Established in Germany as a fork-lift manufacturer and service network, Jungheinrich opened its UK operations in 1961 and has since become a leading international provider in the field of intra-company logistics. The forklift after sales business is highly competitive in the UK; customers can choose to purchase service contracts and spare parts from the original manufacturers or specialist companies established purely to service the after sales market.
“After sales services is a significant part of our business and in order to maintain our marketing leading position in this area its is critical that we maintain a low cost base whilst maintaining the highest level of customer service and quality parts.” stated Roger Stevens, Head of Supply Chain at Jungheinrich UK
It has become common practice in the warehousing logistics industry to offer full service contracts as part of the after sales service, particularly with national accounts such as Amazon and major food retailers. These full service contracts depend on Jungheinrich being able to provide spare parts at short notice as well as engineers to provide the service. Failure to do so results in significant penalties to Jungheinrich and high opportunity costs for their customers.
In 2006 Jungheinrich in the UK felt its supply chain to manage the supply of spare parts to its engineers required improvement. The 500 UK-based Engineers either operated from service vans or were permanently based at customer sites. Both groups relied on spare parts being delivered from two warehouses based in Germany to two points in the UK. This process was proving not to be responsive to the engineers’ requests and service contract demands and produced a great deal of waste packaging which further added to the cost of service.
“We couldn’t rely on our existing supply chain to meet the needs of our customers, we needed to find a partner who could support our commitment to delivery next day service as a standard at an acceptable cost” stated Stevens. “As such we reviewed our need and invited leading overnight delivery companies to tender for our business.”
Jungheinrich agreed their need, based on customer contracts, was for a partner who could collect mission critical spare parts ordered before 4pm each working day from the Jungheinrich warehouse in Southern Germany and distribute directly to engineers before 7am the following day. By delivering locally to the engineers, Jungheinrich also aimed to consolidate its UK warehouse operations and reduce inventory stocks; instead of operating 2 warehouses in the UK it planned to use its selected delivery partner’s hub – saving further costs.
Following a comprehensive tender review process, Jungheinrich select DX Business Direct as its supply chain partner, with the contract commencing in April 2007.
DX Business Direct was established in 1993 to provide a superior national infrastructure to facilitate secure parcel delivery to support field service engineers. The business operates as a secure logistics courier to deliver time critical inventory using its ParcelXchange network of 4500 intelligent lockers, offering customers a “virtual” nationwide depot, or its unique In-Boot service that delivers parts directly to an engineer’s vehicle. These delivery methods are supported by a “Pick-up/Drop-off” (PUDO) service at manned third party locations across the country.
Business Direct was acquired by the DX Group (DX) in September 2008, providing the company with a solid financial foundation from which to grow the business. DX is the UK & Ireland’s leading independent mail, courier and secure logistics company, delivering close to 1 million items each night from 50 locations, employing 3500 staff, contractors and owner drivers.
Before Jungheinrich’s business could migrate to DX Business Direct, it was critical that each engineer’s information was validated to ensure the optimal delivery method. Where possible, Jungheinrich wanted the ordered parts to be delivered direct to the engineer’s vehicle. As such, the first task was to validate each engineer’s vehicle & key type, along with their name, delivery address and mobile phone number so the engineer could be sent an SMS to confirm deliveries. It was also decided to use new technology to provide quicker but still secure access to each vehicle, using a coded disc rather than vehicle-specific keys.
This information was then used by DX Business Direct to create a delivery database. Where delivery to an engineer’s vehicle was not deemed as the optimal method – often because of local residency restrictions or because, in some cases, the engineer’s could not have a liveried vehicle for security reasons, DX Business Direct was required to offer a more suitable alternative. The options included using the nationwide network of intelligent Drop boxes – ParcelXchange, or lockable boxes camouflaged as grit boxes.
ParcelXchange offers the most flexible option for engineers on the road visiting different sites each day. Deliveries are made during the night, with 99% of all parts being delivered by 8am each working day. Jungheinrich is able to select either a fixed locker for an engineer – with deliveries being made to the same locker in the same location each day, or for even greater flexibility, can select different locker sizes in different exchange locations – for example closest to the end-customer if the engineer is not working from a fixed location.
“The in-boot system is ideal for 98% of our engineers who operate from a fixed home base in areas & vehicles where it is practical and secure to deliver. The most flexible alternative for engineers who are travelling to different locations and sometimes not from their home base is the ParcelXchange with dynamic locker allocation. Engineers are still able to collect their parts by 8am and we and our customers have full track and trace capability of the required parts – making the system more robust and more trusted.” Stevens continued.
As well as improving the delivery of spare parts, a new collections process was implemented when DX Business Direct was introduced. Rather than using cardboard packaging and a lengthy administration process, engineers simply had to place the parts they needed to return to Germany for repair in a plastic tote bin and leave it on the passenger seat of their vehicle or in the selected exchange, using a return label supplied by DX Business Direct. The tote boxes are collected by DX Business Direct when they make deliveries. This simplified process has helped to significantly reduce packaging waste and cost and encouraged engineers to return goods more quickly – further reducing remote inventory stocks.
“We had numerous reasons to find a new delivery partner – increasing efficiency and effectiveness of the engineer were key factors to help us maintain our high levels of customer service, but cost was a significant driver” stated Roger Stevens “With DX Business Direct we have managed to achieve all our goals.”
On average Jungheinrich sends about 1.5 tonnes of parts to its UK engineers each day. In order to manage costs the company decided to consolidate its warehouse points in the UK to a single store – using DX Business Direct’s Midlands’s hub. However, in order to meet service level agreements using air as a method of transportation from Germany was necessary. All parts are airlifted from Maastricht and Frankfurt to Coventry airport and processed in the DX Business Direct hub along with other goods collected from UK suppliers.
The implementation of the new supply chain has resulted in more confidence in the delivery system meaning that inventory levels have reduced further helping to control costs. The track and trace system, available via the internet and in real-time helps Jungheinrich to locate any part at any time. DX Business Direct fully integrate with the Jungheinrich processes, linking the delivery consignment number with the delivery note number on the Jungheinrich system – meaning that the engineer’s order using a part number can be matched with the delivery every time.
“The supply chain improvement reduced our delivery time by a whole day, as well as ensuring that we can supply the majority of our needs from a single point in Germany. This combined with the new prioritisation system used by the engineers meant that we save around £450K each year” concludes Stevens “All of this, and we have increased our ‘on-time’ delivery from 90% to 98.5% daily. This has been done by developing a close working relationship with DX Business Direct – meaning we can have honest discussions leading to quick resolutions of any problems that inevitably arise in an operation our size. We share the cost savings, and we consider DX Business Direct as an integral part of our business – helping us to deliver our promises to our customers.”
DX Business Direct Tel: 01788 821200 www.bdpx.com
Comments are closed.