Uganda Cooperative Transport Workshop: Transaid Transport Management Manual and basic costing for Transport 24th November 2011 Caroline Barber – Head of Programmes Agenda • 09:00 – 09:15 Introducing Transaid • 09:15 – 10:30 The Transaid TMS manual • 10:30 – Tea Break (30 mins) • 11:00 – 13:00 Basic costing for transport operations: – Key concepts – Break out groups to costs own or ‘imagined’ transport operation • 13:00 - Lunch • 14:00 – 15:30 Presentations back to group • 15:30 – Tea Break (15mins) • 15:45 - Summary – what have we learned and creation of toolkit from this workshop • 16:00 – 3 day workshop summary and next steps • 17:00 Close Introducing Transaid Transaid History • Transaid was the idea of HRH The Princess Royal • Founded by Save the Children and CILT • Roots from the mid- 1980’s famine crisis in Sub-Sahara Africa • Independent charity 1998 The Southern Africa Drought In the early 1990s there was a call for more vehicles to support drought relief activities in Malawi. The problem, the appraisal team realised, was that there was more than sufficient transport available. The missing element was effective transport management systems. Vision, mission and goals Our vision & mission “We seek a world where transport contributes fully to a better quality of life” We aim to reduce poverty and improve livelihoods and quality of life in Africa and across the developing world Our goals • To improve access to basic services through the development of appropriate transport management systems • To increase economic opportunities through increasing the capacity of the transport and logistics sector to operate effectively, efficiently and safely Why we exist • Transport is essential for life but is unavailable or unaffordable for many people • Lack of transport denies access to basic needs e.g. health care. • Little aid money is allocated to training of transport management skills and expertise (most is spent on infrastructure) Some Challenges poor infrastructure poor maintenance overloaded trucks shortage of skilled drivers lack of legal enforcement poor transport management goods costly to move Where we work Where we work • West Africa – Nigeria* – Ghana* • East Africa – Tanzania* – Uganda • Southern Africa – Zambia* – Zimbabwe – Madagascar* *Where we have major projects Our areas of expertise • Transport Management • Professional Driver Training & Road Safety • Community Managed Transport • Supply Chain Strengthening (drug distribution) Our areas of expertise • Transport Management • Professional Driver Training & Road Safety • Community Managed Transport • Supply Chain Strengthening (drug distribution) Transport Management Nigeria Driver Training - Zambia Results to date Emergency Transport Scheme with Nigerian Taxi Union Transaid’s Transport Management System (TMS) manual Introducing the TMS • Transaid developed a TMS manual over 10 years ago • Over 2500 TMS manuals have been distributed to over 50 countries since publication • The key purpose is to provide day to day assistance in the management of transport resources, particular focus within a public health context • Chapters 1-4 focus on long term processes and strategies • Chapters 5-9 – tips and tools for more immediate and regular implementation TMS Self Learning Guide • In 2009 Transaid developed the TMS into a Self-Learning Guide for Local Transport Managers of Public Health Services • This was based on Transaid’s extensive work in promoting best practice in transport management throughout Africa and elsewhere. • This guide presents sound principles of transport management coupled with real-life experience. It was funded by USAID | DELIVER PROJECT (part of John Snow International). • http://www.transaid.org/projects/transaid-develops-tms-self-learning-manual-with-johnsnow-international Components of the manual • There are 9 key components to the self learning TMS manual: 1. Operational Management 2. Financial Management 3. Fleet Management 4. Health & Safety 5. Human Resources 6. Monitoring and Evaluation 7. Situational Analysis 8. Outsourcing 9. Policy and policy development • TMS manual also includes tools to be used, worked examples and templates that can be photocopied Module 1. Operational Management This module focuses on: – Describing key personnel tasks and roles involved in operational management – Managing transport planning, vehicle distribution and returns, and fuel supply – Managing key routine operational tasks – Using the appropriate forms to collect management information – Implementing standard operating procedures (SOPs) Module 2. Financial Management This module focuses on: – Understanding why financial management is important for TMS in health service delivery – Linking financial management to other components of TMS – Working out the best economic point of replacement for a vehicle – Accurately determining budgets that will control transport costs – Using a trading account to pay for transport costs more effectively Module 3. Fleet Management This module focuses on : – Avoiding unnecessary vehicle breakdowns; – Improving the use of a fleet and prolonging its working