Case Study - Hermes
1 Capitol Close,
|Fleet Size Overall:
|Private vehicles used for business purposes:
| (Artic tractor units)
Hermes is the leading home delivery specialist in Europe and is part of the European Logistics Division of the Otto Group. As industry market leaders, Hermes offers clients a truly dedicated business to consumer residential delivery solution, specifically designed to meet the demands of the European retail, mail order and online shopping market. Today the group is trusted by some of the most successful retailers, such as Next Directory, QVC and Lands' End.
The combined experience of the group and its key role in the development of best practice within the industry, bring significant added-value to the collection and delivery cycle. The success of Hermes is based on a solution designed and built around tackling the key challenges in a growing and increasingly complex market - in short, how to make parcel delivery as easy and convenient as possible. The service portfolio offered, therefore, caters to each local market need and includes, among other services, home delivery; home pick up and an easy returns service. This makes working with Hermes a positive experience for the customer's customer. The guiding principle of working with Hermes is - Makes Delivery Easy.
Hermes has developed from a mail order company into a leading logistics and transport operation. Hermes now:
- Handles over 110 million parcel deliveries and collections annually.
- Delivers 22 percent of all catalogue and internet home delivery parcels throughout the United Kingdom.
- Utilises the services of over 7,500 local couriers under contract, who efficiently provide a friendly and flexible service to their neighbourhoods up to six days per week using their own vehicles.
- Employs over 1,600 people across the country to support the network.
This development has also affected the way in which Hermes has approached its responsibilities for managing the safety of its drivers. At the beginning of this period of expansion, Hermes had no ownership of the actual training of its drivers. In 2004 it launched a Driving School which has rapidly become an industry-leader. Initially, the school trained a small number of instructors but as the benefits of improved training and driver education (professionalization) were recognized the remit for the Driving School was broadened. It now delivers induction and continuation training for all Hermes drivers. In addition, the Driving School is an authorised Joint Approvals Unit for Periodic Training (JAUPT) centre and runs courses to deliver Certificates of Professional Competence (CPC) for all Hermes drivers.
Nature of Operation and Driving Activities
The management at Hermes is committed to improving the safety of Hermes drivers at work. When Hermes began the process of organising a management structure to deliver this, the initial focus was on improving the performance of drivers and business results. The management was aware of the challenges posed by factors such as the introduction of new legislation; increasing fuel prices; the pressure to improve the CO2 (carbon) footprint; and the need to manage the safety of drivers.
As a result of the expansion of the business, the management also faced the challenge of "growing the business to be part of the Hermes brand". The focus here was to support and develop the Hermes brand - Making delivery easy. This work was based on an analysis of the experience of Hermes clients with their services and a key output was the decision to professionalize the interface with the client focussing on the areas of:
- Employee development & engagement.
These factors added weight to the requirement for a Hermes Driving School.
The Hermes Driving School
The Hermes Driving School was launched in 2004. It was initially targeted at solving a shortage of LGV Cat C and Cat C+E drivers by providing training to upgrade existing Hermes drivers. The delivery of this training was extremely successful in setting high standards of performance. The Pass Rate is currently 92% with 82% of drivers passing the Driving Standards Agency (DSA) practical driving test at their first attempt.
In September 2009 additional legislation aimed at delivering progressive training throughout the career of a driver came in to effect. This meant the Driving School gained a new impetus.
From September 2009 both new and existing drivers must complete a total of 35 hours Periodic Training within the 5 years following their 'acquired rights' or initial Driver Certificates of Professional Competence (CPC) to keep their Driver CPC valid. This is only required if the driver is using their licence professionally. Additionally, new LGV Drivers must also undertake the Initial Qualification which is required along with their vocational licence to enable them to use their licence professionally. This includes:
- Module 1 - Multiple Choice questions and Hazard Perception Theory Tests.
- Module 2 - Case Studies Theory Test.
- Module 3 - Practical LGV Driving Test.
- Module 4 - Driver CPC Practical Test.
Included in the Module 4 practical test are:
- The ability to load the vehicle with due regard for safety rules and proper vehicle use.
- The security of the vehicle and contents.
- The ability to prevent criminality and trafficking in illegal immigrants.
- The ability to assess emergency situations.
