329 million tonnes of CO2 are released each year into the atmosphere from the emissions of heavy goods vehicles. In the UK 76% of all goods are moved by road. Despite increasing environmental concerns, this industry is growing at a fast rate to fulfil increasing consumer demand.
It is essential that road freight efficiency is a top priority to minimise cost and environmental impact. However, there are significant inefficiencies in how logistics companies operate their vehicles. Logistics is highly competitive and this drives extreme cost cutting within the industry. However, there is a complex relationship between capital costs and operational costs. Often fleets spend too little on maximising the efficiency of their vehicles and suffer increased fuel bills and carbon emissions. One high-tech data analysis company, Dynamon is helping logistics companies make significant operational cost savings through smarter purchasing, using data analysis techniques originally developed to improve the efficiency of Team GB in the London Olympics.
The culture of the logistics industry favours reduced capital expenditure over reduced operational expenditure, since it is easier to immediately quantify. Minimising operational costs such as fuel consumption often requires increased capital expense with the outcome only becoming clear some time after the procurement decision has been made.
A clear example of this dilemma is the tyre industry. Many manufacturers offer expensive premium tyres that can save fuel, but this can be to the detriment of wear rates, and therefore tyre costs. Conversely, cheap hard wearing tyres have gained market share as many fleets are favouring the lower upfront cost. This has been to the detriment of fuel economy, the environment, and the operational costs of the fleets Manufacturers now need to prove that their tyres will provide reduced fuel costs that far outweigh any decrease in longevity. However, proving the performance of a tyre in the real world is highly complex.
Wincanton, the largest British logistics company, is constantly dealing with this dilemma. Dave Rowlands, Wincanton’s Technical Services Director explains. “Due to the complexity of our transport operation it is very difficult to clinically model the impact of various purchasing decisions on our operating costs. Therefore, we make purchasing decisions based on the strongest evidence to hand, which in the absence of any reliable empirical data can result in the lowest price, but not necessarily the best value. With the development of sophisticated big data analytics in our industry, we would like to begin using these methods to reduce our total costs through smarter purchasing.”
Dynamon has developed a specialist data analysis service to give logistics companies the knowledge to make procurement decisions that balance capital expenditure with operational expenditure. Dynamon analyses a fleet’s existing telematics data and simulates alternative procurement decisions. to identify the optimum vehicle configuration that minimises total cost and environmental impact.
Dynamon was founded by Dr. Angus Webb. “Fleets are not taking advantage of the valuable data they are collecting from their telematics. We are analysing this data and identifying significant cost saving opportunities.”
Richard Farren, Dynamon’s Head of Software, explains the scale of the data analysis problem being addressed. “The quantity of data we are analysing is immense. We take a live feed from a fleet’s telematics data, and from that generate a further two million analysis data points daily per vehicle. This produces a set of ‘what-if’ scenarios that logistics companies can use to identify efficiencies and make procurement decisions.”
ASDA is one of the largest grocers in the UK, operating over 850 heavy goods vehicles with a significant fuel bill. Working with Dynamon to analyse tyres, ASDA tested a change in tyre choice that has the potential to provide a multi-million pound fuel saving per year and reduce their emissions by tens of thousands of tonnes of CO2 per year.
Dynamon carried out controlled scientific trials on ASDA trucks to verify the impact tyre choice has on fuel performance. The trials were performed at Millbrook Proving Ground and measured a 17% improvement in MPG changing from ASDAʼs existing low-cost tyres to tyres optimised for fuel performance. These figures were produced from controlled scientific circumstances and the realistic fuel saving in the real world is impacted by a number of other factors such as weather, terrain and driver behaviour. “The percentages that we can see in the real world are closer to 5-12% just as a result of optimising tyres, depending on the operation. This is still a saving of millions of pounds per year for the larger fleets and these savings can start to be realised in the first year of implementation.” Angus Webb, Dynamon CEO.
Dynamon’s service is currently being used by Wincanton. Dave Rowlands explains. “We have been working with Dynamon for the past twelve months. They have a direct feed from our telematics to run their data analytics. From this they have identified significant cost and CO2 reduction opportunities which we are now pursuing. The insight that Dynamon has produced is very impressive and demonstrates a wide range of opportunities to continuously improve, and drive down the cost of running, a multifaceted logistics operation.”
Dynamon has been awarded two Innovate UK government funded projects to expand the number of procurement decisions it can analyse. Dr. Chris Durrant, Dynamon’s Head of Analytics, explains the value of these projects. “In addition to analysing telematics data, we need accurate data on products that fleets buy and, in most cases, this does not exist. Where data is available, products are tested under ideal conditions and rarely deliver the same performance in reality. Tyres are a great example of this. Although all new tyres have a laboratory measured EU energy rating, tyres perform very differently in the real world and are affected by many factors that are not captured, including weather, wear, inflation pressure, and specific drive cycles. One of Dynamon’s greatest challenges has been developing a model which fully captures this complexity. With Dynamon’s data analysis service, for the first time, fleets can confidently make purchasing decisions with a clear understanding of the operational cost savings they will achieve.”
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