Coping with Lubricant Distribution Challenges
The lubricants industry is not alone in being affected by the rising price of fuel, the general economic downturn and a need to reduce the corporate carbon footprint. Add on the impact of REACH and together these challenges have thrown a greater spotlight on other business areas that can deliver cost savings and greater efficiencies. The use of appropriate technology such as vehicle routing software, telematics and business intelligence are increasingly becoming key weapons in the fight to remain competitive and profitable.
However, two requirements for the lubricants industry in particular are placing a strain on distributors' supply chains: managing product and compartment mixing restrictions and delivering bulk and packed lubricants to the same customer. This is where the application of technology solutions such as vehicle routing software can deliver major benefits.
This article examines the key issues involved in lubricants distribution planning and looks at the components of an efficient supply chain.
Filling the Vehicle
Vehicles used in lubricant delivery can come in various shapes and sizes. The traditional form is for a compartmented vehicle with one or more pumps. Distributors, particularly those working in less densely populated areas or for more specialist products may also have vehicles with mixed bulk and packed capability. Space can be made by having a smaller number of conventional bulk compartments or make use of IBCs or "totes". Totes are plastic moveable containers of typically 1m3 or 1.25m3 capacity which function as bulk containers in that they can be hooked up to the pumps and emptied by pumping.
Vehicle routing software has to take account any of these combinations in order to maximise the effective load on the vehicle. For a conventional lubricant tanker the basic rules are simple:
- Multiple orders for the same product can go into the same compartment.
- Different products cannot go into the same compartment.
- Control of quantities off-loaded is managed by the metering.
There are some exceptions. Older vehicles or vehicles without metering systems may require that a compartment is dedicated to the product of a particular customer, or even that only full compartments dedicated to a single customer product are permitted.
For IBC carrying vehicles, different problems arise. For example, if you do not use all available space for IBCs you have space for packed goods. But the routing software needs to know how many IBCs are used in order to calculate this available space.
Finally, the packed goods storage space itself may need careful planning. For example:
- Drums or full pallets may be stacked under some circumstances but not in others.
- The inclusion of heavier packed goods (drums or shrink-wrapped pallets) may require mechanical handling equipment which itself will occupy space on the vehicle.
So why is all this so important?
If the routing system is operated without taking these matters into account, it will only have a crude estimate of vehicle capacity, resulting in either:
- Overestimating capacity - resulting in trips that do not work. This is not discovered until loading whereupon orders are left off or relief vehicles brought in.
- Underestimating capacity - vehicles are not full and more vehicles than is necessary are used.
Loading and Unloading
Mixed packed and bulk lubricant routing requires carefully modelling of loading and unloading times. Loading is a critical use of time. Companies may allocate a whole day to loading a bulk tanker, but IBC vehicles require far less. Unloading bulk orders requires a high fixed time (setup of hoses) plus an easily calculated pump rate - which may vary with product viscosity. Unloading packed orders can be quick if they are shrink-wrapped pallets and the customer has a forklift, very slow if it is done manually.
Modelling time properly is essential to any routing system in order to make good use out of the driver's day. It needs to take account of products, the customer site and equipment on the vehicle/on site.
Product Contamination
An understanding of product contamination is vital to the planning of bulk lubricant distribution. It affects both cleaning of compartments and sequencing of product through pumps and hoses. Product A can always follow Product A with no action but any product transition must be treated carefully.
Products can normally be grouped into families, e.g. hydraulic oils, gear oils, motor oil, etc. Within a family one product may follow another in a compartment with nothing more than draining any residue. But between families different transition rules apply. For example, gear oil may follow hydraulic oil with nothing more than a drain, but for hydraulic oil to follow gear oil requires a Drain and Base Oil Flush. Different types of cleaning include:
- D = Drain
- D+BOF = Drain + Base Oil Flush
- D+DW+R = Drain + Detergent Wash + Rinse
- D+DW+R+DRY = Drain + Detergent Wash + Rinse + Dry
The more complex the cleaning the more expensive it is and some transitions are simply not possible or allowed, e.g. industrial to food grade oils.
For this to be solved by a routing system it is necessary for it to know which products were previously in the compartments and also to know the cost of the cleaning. The software ensures that all product to compartment allocations are feasible and to keep the cost of cleaning to a minimum, by appropriate compartment selection.
Below is the Optrak compartment loading chart with cleaning instructions:
In this example we have Special Instructions for the transition to an OEM product, Drain and Base Oil Flush from ATF to Hydraulic oil and a straight Drain from Hydraulic to Base oil.
Pump and Hose Contamination
Prevention of product contamination may influence the sequence of deliveries on a trip. A vehicle will typically have 2 or sometimes 3 pumps. An incorrectly sequenced trip may deliver heavier or more contaminating oils early leaving lighter oils, such as hydraulic oils until last. This will result in the pumps on the tankers becoming contaminated.
The same set of rules can be applied as for cleaning. However, in this case, if no on-the-road cleaning of pumps is possible, the only transition permitted is Draining. Optimisation of the routes may involve re-sequencing of deliveries. But it is more cost effective, where possible to optimise choice of pump to allow a better trip.
Establishing best practice with supply chain technology
A real-time, integrated supply chain that takes into account the challenges posed by product and pump contamination issues, and features a high degree of automation of planning and control tasks is today considered best practice. It reduces the risk of expensive errors in planning and minimises staff and distribution costs.
A supply chain that incorporates the following elements provides the greatest flexibility and potential for savings:
- Sales order processing systems to capture orders
- Vehicle routing software to calculate efficient routes and compartment loading plans
- Warehouse and production software to control stock and fulfil orders
- In-cab SatNav systems for turn by turn instructions and to send vehicle location information in real-time to a central server
- Handheld automated Proof of Delivery units to capture customer signatures
- A business intelligence server to allow customer service staff to monitor deliveries and dynamically reschedule vehicles in the field and notify customers as appropriate
- A database to facilitate management reporting
Andrew Reynolds of Reynolds Logistics, a company that uses a highly automated supply chain, comments, "By investing in modern technology within our supply chain, we have been able to introduce greater efficiencies, and ensure our vehicles travel the least distance whilst meeting our customer service obligations. By effectively managing compartment mixing rules and our pioneering use of IBC carrying vehicles to deliver both bulk and packed lubricants on the same vehicle, we can operate an agile and lean supply chain which is crucial to our business competitiveness."
Conclusion
Whilst fuel prices are showing signs of coming down, many lubricants distributors still need to invest in their supply chain. However, implementing vehicle routing software alone can lead to a reduction of up to 20% in distribution costs. In an uncertain economic future, an efficient, automated supply chain could make the difference between business survival and failure.
Author
Tim Pigden is Managing Director of Optrak, a leading supplier of vehicle routing software for the distribution industry.
Links:
Web: www.kmkeystone.com
Want to know more?
Email: rkoren@kmkeystone.com