Arla Foods’ Division Denmark operates a fleet of approx. 300 trucks and is one of the largest retail distributors in Denmark. It is a challenge to coordinate the distribution of huge volumes of dairy products to time-constrained customers. Transvision has developed and supported Arla Foods’ transport planning solution for years, and today this solution forms the backbone of the dairy producer’s distribution and trunking operations.

Arla Foods in briefArla Foods operates 5 large dairies in Denmark, from where 4.4 million pallets are distributed annually to more than 3,000 customers throughout the country. This corresponds to 1 million tonnes of goods, which are transported from a total of 45,900 square metres of warehouse space.

However, it does not stop here. After the distribution process, the fleet is used for trunking operations in which large volumes of goods are transported between the centres and collected from suppliers and local dairies.

The large volumes require approximately 550 drivers to work in shifts in order to operate the approx. 300 vehicles, which annually cover 28 million kilometres. All this incurs significant operational costs for the company and necessitates efficient transport management, which clearly has a direct influence on Arla Foods’ overall performance.

Logistic Director Steen H. Madsen says, “Fine-tuning our production and meeting our delivery targets are

crucial factors. The key elements are to reduce mileage and maximise the utilisation of our vehicle capacity. This is a challenge in itself, but it is further complicated by tight delivery time windows.”

Making improvementsSteen H. Madsen continues, “Before we acquired the transport planning system from Transvision, planning was carried out with several different and less advanced tools at all five dairies.

“The decision to implement a single planning solution was based on a desire to obtain better management of the operation and an ability to perform qualified strategic simulations.

“Using the system’s simulation facilities, we carry out major operational optimisation runs once or twice a year, where we “shake it all up” and change our master routes. This is where we really reap the benefits of the system.

“During the simulation, we test our own ideas for improvements, adjust the master routes according to customer changes, and then calculate new delivery times and routes.

“The system enables us to maintain control of everything, which would have been absolutely impossible with paper and pencil.”

Case study Arla Foods

High capacity utilisation Arla Foods’ daily distribution operates according to a fixed-route principle in which each route is provisionally overbooked in order to reduce the risk of low capacity utilisation. This means that some orders are picked from the routes during the daily planning and then moved to other routes or to external vehicles hired on the spot and operating around the distribution centre. Creating an accurate and dependable model using this principle would have been very difficult without Transvision’s solution.

“Being able to adjust our master routes through picking means that we can reduce our standing fleet of vehicles considerably”, explains Steen H. Madsen. “The planning system ensures that we can control this process through instant cost- and service-related consequence calculations”, he continues.

“We have integrated the planning system with mobile terminals in the vehicles. In this way, the system can be updated in real time, and we can recalculate customer arrival times on the fly and thus inform our customers of adjustments to our ETAs. This is a very important and valuable aspect of the solution.

“We also use the real-time information to decide which vehicles should be involved in the trunking operations

later in the day. These decisions are made on the basis of the vehicles’ actual ending positions and ending times. At the same time, we use this operational information for statistics and invoicing.”

Strong ROISteen H. Madsen points out, ”After we integrated the distribution and trunking operations, we immediately cut nine trucks from the budget. Apart from that, it is difficult to estimate which savings have resulted directly from the planning system, as other projects have been carried out at the same time as well.

“Nevertheless, we have a feeling that we have realised significant savings and that even more can be gained. Just being able to get an overview and to make follow-ups has had a positive effect on the bottom line.”

Major benefits from implementing the system:

Better capacity utilisation and lower mileage

Reduced average cost per moved pallet

Improved operational follow-up and overall view of orders and resources

Increased customer service due to notification of customers regarding delays Possibility of carrying out strategic and tactical simulations

“Even though we have had some difficulties with the system in the past, there is no doubt that we now have a superb solution which meets our exact needs”, concludes Steen H. Madsen. “We would never have been able to create such strong results without the system.”

Arla Foods:”We would never have been able to create such strong results without the system.”

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