New supply chain ideas tried out at the London 2012 Olympics could change the way retailers operate in the UK. Alison Clements finds out what lessons have been learnt.
Night-time deliveries, consolidated transport, river transport, increased collaboration between businesses, and extensive logistics modelling all helped tackle road restrictions to ensure a safe and well-served London 2012 Olympic Games.
The landmark event enabled large-scale supply chain pilots to run their course, with considerable progress made, according to Richard Wilding, professor of supply chain strategy at Cranfield School of Management.
The acknowledged success of the Games’ logistics operations is still being evaluated, although many are already drawing key lessons from them. The Chartered Institute of Logistics and Transport (CILT) is compiling a report on the learnings, organising a working group – The Olympic Legacy Group for Logistics and Transport – to assess how effective various initiatives were. Results will be published in the first three months of 2013.
Chairman of the institute Graham Inglis, who is also chief executive EMEA of DHL Supply Chain, is making ‘legacy of the Olympics’ a focus theme of his year-long presidency. “Requirements for increased security and fewer deliveries into parts of London during the Games proved the catalyst for smarter operations,” says Inglis. “By working closely with local authorities and the transport agencies, issues like out-of-hours deliveries could be progressed significantly.”
Transport for London, LOCOG, official London 2012 supply chain partner UPS and logistics academics spent several years looking for ways to innovate when supplying the Olympics, and keeping London and other affected locations functioning normally during the Games.
“During the Olympics retail supply chain directors will have looked closely at how their business is run and carried out their own very specific modelling and forecasting,” says Steve Agg, chief executive of the CILT. “Others will perhaps hear of initiatives tried out during the Olympics, and ask, could we sharpen our forecasting and planning further? Should we look more closely at patterns of customer behaviour and adapt accordingly; shorten lead times for key products; know how to work more closely with suppliers during peaks and troughs? If the Olympics has inspired retailers to look at their businesses in a different way, that’s great, and we should continue to build on that.”
Sainsbury’s senior supply chain manager Stephen Hayward says planning and execution proved to be key to success for the group during the Games.
“We took the time to establish the impact, both positives and negatives, right across the business from product supply, logistics, retail, IT and facilities management,” he says. “These were then closely managed by senior management through four weekly steering and working groups. Teams were asked to provide evidence of their plans, rehearse those plans and to update those plans as we got closer to the events and or when new information came to light.”
Hayward feels the Olympics showed “that if you govern and plan key events properly, working together internally across all divisions in conjunction with external parties such as suppliers, the impact of any event can be mitigated, even optimised”.
New and improved
There was plenty of advice from the Games organisers. The mantra put out by TfL and LOCOG was ‘reduce, re-route, re-time, and revise mode’. Now evidence is emerging that innovative ways of working were borne out of the guidelines.
A prime example is out-of-hours deliveries, says Agg. “There was relaxation of out-of-hours delivery restrictions into the London boroughs and other Olympic sites around the country,” he says. “Anecdotally this went very well. There have always been concerns about noise and disturbance to residents, but the Olympics has given us the opportunity to show this needn’t be the case. Today vehicles are quieter and night-time deliveries can be done efficiently and quickly if managed well. If it worked in London there’s no reason why it can’t work in Cardiff, Glasgow, Birmingham and so on.”
Marks & Spencer took part in TfL’s quieter out-of-hours delivery trials for the Olympics, working closely with LOCOG and the police to implement “robust plans at our warehouses”.
Michael Watkins, head of operations of food logistics at M&S, says 67 London M&S stores received overnight deliveries during Olympic restrictions. “In-take into Faversham and Hemel Hempstead DCs was brought forward by three hours. We managed shift patterns among drivers, warehouse staff and store colleagues as a result,” says Watkins.
He says M&S was keen to see the impact of changes to delivery schedules on staffing requirements, and feels there is now a template to work to. “There are very few stores within the M&S estate where it would work for us on a permanent basis, so we’re not calling for wholesale changes to delivery times, but we have now proven it can work. So if there is a question mark in the future over a particular store we have evidence and experience to report on.”
Meanwhile, direct delivery routes alleviated problems for Waterstones. The book retailer worked with its supply chain partner, Unipart Logistics, to ensure store deliveries from its Burton distribution hub overcame any Games-related hurdles. Waterstones supply chain director Simon Davidson says: “When all the planning information became available it was clear that for a dozen stores in London the likelihood was there would be severe delivery restrictions during normal working hours. It would be impossible for our transport provider, DPD, to guarantee daily deliveries to branches in those areas of London. So we decided we wanted a bespoke service set up for these 12 stores and the delivery was to operate overnight.”
During the games, freight service Pall-Ex also launched an overnight service for those postcode areas likely to be affected, among other initiatives.