life – Identifying basic operational and technical specifications to choose the best vehicles for a fleet – Recognising the importance of regular planned vehicle maintenance – Using and developing key maintenance schedules – Managing maintenance activities and the personnel responsible for them – Safely, effectively, and efficiently managing the distribution and delivery of supplies Module 4. Health and Safety • This module focuses on : – Identifying key health and safety concerns for transport management – Monitoring and improving health and safety in your own transport management system – Managing accidents and incidents – Understanding appropriate insurance coverage Module 5. Human Resources • This module focuses on : – Explaining the relationship between transport management and human resource development – Creating an organisational chart, specifications, and job descriptions for the staff in your transport structure – Describing the basic principles of the recruitment process that is used to begin building an effective transport workforce – Describing key human resource development processes to help develop and retain a transport workforce – Linking essential human resource management issues to the development of an overall transport management policy Module 6. Monitoring and Evaluation • This module focuses on: – Recognising how to collect and use information for improving transport management and distribution – Explaining the importance of having a structured transport management information system – Using Key Performance Indicators (KPIs) for transport management and distribution (We’ll come back to this) – Presenting, interpreting, comparing, and using KPIs for improving decision making Module 7. Situational Analysis • This module focuses on: – Describing the purpose of a situational analysis – Advocating the need for a situational analysis to senior managers – Planning and implementing a situational analysis – Analysing data from and reporting on a situational analysis Module 8. Is outsourcing an option? • This module focuses on : – Defining outsourcing – Describing the reasons an organisation would consider outsourcing supply chain activities – Recognising the steps for determining whether outsourcing is a viable option to address an organization’s identified needs – Summarising key principles related to contracting and contract management Module 9: Policy and Policy Development • This module focuses on : – Explaining why developing and reviewing policies are important for implementing a TMS – Understanding the difference between policy and procedures – Identifying who can provide information on transportation policy issues in need of change and recommend specific changes and how that information is channelled up to the higher level Tools that can help – Core TMS forms • • • • • • • • • • • • • • • • • Vehicle Check Sheet Vehicle Log Book Vehicle Defect Report for Vehicle Operators Trip Authority Period Movement Plan Period Transport Schedule Seven-day Transport Schedule Period Transport Report Period and Safety Issues Vehicle Inventory Vehicle Information Sheet Crash/Incident Report Crash/Incident Follow-up Report Vehicle Maintenance Summary Twelve-month Planning Schedule Assessor’s Form for Vehicle Operator Assessment Vehicle Operator Report Transaid’s 11 KPIs • Quality information is needed for good decision making at all levels of an operation • An organisation can only determine if transport policy goals and objectives are reached by monitoring and evaluating performance • 7 transport Key Performance Indicators • 4 distribution Key Performance Indicators KPIs continued…. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. Distance travelled Fuel consumption Running cost per kilometre Vehicle availability Vehicle use Needs satisfaction Safety Truck fill On-time delivery Damages Nonconformity A case study - Transport Management South Africa and Ghana MoH Implementing a Transport Management System in South Africa’s Department of Health PLEASE CLICK TO START In thevehicles first 5 years of the project gains in efficiency meant plans that …old were disposed of,an sustainable procurement By …Transport Senior ….drivers 2008 the management fleet Officers were had trained, started maintained were Planned to sensitized, notice Preventative average that a with transport size better Maintenance of policy 796 planning vehicles was less In 1996 the Department ofthe Health inremoved South Africa’s North By more In2003 the than first the 800 three fleet PLEASE vehicles was years down could CLICK fleet to be less TO was than CONTINUE reduced 40% from of by its the 290 original fleet vehicles. without size. werewere developed, monthly transport reports were developed, vehicles transport systems required officers were for toof meet 5 implemented…. years. received service job delivery descriptions…. demands. Western Province had a fleet 2013 vehicles affecting service delivery levels. produced and distributed… Most importantly, “Needs Satisfaction”, a Transport measure of the ability of …vehicle utilization remained steady as Officers used