Tactical deployment of FGP
Once the strategic decision was taken, it was then necessary to identify transport management approaches that would delivery a reduction in transport costs. It was identified that the savings achievable through exploiting economies of scale alone would not generate sufficient saving to justify the investment associated with adopting FGP. In total, four different techniques were adopted, two for less than truckload suppliers and two for full truckload suppliers. Less than truckload suppliers are defined by the retailer as those supplying less than 18 pallets per day to a DC
With less than truckload suppliers, the decision was taken to consolidate these shipments through a new network of CCs so as to make deliveries to the DC in full vehicle loads. Effectively, this represented an extension of the strategy to introduce CCs that became common for all retailers in the 1990s. However there were two differences from the previous network. Firstly, the volume of products was much higher with increases for ambient and composite products of 17 and 6 per cent, respectively. Secondly, the whole network was coordinated by the retailer.
In analyzing the flow of existing consolidated products, it was found in some cases that a supplier was transporting products across the UK to a CC, for them to then be moved back along almost the same route for delivery to a DC. This increased transport costs because of the extra distance required to deliver products. Under FGP, products are routed more rationally, going from suppliers to the local CC for onward movement to the DCs. Where the supplier is close to the DC, direct deliveries continue to be the most cost effective approach