- The ability to prevent physical risk.
- A demonstration of the ability to conduct a physical, walk round vehicle safety check.
Once the new LGV drivers have completed this training, they will start the Driver CPC periodic training of 35 hours to be completed within the following five years. To date, some 166 drivers have completed CPC training. Some of these drivers are outsiders contracted to recruitment agencies which provide contract drivers to Hermes at short notice.
As Hermes expanded, opening 10 new depots across the country, the Driving School was tasked to ensure that all drivers are assessed in their driving skills, their knowledge of the legislation surrounding Driver Hours and Tachographs, and of the Highway Code. As a result of this work, the Driving School launched a 2-day Induction Course for all drivers joining the company. This course is focussed on improving the professional knowledge of drivers and ensuring that they are aware and competent in all measures which will deliver a safe working environment.
Hermes has a culture of identifying industry "best practice" and implementing it through its management policies and procedures, especially in regards to the safety of its employees. Carole Woodhead, CEO Hermes seeks to develop the professionalism of her employees through development and a focus on safety.
The core process for delivering success and safety within the business is based on careful selection of employees; a thorough induction process; the encouragement to make full use of the continuous professional development opportunities offered by the company; and the commitment to making a difference in all aspects of safety for both the employee and the customer.
This ethos is summarised in the statement by CEO Hermes on Health and Safety.
CEO Hermes has directed that the development of Hermes employees is central to delivering superior customer service, revenue and business growth. It is her view that development plays a critical part in ensuring Hermes has the right skills to deliver its core business targets, to meet its customer requirements and to continue to improve.
Significant investment has been made in designing first class programmes aligned to business and personal needs. Programmes cover Core Skills Development; Operational, People and Customer Management; as well as Health and Safety; Human Resources and General Skills. All modules are to 'Industry Best Standard" and are delivered by internal and external experts. Hermes is guided by the Institute of Leadership and Management (ILM) in the delivery of its internal training and has recently become an accredited centre for the delivery of ILM qualifications. In addition, certain key programmes are aligned to qualifications further to assist Hermes employees in developing their careers with the company. As part of the Performance Management Process, Line Managers identify development needs and nominate employees to attend relevant programmes. CEO Hermes views the commitment of her employees to attending development training and applying the lessons they learn from it as essential to the overall success of Hermes during 2010. The training of drivers is a key element of this development process.
Work related Road Safety Policy and Procedures
All drivers are introduced to the Hermes work related road safety policy and procedures in their initial induction training and thereafter in all elements of the training delivered by the Driving School and in certain elements delivered as part of corporate training. The Hermes Company Car Policy ensures that all vehicles conform to the work-related road safety policy and procedures at all times. Individuals needing to travel by car for business purposes use either a company, hire or private car, with all vehicles operated under the terms of the company car policy.
It is important at this stage to emphasize that Hermes makes full use of all "best practice" information provided by the Department for Transport through the Safe and Fuel Efficient Driving (SaFED) and Freight Best Practice (FBP) programmes. It has drawn heavily on the advice provided by these programmes in developing its own courses at the Driving School. In addition, the Driving School works closely with the Driving Standards Agency (DSA) to ensure that the profile of its instructors matches the DSA recommendations.
The training courses at the Driver School support the Hermes training needs and ensure legislative compliance. Every new driver is trained to the standard at which Hermes wishes its drivers to operate.
In outline the system is as follows:
- Induction Training. The induction process welcomes the new employee to Hermes and familiarises them with the company and their role within it. The training provides the general information needed to ensure that the new employee is able to operate safely at all times. It covers the following:
- Introduction to workplace hazards and associated control measures.
- Other main hazards, associated controls, general safety and hazard elimination.
- Driver Control form.
- Pre-use checks and fault reporting.
- Ladders and step ladders.
- Safe marshalling of reversing vehicles.
- Driver Tiredness.
- Tachographs and Driver Hours Regulations.
- Truck, Load and Pedestrian Safety.
- Mobile phones.
- Trailer Height Awareness.
- Certificate of Professional Competence (CPC). A plan is now in place for all drivers to undergo continuous professional development training which involves 5 x 7 hour sessions over the 5 year period. The Driving School has a dedicated instructor for this training which is delivered throughout the year between January and October. Some 166 individuals have now completed this training.
