Potential industry asset

Tim Lawrence, director of Digital Catapult’s digital supply chain hub, an initiative focused on making supply chains smarter through use of technology, says Sequence could become “an asset that’s available to the industry” and used to optimise and share fleet routes.

“If you imagine in the future, for example, the M1 corridor – a busy area between the distribution hubs in the midlands – some trucks are full and some are empty,” he says. “We want to use this platform so everything is running full.”

Lawrence sees progress if this is rolled out gradually, and predicts interest will build as more retailers get involved. However, he acknowledges a plan is still required to cater for the different needs of ambient goods and fresh food haulage.

“But there is no reason why, if everyone collaborates in the right way, you can’t optimise that, and reduce congestion and traffic on those roads,” he adds. “And, in the future, if they’re all running on hydrogen or electric power, we will have created a low-carbon, optimised system. That’s the vision.”

Fuuse has developed the algorithms around route optimisation and related supply data and, for example, can calculate how far off a route a truck can deviate to pick up another load before it becomes less efficient, as well as the logical retailer journeys.

Incept, which has been working with AF Blakemore for six years already and is the innovation arm of Simply Supply Chain, boasts several large UK retailers as existing customers. It offers tech to optimise the use of a particular vehicle itself, such as best use of pallets, and provides the retail operational knowledge and expertise to L3.

“Retailers we’re working with are already optimising orders and flows, and therefore they are already taking costs out which can offset inflation,” says Nick Gazzard, a director at Incept and Simply Supply Chain, adding that there are significant savings to be made by retailers who open up their end-to-end supply chains.

Results

The L3 programme began looking for last-mile logistics problems, but ultimately honed in on the middle mile and particularly backhaul when trucks return to their depot after making a delivery. With so many trucks fulfilling goods and then returning to warehouses and distribution centres empty, it was agreed there was huge potential for using the tech to allow retailers to pick up future supplies on their return route.

“One of the things often discussed when looking to decarbonise is the move to different technology and diesel fuel alternatives – and, ultimately, that is what we all want to move towards,” says Lawrence.

“But one of the first steps is improving efficiency of existing vehicle fleets – known in the industry as resource efficiency. Through products and platforms like ours, you can drive a certain reduction in CO2 and generate cost savings because you’re taking trucks off the road.”

This represents methodical thinking because the transition from diesel-powered trucks to alternatively fuelled vehicles is not a rapid process. For example, AF Blakemore introduced four electric HGVs to its fleet in the first quarter of 2024, and baked goods manufacturer Warburtons added three electric HGVs in March after successfully running a comprehensive trial using a single Renault e-truck.

Last year, furniture and furnishings retailer Dunelm invested in one electric vehicle for store deliveries alongside nine home delivery tractor units powered by compressed natural gas. There are other examples, but the stock of non-diesel HGVs is still limited, and retailers are only able to tentatively add them to their fleets at present.

“Aiming for a fully decarbonised economy, the first curve you hit on is efficiency, then you get into more green energy and vehicles, but that’s going to take 10-15 years,” says Lawrence. “Unless you do some of these efficiency initiatives first, I seriously don’t think we’ll hit the emissions targets we’re setting ourselves.”

L3 has been trialled in a real-world industrial environment, combining DLT, the internet of things and an algorithm developed by Fuuse, to optimise route planning and truck use. By matching vehicle transport capacity with shipment needs, it’s argued that AF Blakemore could decrease overall transport costs by 37%, improve its vehicle fill rate by 9%, and achieve carbon savings of 15-30% by utilising trucks already on the road.

Gazzard says the platform can fix “one of the biggest bugbears in the industry” – the problem of empty running transport costs, which he argues are “through the roof”.

“If we can get this working, you’re talking about bringing 80% of the goods – maybe more – on backhaul,” he says. “The apps are working; the question now is industrialising them and expanding the range of people using them.”

The project’s activities and outcomes are now detailed in a report, accessible through the Digital Supply Chain Hub. 

“We’re now at the stage where we want to scale it up with AF Blakemore and roll it out with other retailers as well,” says Lawrence. “We need some further work technically, but we want to build knowledge and excitement in the marketplace.”

Industry mindset

According to Lawrence, it’s no longer the capability of technology holding back the potential for improving efficiency and environmental performance of supply chains: it’s industry mindset. “It should be a no-brainer,” he says.

“The problem we need to overcome is the industry sharing mindset, and whether retailers are happy to collaborate effectively, in terms of data sharing and suppliers sharing information on loads and timing,” says Lawrence. “There is evidence retailers are more willing to move towards greater transparency in the name of environmental improvement. One of the reasons we focus this on manufacturers and retailers is we worry logistics companies themselves may not see the benefit.”

Gazzard says: “The proposition for retailers is simple: you have all this backhaul, so why don’t we look at suppliers you’re ordering from and synchronise things so you can order on same day and find out who you can collect from on your last drop? Then, you’ll be utilising your own vehicle to bring your own goods to your own shed.”

He adds that supply chain collaboration and efficiency illustrated in the L3 project can help the retail industry overcome some of its key challenges – saving money at a time of growing operational costs, smoothing demand and helping business supply chains become more robust, and decarbonisation to meet sustainability goals.

There is clear industry demand for it, and several of the UK’s largest retailers are already involved in supply chain optimisation projects. Analyst Gartner also reports global supply chain reorganisation is high up on chief supply chain officers’ agendas, and its research shows success in this field tends to come from “a radical approach” to redesigning their operations, which suggests the time is right for rethinking strategy.

Marc Deakin, supply chain director at AF Blakemore, says: “Following the successful L3 project with Incept, Fuuse and Digital Catapult, AF Blakemore is excited to collaborate with Simply Supply Chain to support operational trials of the collaborative transport optimisation tools used in L3, and to develop a business model to ensure that using the tools would be a commercial success for our business and suppliers.

“We look forward to collaborating on this crucial work, enabling years of innovation collaboration to translate into long-term impact, through our existing and future end-to-end programmes,” he says.