extraordinary activity) - The company has difficulty in comparing the various proposals from providers.	- Technical consulting must integrate the provider's own skills with the more operational expertise of the company and prepare a specification that will serve as a basis for developing the executive project - The specifications must contain the quantitative elements on which the offer is to be based, with tariff drivers defined by the client and tender rules clearly stated.
Definition of contract and launch of operations	- A focus on cost and little attention to service - Difficulty in recognising the value offered and in extending the negotiation to principles of fairness and transparency - Difficulty in handling the implementation of IT processes - Slowness in adapting organisations to the needs of the contract.	- Use of models shared between supply and demand - Definition of control indicators (level of service: complexity and mix of activities); - Setting up of a mixed team for planning/implementation of contractual activities - Regular meetings to discuss contract issues.

Overcoming cultural obstacles and pursuing advantages
Ceramic industry companies can likewise improve their competitiveness by reducing logistics costs. In supplying raw materials to factories, ceramic companies could innovate by using more rail and less road transport, but they are limited by the availability of adequate intermodal infrastructures. As regards distribution, logistics innovation appears to be obstructed by internal organisational choices that hinder the adoption of new operating models capable of improving transport efficiency. Likewise for the ceramic sector it is necessary to use appropriate analysis and simulation tools to investigate the feasibility of introducing a new organisation of transport, encouraging users to adopt a shared provider within a specific geographical cluster. The current national distribution model appears to be sound. It has a cluster organisation with carriers that specialise in regional districts and are capable of balancing outgoing flows with return journeys towards the Sassuolo cluster, which serves as a national platform for distribution in a market where the Italian producers maintain their leadership position. By contrast, physical distribution in Europe is managed by clients and carriers with little margin for negotiation in terms of either service or cost, with an offering split over hundreds of players. Amongst all markets, Europe is probably the one where a new distribution model based on the principles of collaborative logistics could best be implemented without necessarily having to alter the delivery conditions. Ceramic producer companies need to join forces to organise transport and obtain better service conditions for their customers. To get an idea of the scale of the phenomenon, in 2012 the cluster shipped more than 180 million tons of tiles to Europe with a flow of 500 truck equivalents/day. Transport costs for distribution in Europe amount to a total of 100.00 million euros, equivalent to around 10% of turnover. The goal should be to have a small number of specialist providers for each regional cluster which would be capable of organising the distribution service with guaranteed delivery times. According to some simulations, the costs may be as much as 15% lower than at present.

*management consultant and expert in logistics and transport systems
**senior researcher and project manager, Institute for Transport and Logistics