- Regional Training. Training is based on regional delivery across 19 centres and delivers 2 core elements of training given below. This training includes agency contracted drivers (Igloo and Driving Edge) who work for Hermes and consists of:
- Practical in vehicle training.
- Off job classroom sessions.
The practical sessions include the following:
- Advice /feedback on driving style.
- Demonstration of key techniques and benchmarking of effect by instructor on fuel consumption etc.
- In vehicle monitoring on fuel consumption etc.
- Distance learning material is provided to all trainees. This includes DVDs; reading lists etc. and copies of extensively used freight best practice guides/DVDs on improving fuel efficiency
This training is supported by on-going one to one in-vehicle coaching by depot champions to ensure continued performance improvements and positive impact on results. The coaching process begins on completion of training.
- New Depots - The drivers at new Depots are assessed on both the standard of their driving and their knowledge of Tachograph and Driver Hours procedures. In addition, they undergo a current Traffic Signs test. Initially, drivers will follow a detailed Induction plan, which ensures that all drivers have a good working knowledge of the current transport regulations. Part of this Induction training will also ensure that they comply with the New Driver CPC periodic training legislation for LGV drivers.
- Development of Warehouse Staff - Warehouse to Wheels. Hermes identified that staff working in warehouses provide an internal resource for the recruitment of new drivers when they were faced with an LGV driver shortage in 2004. These individuals have awareness of the company ethos and standards of performance and are nominated by their Line Managers for this training. Some 140 individuals have now been through this training.
The Driving School is proud of its record in delivering successful candidates. As part of the process of ensuring that only fully motivated and capable individuals are selected for driving, Hermes offers driver training, CPC training and licence upgrades to potential LGV drivers from outside the company. In addition, it has developed a process for agency drivers with two local providers of agency drivers, Igloo and Drivers Plus, which assesses and grades all potential drivers prior to placement. Drivers Plus screens the candidates in an in-depth face to face interview which focuses on demonstrating practical abilities. The candidates are then assessed by the Driving School in a one day workshop. This training covers the following:
- Daily vehicle check.
- Legal requirements.
- The working time directive.
- Tachograph training.
Candidates are debriefed on their performance and remedial training is carried out if necessary. The Driving School is confident that this process delivers only the most responsible, safe and qualified drivers.
Work related Road Safety Guidance for Drivers
Hermes seeks to train its drivers to the highest standard and to make them aware of their responsibilities for safety through a process of constant assessment. This is achieved through a balance of practical instruction and assessment and classroom based theory.
All drivers have access to and are familiar with the safety manuals and information required to allow them to operate safely at all times. They are expected to operate in accordance with these manuals and handbooks on equipment on which they have been trained. They are expected to follow safe working practices and operate in accordance with their training at all times.
The Drivers' Induction Book gives information on how Hermes expects a Driver to carry out his role. Drivers retain a copy for reference and their induction is reinforced by site-specific Safe Working Practices for the various tasks which they will face, such as for example, refuelling vehicles and breakdown procedures. Each depot will also have a Drivers' Information Board which displays company and procedural updates as well as fuel efficiency tables and notes on safety issues.
Specific examples of procedures
Mobile Phone Policy
The Hermes Mobile Phone policy applies to all persons employed at or visiting a Hermes site including agency workers, contractors, visitors and employees. Business phones issued by the company are exempt from this policy. Business phones used by contractors are generally exempt from this policy in respect of business calls only. The key elements of this policy are:
- Unless specific permission has been given from management, all employees must have their personal mobile phones switched off during working hours (including during overtime). Personal mobile phones may be used during non-working hours (i.e. before starting work, after finishing work and during tea and/or lunch breaks). However, consideration should be given to other employees who may not wish to be disturbed during their break.
- In the event that a relative or friend needs urgently to contact an employee, the call should be directed through the Hermes switchboard. No mobile phones should be used in any communications room or any other area where such use may interfere with the equipment held there. Any employees required to present themselves for a personal search are prohibited from using their mobile phone whilst waiting for, or undergoing, the search.
