Creating a more integrated environment - Hanson case study  

Hanson is a substantial, medium‑sized business with a strong sales line, generating a large annual turnover. Profitability was low in a marketplace with surplus capacity. Over half Hanson’s turnover went on delivering four main products, but customers complained about late and incorrect deliveries.WCI helped the company to optimise their customer service by leaning up the logistics operation and supporting information systems, at the same time creating a more integrated environment in which departments automatically worked together.

Key challenges
The company didn't have the data – or not in a form they could use intelligently to identify where they were going wrong and how to put it right. Nor did they know what data they needed for the job. They started by trying to tie down all the variables, but realised it might not be practicable – and would take far too long. They called for help.

Operationally, the big challenge was to help Hanson quickly reduce their costs (per delivered mile) on their dedicated fleet, while improving service reliability and accuracy. This would buy time and resources to work on achieving further improvements in logistics and other business processes.

An operational model of logistics was needed to test ideas and solutions – a robust model that could be produced quickly.

Solutions – 'good enough'
To look for a swift, robust solution that is 'good enough' is not a recipe for a rough job. It is a matter of building something that is ‘fit for purpose’.

Why not go for the Rolls-Royce job? First, you need to focus on the significant things. Trying to cover everything muddies the picture. Second, by the time you have it 'perfect', the market will have changed. And third, you want to know what's best to do. The model should identify the top scorer. Top is top, the number is immaterial.

Identify and focus early on your KPIs and how to measure them. A good model could suggest numbers that you should aim to achieve in each measure. ‘You cannot improve what you do not measure...’

Logistics was the key to customer satisfaction, and so was tackled first. WCI helped identify quickly how to manage it more effectively, how the internal fleet could be better utilised, and what savings and service improvements could be delivered.

Phase 1 We carried out qualitative research inside the company on delivery and fleet utilisation. We confirmed that functions were rather isolated, with little sharing of data. We were told customers were not very happy, but what displeased them most? Erratic delivery? Order inaccuracy? We asked some of them. And collated industry benchmarks and data on comparable operations.

From the answers, we built our model. We were also able to simplify, integrate and apply the IT systems in an appropriate way to support the lean processes. Making the most of some straightforward IT meant that everyone would be working with the same data to ‘join up the functions’.

Comparing Hanson's logistics practice and performance with industry norms revealed the gap to be filled. The model gave figures for optimising load fill and showed the costs of working the fleet harder and/or changing the selection criteria for 'own fleet' versus hauliers.

Our robust analysis specified the scope for savings and potential benefits, as well as offering strategic scenarios and comparisons for consideration.

Provided with an agreed set of data for initial analysis, a WCI team expert in the European logistics industry completed this work in just four weeks.

Phase 2  WCI identified potential operational savings of four times current profit which would be delivered by five internally staffed workstreams.

1. Manage the customer queue process and increase the recovery of waiting time
2. Improve workload scheduling and demand management
3. Review the commercial structure and annual planning for distribution
4. Implement cross-functional measures as an enabler of lean performance
5. Develop strategic opportunities for a fundamental shift in distribution costs.

WCI developed milestones and resource plans, as well as identifying and installing KPIs. Then we trained the internal teams and managed the project workstreams through to successful completion. People from the company's functions applied their rich day to day knowledge to make each project succeed and achieve the overall plan.

Benefits and results
The company had acquired the ideas and skills of continuous optimisation.

They had a means of measuring performance on KPIs, of comparing it with industry norms, and of monitoring and adopting industry best practice.

The effect of functional silos was much reduced as people had better access to IT, used it more intelligently and had common systems and formats.In a year, profitability had almost tripled. It is on course to quintuple.

Still room for improvement?
What made this piece of work stand out was that the model we built of the operation was no more complex than it needed to be to get the job done. The change process itself was lean it got the best solution at the least effort and cost in the minimum time.

And we combined techniques of Optimal Production Technology with Lean techniques of simplicity and efficiency: "Lean Optimisation".The simple plan is, make the step change first. Now the playing field is level you have space to move on to continuous improvement.