Throughout the duration of the project the availability of vehicles the fleet request to meet the needs of END the Ministry, consistently vehicle forms and scheduling toolsremained to arrange transport remained high due to good maintenance practices…. throughout the entire project. and high consolidate activities where possible. Ghana case study • • • In 2007 Transaid worked with Ghanaian women market traders to run a pilot to manage their own transport Iveco (truck company) donated 4 daily vans and Transaid conducted some transport management training and helped train female drivers and a Transport Officer The project had some success but had many important leanings: – – – – – – The vehicle type needs to be absolutely fit for purpose – these were not for the routes they were doing The vehicles need to be pooled and high levels of collaboration required between market traders The learning curve was very steep – routing, scheduling, budgeting and even learning to drive Transaid did not invest enough long term support on the ground to the market traders The project insisted on certain provisions which made it difficult to operate in a competitive market – such as insuring vehicles and working reasonable shifts While we have fedback the women traders learned a significant amount from the project which is transferable ,it became more profitable for the women to put seats in the vans and run them as minibuses so some have now done this Zambia case study • • • • • • Transaid has more recently been working with the Zambia National Marketeers Credit Association (‘ZANAMACA’) In 2009 Transaid completed research to developing a transport project that would benefit Zambian marketeers 72% of Zambian marketeers are women, many of whom are widowed, divorced or single and have an average of five dependents to support. Their market trade is their livelihood. Transaid partnered with ZANAMACA to carry out an initial assessment of the types of transport currently available to marketeers and to determine the main transport priorities. The central Zambian market is based in Lusaka. Many marketeers travel long distances to buy from and sell to the central market, some up to 1,100km, carrying large volumes of goods. There is no transport system in place to meet this need, Under Zambian law public transport should only convey passengers, and not commercial goods. Zambia case study • Transaid have been trying to source funds to implement a project with ZANAMACA • • Project Aim: To improve access to markets for Zambian marketeers and their goods through the implementation of a Transport Management System (‘TMS’). • • • Project Objectives To introduce a tried and tested TMS suited to the market context To introduce safe, efficient and affordable transport for marketeers and their goods travelling a minimum of 500km To increase the capability of ZANAMACA members (marketeers and their management) to manage activities that support their businesses and livelihoods • Results of Zambia research • The high costs of marketeers’ transport, the problem of security of goods and the lack of direct readily available transport all negatively impact upon profit for marketeers • On the long distance one way routes the research showed that per individual marketeer; – – – – The average time per trip was 9.5 hours Average distance 630kms Average cost £90.21 or 361,000 Ugandan shillings Average weight transported per marketer - 1.17 tonnes The research and cost analysis showed an 20% reduction in the all inclusive cost per km for ZANAMACA to manage their own transport fleet rather than hiring private vehicles. However, it is important to understand the specific assumptions behind this (steady volume all year round, 60% vehicle fill on return journeys and tax free status for vehicles etc.) Basic costing for Transport Agenda – session 2 • Basic costing for transport operations: • 11:00 – 13:00 Basic costing for transport operations: – 11:00 – 12:00 Key concepts, a case study from Ghana and Zambia and a basic transport budget – 12:00 – 13:00 Break out groups to cost own or ‘imagined’ transport operation • 13:00 - Lunch • 14:00 – 14:30 Presentations back to group • 15:30 – Tea Break (15mins) • 15:45 - Summary – what have we learned from this exercise and creation of toolkit from this workshop What this session aims to do • From your presentations this week it is clear that transport is a challenge for Cooperatives • Hiring transport is expensive and the vehicles often do not meet your needs • This session aims to increase your understanding of the key costs to consider when looking at running your own transport • It may be that managing your own transport is not the right solution for your Coop/Union but hopefully it will help you to think about how to go about a cost benefit analysis so you can compare what you are paying now vs what it would cost to run the transport yourself. When we have this knowledge we can make more informed decisions. • Hopefully it will give you more experience of the types of costs to consider and therefore a stronger negotiating position with transport providers What this