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Operators have traditionally taken loads into the marketplace. Now, EU
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directives and changes in consumer habits are shaping business opportunities in the returns sector. Tim
Maughan takes a look. Road transport operations have traditionally been characterised by outgoing traffic. Now, fundamental change is happening. With the introduction of European Union legislature such as the Waste Electrical and Electronic Equipment (WERE) Directive, loads are increasingly being pushed hack into the supply chain.
This is known as reverse logistics, and entirely new sets of personnel, accommodation, trucks and expertise have sprung up to handle the work.
Roy Attenborough, owner of transport consultancy 4040 Solutions, compares the situation to a "revolution": logistics is not only outwards, but backwards. An Environment Agency spokesman points out: "One million tonnes of electrical goods from households and businesses are thrown away every year in the UK." Many of the loads are crushed in refuse trucks, and their remains are deposited in landfill sites. But from July manufacturers will have to ensure their goods are recycled (see panel, page 61).
Fuel for reverse logistics
Recycling, however, is not the only factor driving the reverse-logistics sector. British shoppers are a fussy lot and retailers have pandered to their demands, setting up particularly generous return policies— a perfectly sound television set may be in Acacia Terrace for no more than a week before finding itself back in a warehouse.
Christian Salvesen has embedded itself in this returns business. This is a 'value added' environment, with the transport firm working within its customer's own premises.
Roy Attenborough used to work for Christian Salvesen; now, among other things, he advises firms on how to put a reverse operation in place. CM met him, and Christian Salvesen's operations director Rob Berry, at an Asda warehouse complex at Magna Park, near Lutterworth, Leicestershire. "About 13 years ago," Attenborough begins, "Christian Salvesen started to talk about reverse logistics with customers like Tesco and Asda." Reverse traffic has led to the growth of dedicated facilities to take on return loads. Central and regional distribution centres and the supermarkets have now been joined by service, or return, centres.
Christian Salvesen manages Asda's entire reverse loads operation, but none of the fleet operator's LGVs are assigned to this work. Instead, the firm concentrates on directing the returns while Asda's own fleet shifts the goods. Attenborough and Berry agree the Asda contract works on an 'open book' system. "They pay for everything, and we earn our fee based on our performance," Attenborough explains. -We have an annual budget with the customer," Berry adds. But returns are not merely the opposite of the outgoing process. Goods are returned constantly, and sufficient room has to be available for them. -One of the cornerstones of the reverse logistics puzzle is that you should get it right, at the right time," says Attenborough.
The scale of return loads is impressive. On 22 December 2006. the busiest day to date for Asda's reverse operation, no less than 28 of its 44-tonners were bringing in returns every hour. The goods were picked up from supermarkets and dropped at return centres for cleaning, checking and redistribution; electrical products were transported on plastic trays.
Asda has 12,000m2of returns accommodation at Magna Park: a combination of storage space for the goods and washing areas where the plastic trays are cleaned.
Nationally, Christian Salvesen runs seven of Asda's return sites; 400 of its personnel are employed to service them. Because its task is to relieve Asda of returns duties, the operator takes on a variety of work.
Paul Walker manages Asda's Magna Park returns site. "We wash trays and bale card and plastic,he reports. And while welding is something you expect to see in industrial sites rather than supermarket distribution areas, three full-time welders arc based at the Magna Park warehouse: "They repair the transport cages," says Walker. "About 900 are repaired here every week. Extra help can he brought in to repair garment rails, and so on."
Christian Salvesen manages the welders, allowing Asda to concentrate cm its core activities. We see bulk potato containers which have been brought back from supermarkets. These will be cleaned and sent to the suppliers -in this case, farmers.
CM heads deeper into the Magna Park warehouse. Returned electrical goods from across the Asda network eventually find themselves in this shed. -Anything with a plug on it comes back here,says Walker.
Attenborough confirms that Christian Salvesen has transferred its returns knowledge to the Continent; the company is setting up two service centres in France to assist various supermarkets with their reverse logistics.
Exporting reverse logistics
Whenso many UK companies are being snapped up by foreign firms. it is encouraging to see that British logistics outfits can increase revenues by looking further afield. "If it works here, why would the French supermarkets not want to make the savings Tesco and Asda do'?" Walker points out.
Asda's investment in returns accommodation has increased its revenue streams. Previously, owing to lack of dedicated space, large supermarket chains would auction off unwanted electrical goods to jobbers, the middlemen. The emphasis was on shifting the stock promptly to recoup at least part of the consignment's value.
Take your time But now Asda can store returned goods and send them back to the manufacturer in its own time. -It used to be that 80% of products used to go to the jobbers and 20% to the manufacturer," says Attenborough. Malcolm Waddell. operations manager, electrical returns, adds: "Stock is held here for a maximum of two weeks; after that, 93% of goods go back to the original vendors, and 7% to the jobbers."
"This benefits Asda, because it gets considerably more value from the goods.
Waddell shows us a secure area where compact -extra-high-value goods" such as mobile telephones, cameras, and laptop computers are held.
This kind of attention to detail is vital, and fleet operators need to take an all-embracing view of this job that goes well beyond many conventional transport operations. "You need to be flexible and cost effective," Attenborough concludes, "and you need to have a production mentality"..
The company has an artic for hauling tyres to a recycler, and Charles Trent also makes money from selling on car and van parts to the public.
Recycling
This firm is, to all intents, an own-account operator. Its chief business is taking on and recycling car and van parts, and its vehicles service this process. To ensure a steady stream of vehicles to scrap, it has invested in specialist vehicles. Logistics manager Laurance Wateridge oversees two lvecos: a 7.5-tanner and a 32-tonne eight-wheeler which hauls a baler in layman's terms a car crusher. Charles Trent also operates car transporters, street lifters and specialist recovery vehicles.
Wateridge says car recycling really started to have an impact around 2002/03, which is when the focus moved towards using parts and fluids, rather than crushing entire vehicles.
"Our Poole depot was the first in the UK to have depollution equipment," Wateridge reports. "The government used it as a benchmark for all other Authorised Treatment Facilities."