Mark Screen, transport manager at Unipart Logistics, says two specific direct delivery routes were created for Waterstones, which completely bypassed the usual hub and local depot operation. This proved successful. For example, the chain’s Kingston store, which was particularly badly affected by the cycle road racing, would not have been able to receive deliveries for several days without the arrangement.
Davidson says the slightly higher cost of the direct service means it won’t be widely adopted by Waterstones, but he believes there may be specific applications for direct delivery in the future – particularly during peak November and December trading.
At ecommerce operators, home deliveries had to adapt too. DPD London regional manager Steve Woodman says: “Overall we’re delighted with how the Games have gone. We were able to agree earlier collection times with most major etailers and we believe this is a solution that we can employ during the annual Christmas peak – a period which places a very similar strain on the network. In the end, earlier collections helped us solve most issues for etailers.”
DPD invested £1.3m in preparation for the Games, employing 200 extra staff and opening an additional depot in central London, increasing the number of routes operating from all its London depots and extending its early delivery times. Collection hours were extended and DPD provided a ‘runner’ for drivers on routes with restrictions on stopping and parking to make the final delivery on foot.
Communicate and collaborate
Woodman says the biggest legacy might end up being improved communication. “We want to work with retailers to keep on improving the information we are able to supply to their end-customers about their parcels. The Olympics has helped bring us even closer together with our retailers. We’re not just the company that delivers their parcels, we’re very much part of their team.”
Collaboration and communication worked for Boots too. “We worked closely with the British Association of Pharmaceutical Wholesalers and other suppliers to ensure a high level of service to pharmacies in the London areas,” says Simon MacDonald, distribution contract manager at Boots. “A key learning was to always have clear, open lines of communication externally and internally to ensure that the process ran smoothly.”
Another key supply chain strategy during the Olympics was to encourage competitors to work together. Consolidation centres are already delivering greater efficiencies for retailers. For instance, DHL has partnered with Westfield shopping centre to provide a consolidation delivery system to Westfield Stratford City, improving efficiency for about 250 retailers. All store deliveries go to a consolidation centre eight miles from the shopping centre, and are then delivered in one vehicle to the shops – one vehicle between them instead of one vehicle each. DHL Supply Chain says this has reduced vehicle movements to Westfield Stratford City by up to 80%.
“Planning better and sharing facilities can really deliver excellent results, but it needs to be done well,” says Agg. “The Olympics has taken the idea of consolidation, shown what can be achieved, and made it a talking point. If we’ve demonstrated that consolidation effort means fewer road journeys, fewer vehicles and lower emissions then it’s a great strategy to pursue.”
He says that trust has been an issue in the past, as competing grocers and fashion retailers worried that pricing and promotional strategies might be undermined if they worked closely with competitors.
However, if retailers see the benefits from consolidating through the supply chain, they will be more likely to take the plunge. “A lot more is starting to happen around consolidation, fuelled by Olympic success stories, and surely that’s to everyone’s advantage,” says Agg.
The Olympics has proved to be a massive catalyst for supply chain innovation, providing a stage on which to demonstrate what can be achieved.
The disruption of the Games forced many people to look at new ways to operate, according to Wilding. “There was proof that these ideas do deliver results,” he says. “Many of the new initiatives that we saw during the Games did reduce costs, cut journey times and cut the amount of CO2 used, so now we have a duty to pass on that legacy.”
Thinking outside the box
When considering the movement of goods, deliveries and collections during the Games, Transport for London and LOCOG advised to Reduce, Re-route, Re-Time and Revise. These are now considered best practice areas that retailers can apply to their supply chain operations.
- Reduce Retailers should collaborate and co-ordinate with neighbouring businesses to share deliveries, with the incentive to save costs and reduce C02 emissions. Westfield shopping centre showed how consolidation can work during the Olympics.
- Re-route Identify traffic hot spots and re-route deliveries if necessary. Using different depots to supply from or different suppliers saves time and CO2. River routes were piloted by UPS for deliveries into the Olympic village.
- Re-time Arrange out-of-hours deliveries when roads are quieter, and receive deliveries outside the busiest times. Stock up on non-perishable items before big events, and carry out maintenance on vehicles in advance to prevent problems during peak times.
- Revise mode Use different transport and delivery modes. For example, couriers could cycle or walk for small deliveries, and rail or river transport could be an option to avoid congested roads. CitySprint, fulfilment partner for Asos and House of Fraser, had contingency plans for home deliveries during the Olympics, including increasing its push-bike fleet, introducing a jogging and rollerblading team and equipping couriers with routing technology. This enabled it to plan new routes and avoid traffic hot spots. DPD used ‘runners’ from vans for problematic parcel deliveries.