Inefficiencies in the cereals supply chain are nothing new. But this winter an ambitious project linking farmers, hauliers, a grain trader and a leading miller showed how sharp things could really be – and the benefits to all. Ian Ashbridge found out more.
In the past few years, reports have revealed that the arable supply chain from farm to mill is riddled with costly inefficiencies. Every stakeholder in the chain – farmer, hauler, grain trader, miller – absorbs the hidden cost, thought to be £30-50m a year.
But now an initiative has succeeded in showing how this wasteful cost can be recaptured, and turned into real benefits for all involved.
It has taken English Farming & Food Partnerships two years to bring together farmers, hauliers, farmer-owned grain business Openfield, logistics specialist DHL Supply Chain and Britain’s biggest miller Rank Hovis. But the fruits of the industry-wide study reveal £42m a year disappears in the cereals supply chain in haulage inefficiencies.
But it wasn’t just another industry study – the partners in the project committed to a two-day experiment at Rank Hovis’ Solent Mill in Southampton. DHL Supply Chain experts managed the haulage operation to see if real savings could be made.
“We wanted to be involved from the very start,” says Rank Hovis’ Kevin O’Leary. “Somebody is paying for that waste – it’s in all our interests to unlock it.
“There are major benefits for us in terms of our quality stream – knowing what wheats we’re likely to get, what quality, and at what time, helps our supply chains enormously.”
Jim Hotchin, operations director at Openfield, says the statistics speak volumes. “At the retail end of the supply chain, 98% of deliveries are on time and in full. But between the farm and the first processor only 68% are on time, a further 10% do not turn up and an average of 7% of loads is rejected.”
The firm’s Solent Mill at Southampton sees upwards of 300 vehicle movements a day. The pilot study, held over two days last October, demonstrated that, by giving hauliers a 15-minute delivery window to meet, instead the usual two-hour allocation, savings of £25-30 per load were possible. “It means you don’t have 10 or 15 lorries in front of you waiting to tip,” says haulier Ian Hart, who took part in the pilot.
“If you factor in that an articulated vehicle costs about £40 an hour to operate, every hour wasted is another cost to the chain,” says DHL’s Roly Toplin.
But real improvements hinge on getting lorries loaded promptly and efficiently on farm. EFFP’s Duncan Rawson says farmers need to be well prepared to meet their customers’ needs when moving the crop that has been sold. “What’s so heartening about these results is that it doesn’t require significant capital investment to get these improvements. It’s simple changes which the whole chain can contribute towards.”
• Better notice of grain movements
• Improved lorry arrival times
• Reduced risk of rejections
• Stronger trading relationships
“And farm labour is expensive,” says Hampshire farmer Simon Bourne. “A 10-minute slot at the mill ideally means a 10-minute slot loading on farm. The cost of farm labour waiting around for lorries is as expensive a lorries waiting around to load.
The world beyond the farm gate is changing
This project deserves recognition for bringing together farmers, hauliers, logistics experts at DHL, traders at Openfield and getting the mighty Rank Hovis on board, in a supply chain where little mutual trust has existed in the past. And that credit must go to English Farming & Food Partnerships.
DHL’s logistics expertise at Rank Hovis’ Solent Mill demonstrated just how tight the operation could be. The miller benefits from greater efficiency at intake, the merchants reduce haulage overheads, the hauliers fit more work into a day and earn more. Everyone benefits.
But what about the farmer? How much of the potential £42m a year will they see? Well, any improvement to their ex-farm price seems unlikely – although not impossible. More likely is that some cash might trickle back through farmer-owned businesses like Openfield. The immediate gains are clearly for the haulier and the miller.
But there is no doubt the cereals supply chain needs to tighten up. Lorries hanging around on farms to be loaded, hours spent queuing at mills, loads failing to arrive at all or being turned away would just not be tolerated in other industries.
The upshot of this is that farmers will be rewarded for engaging with this change. Merchants who know the farmer will be there to load their lorry quickly and on time will be the ones who get the call when there’s a boat to be filled and there’s a deal to be done. And when the market rallies and you’re picking up the phone, being known as one of “the professionals” isn’t going to hurt.
The reality is that there is value to be recaptured up and down the chain. But it’s up to farmers to reclaim their share.