exercise will not do • It will not give you all the answers….! • There are many ways to create transport budgets, this exercise will not give you a ‘one size fits all’ solution – rather it is to share approaches and concepts to start thinking in a more focused way about financial management and transport and if you chose to, to go away and work on more detailed business plans (which I am happy to have a look at) • It is also important to consider all the other advantages and disadvantages of running your own transport – cost is just one of many factors! Key Concepts – Costing for Transport • What types of costs should we consider • Fixed and variable - what these terms mean • What are the key elements of each and how do we start to build up a budget What Costs do we need to think about for transport operations? • • • • • • The cost of purchasing vehicles (i.e., the initial capital cost) Other costs are incurred to maintain and protect vehicles after they have been purchased. These costs include— Depreciation, which is used to determine financing requirements for replacing a vehicle at the end of its economically viable life Fixed costs (which do not vary with the level of activity), including annual vehicle licenses, taxes, and insurance. Variable costs (which vary based on vehicle use), including— – Running costs (costs related to the distance a vehicle travels): fuel, maintenance, and tyres. – Indirect costs (costs that do not affect running costs): crashes, breakdowns, and fines. Human resource costs, including: Fixed costs, such as salaries. Variable costs, like per diem. Any overheads (office costs) Fixed or ‘standing’ costs • Costs which do not vary with the level of activity: • • • • Depreciation Insurance Tax Is there anything like an O’licence in Uganda? Variable costs • Costs which vary based on vehicle use – Running costs: (i.e., costs related to the distance a vehicle travels • • • • • Fuel Maintenance (repairs and maintenance) older the kit higher r&m Tyres (either outright purchase or contract) Specialist kit - chilled vehicles – cost of gas or diesel for chiller Specialist – cleaning (for example diary, livestock, petrochemicals) – Indirect costs (i.e., costs that do not affect running costs) • Crashes (can benchmark from other operations – estimate x per km or per period but so much depends on training, urban or trunking) • Breakdowns • Fines HR and Overhead costs • • Fixed element – salary – drivers/transport officer? Variable – per diems or allowances • Other considerations when budgeting for HR: – Pension? – Absence, Sickness, Holiday (ASH) – for example 5 days a week x 52 weeks = 260 days a year. How many days holiday or leave (x weeks?) have to budget for other leaves of absence – sickness, funerals – In UK ASH is usually 15-17% in transport industry • Overheads – – – – – Do you have an office or parking area you are hiring? Office costs and rent? Mgt team Training Uniforms? Protective clothing Mobile credit Costing the ZANAMACA new transport service – 1 yr operating budget • How did we get to these figures? • Refer to basic costing model and discuss....(go to excel file) Break out group exercise • Take 1 hour to ‘cost’ your transport operation / or create an imaginary transport operation and ‘cost’ it; • After lunch… – Present back to the group (10 min presentation) on: – the key fixed and variable costs using given headings – We will input these into the model to arrive at your all inclusive cost per km for your transport operation Why is it useful to know what the cost of operating you own transport is? • If we know it costs us X per km to operate our vehicles then we can answer these questions: 1. What does it cost to hire a 17ton vehicle per km? We can now compare a trip of 200kms operated by a truck operator to a cost of running it ourselves at XX. 2. It also helps us to understand what we should be charging our members to cover our transport costs including vehicle depreciation (remember this model does not build in profit for the operator!) 3. Two notes of caution: – – this cost of XX for 200kms assumes you have a return trip or backload. If you don't the vehicle will run empty and to get from bulking point to market and back will now cost double hence the need to find backloads! The budget you have created needs to be updated frequently as costs change and key assumptions like numbers of kms and fuel price changes! Your presentations Break out group exercise (2) • What did we learn from doing the exercise ourselves? • What did we learn from each others presentations? Next steps – toolkit development • One of this workshop outputs is a toolkit, which: – Highlights case studies of cooperatives that provide transport services for their members – Captures the experience of these co-operatives in delivering such services – Identifies common themes and lessons from these experiences – Develops technical guidelines for co-operatives on how to improve transport services for their members – Is there anything that you would like us to try and include in the toolkit? Thank you for your attention and your participation Cooperators!