Local government is one of the largest employers in the Netherlands, with departments and services across hundreds of sites in a municipality. Every day, these sites are supplied with printer paper, catering, maintenance products, cleaning items, paving and much, much more. These sites also produce substantial waste streams on a daily basis. The supply and waste flows generate a great deal of traffic in urban areas, requiring many lorries and vans to visit these sites. Is there a smarter and cleaner way of doing this?
Is a smarter and cleaner approach not possible by bundling streams of goods together with certain suppliers or distribution centres, or by making deliveries at night, using waterways, or from now on by only using electric vehicles?
Concepts for smart and clean distribution are ready and waiting to be used. It is no coincidence that municipalities like Rotterdam, Utrecht and Groningen support a Green Deal on zero-emission city distribution. Clean and sustainable cities are attractive environments for living, working, recreation and last but not least, for investment.
The first municipalities to study procurement and mobility discovered that ‘spending management’ allowed them to know exactly what they are purchasing, but it did not provide any indications of volumes, the specific locations supplied and the availability of remaining locations in the internal supply chain.
Virtually all purchases are delivered duty paid (the Incoterm DDP). This means there is no insight into the transport costs of the final kilometres into the town centre. Streams of goods from providers of services such as catering, ICT and cleaning are often out of the picture.
There are two key purchase flows involving a high level of town centre transport movements. Firstly, procurement of office supplies, catering and maintenance products.
Secondly, the materials for construction activities in municipalities such as building and renovating buildings and for public works. This involves some 50,000 to 100,000 deliveries per year in the larger municipalities. Some 80% of those deliveries are made by 20% of the suppliers, and municipalities often have long-term relationships with them.
At a market insight session during the conference on ‘Mobility and Innovative Procurement’ on 25 November in Rotterdam, leaders in logistical service provision, progressive suppliers and procurement specialists met to come up with innovative solutions to mobility issues related to the procurement of supplies and services. Part of this session involved presenting the results of research by the municipality of Rotterdam into mobility resulting from municipal procurement. This research has also provided an overview of how the Municipality of Rotterdam can better manage the flow of purchased goods and services, and what opportunities suppliers see for better utilising vehicles. This involved taking a closer look at the number of kilometres driven daily by suppliers and the distribution of these kilometres over the course of the day.
The suppliers for the municipality provided suggestions for bundling together streams of goods, the use of clean fuels and electric vehicles, deliveries at night and in the late evening and early morning, and delivery to a logistical consolidation centre on the edge of town, from where delivery into the town centre can be optimally organised.
To achieve results, the purchasing records of the municipalities must first offer insight into the mobility effects of the orders. The number of deliveries, the distances involved, as well as the means of transport. Purchasers should in the future obtain this information from the suppliers. Conversely, suppliers expect that municipalities critically assess their approach to placing orders (for example, bundling deliveries into two consignments per week) and the earlier sharing of reliable planning information with suppliers.
A smart and clean approach to distribution begins with smart purchasing. Supplying municipalities should be a natural part of sustainable and socially responsible procurement. Know what you are ordering, in terms of volume, and understand the associated transport costs. When making purchases, look expressly at the ‘cost to serve’ of a procurement category. Which costs and benefits are associated with other supply concepts? Review the ‘delivery free domicile’ conditions.
There is a pressing need for a new Incoterm : ‘town distribution centre delivery’. Together with service providers, take a good look at how they transport goods. Smarter and cleaner urban distribution cannot be rapidly achieved by taking major steps. Purchasers, together with the end-users of products and suppliers should sit down together in order to achieve the perfect balance between purchase price, handling, transport and storage costs. This may sometimes involve reviewing the agreements made during the tender.
Particularly in construction logistics, good and reliable planning is essential for sustainable mobility. Information from the construction supply chain downstream is not available upstream. Businesses are often faced with a last-minute order that has to be delivered to the building site as soon as possible. Better planning also offers more opportunities to organise recycling of construction waste streams. In the absence of proper planning, few options remain for organising recycling in a smart and clean way.
The development of the Building Information Model (BiM) increasingly offers municipalities opportunities for sharing information with contractors and construction suppliers.
A good traffic policy is also important. This involves difficult decisions about permits and spatial planning, or about setting requirements for the supply of large construction projects and municipal sites in town. This policy should be clear and not be subject to continuous changes. What can the government do about fixed loading and unloading times and recharging facilities for electric vehicles?
There is a need for up-to-date traffic data (‘open data’) so transport involving the least number of kilometres and hours can be planned. The use of more expensive electric vehicles requires a higher productivity.
It is impossible to start cooperating with thousands of suppliers at the same time, but it is possible to start with a select group of strategic partners. Major nationally operating suppliers and carriers are important, as it will be problematic to manage the streams to the many locations later in the chain if procurement streams are not bundled upstream (earlier in the chain/close to the source). By cooperating, local SMEs in construction, installation, logistics and wholesale can create competitive advantages in city distribution over the major suppliers. They have local knowledge, and by cooperating on transport they can support municipal services and other large town centre buyers as a strategic partner, swiftly and with the desired quantities.
An important success factor for implementation is the common approach. If each municipality comes up with their ‘own’ standards, we will face a difficult process. The ‘Mobility and innovative procurement’ conference made clear that a smart and clean city distribution starts with procurement by local authorities. The congress also produced many concrete suggestions from suppliers who would be happy to implement them as soon as possible. The next step is working out some ‘living labs’ with those stakeholders to work together towards smart and clean city distribution.
Walther Ploos van Amstel Lecturer City Logistics Amsterdam University of Applied Sciences
Incoterms rules (International Commercial Terms) are an international standard about the rights and obligations of the buyer and seller regarding the international transport of goods, developed and published by the International Chamber of Commerce (ICC) the world business organization. “Incoterms” is a registered trademark.