- Failure to observe the above requirements may result in disciplinary action being taken. It could also result in a ban on bringing a personal mobile phone onto company premises. This is a non contractual policy that the company reserves the right to amend from time to time in order to meet the operational or business requirements of the company and does not form part of the terms and conditions of employment of an employee.
- Data devices should not be used whilst driving, including at traffic lights or queuing in traffic. Hands free devices are supplied for employees who regularly drive on company business. Even where such a device is supplied, it remains an individual responsibility to drive safely and comply with the law at all times. If it is not safe or legal DO NOT take the call.
- Use of hands free equipment is only permitted if the driver is considered to have proper control of the vehicle they are driving. Individuals can still be prosecuted for using a hands free device if they fail to have proper control of the vehicle. Anyone using a hand held mobile device whilst driving will be subject to a fine and 3 points on their licence. The company will not reimburse any employee who is fined for using a mobile phone. In the event of involvement in an accident whilst using a mobile device (or immediately after use) the driver could receive a driving ban and/or imprisonment.
- For the avoidance of doubt, drivers must not pick up or use any type of device that sends or receives data or calls if it is necessary to pick it up to operate it. This includes:
- When driving
- When stopped at traffic lights
- When queuing in traffic
- In no circumstances may a driver use any device to view pictures, read text messages or access the internet whilst in charge of a vehicle.
There are established procedures within Hermes to ensure that the drivers and staff members employed by the company have valid driving licences and sufficient and appropriate driving experience to meet the legal requirements as well as those of their insurers.
- Driver Standards. All drivers of Hermes commercial vehicles, including full time employees and agency staff, must meet the following established insurance requirements when recruited:
- A minimum of 2 years driving experience since passing their test.
- No more than 6 penalty points on their licence for speeding.
- No other offences are acceptable.
- These requirements may only be varied by reference to the Fleet Services Department.
- Driving Licence Checks. Currently employed drivers are required to have their driving licences checked at 3 monthly intervals. A Driving Licence Check register should be established in each Depot. It should be pre-printed with the name of each driver; licence group/s; expiry date/s; endorsement offence code/s; and should be updated as staff leave or are recruited. Note that in the case of drivers with class C or C+E licences, the expiry date must be of the vocational element. This will be when the driver reaches the age of 45 and every 5 years thereafter. Photocard licences carry an earlier expiry date based on when the licence was last renewed. This is to ensure the photo is still up to date. Only penalty points, which are current, should be noted. Licences of all drivers must be checked each quarter in every depot. These checks are to be carried out on the first Monday of March; June; September and December. A photocopy of the original licence is to be taken and placed on file. Where a driver is unable to produce their original licence for the routine licence check, the Depot must immediately ring the DVLA with the driver present to confirm the current licence entitlement, penalty points or bans for this individual. Drivers must give permission for DVLA to provide this. If a driver refuses to give this permission he must be suspended from driving until it can be established that he has a valid licence. Depots are to check, on a random basis, 10 percent of all Hermes and agency drivers by phoning DVLA with the driver present to confirm details of their current licence entitlement, penalty points or bans. Drivers whose vocational element is due to expire within the next 6 months must be warned to enable them to check that their driving licence has the correct home address thereby ensuring they receive a reminder from DVLA.
- Agency Drivers. The duty supervisor must always check the original licence and on the first time that an agency driver reports for duty at Hermes, the Depot to which he is assigned must ring DVLA with the driver present to confirm the current licence entitlement, penalty points or bans for this individual. This should be carried out before they are allowed to drive any company vehicle. The agency driver must also sign the Agency Driver Declaration Form. A photocopy of the licence of the agency driver must be taken and placed on file along with the Agency Driver Declaration Form.
Auditing and review
The management of Hermes is determined that the business remains the leading home delivery specialist in Europe and improves on its market share. Central to this determination is a management process which monitors and reviews progress against targets. All elements of driving for work fall under this process. Hermes monitors its performance in maintenance and repair costs, fuel consumption and incidents affecting safety involving all Hermes vehicles.
The internal analysis of incidents involving Hermes vehicles allows the management to identify factors contributing to success and to target key areas of underperformance in the differing performances of the Hermes depots. A core element of this analysis is the ability to identify the cost to the business of incidents involving its vehicles. The performance of individual depots is compared on the basis of the factors identified in the table below.
The performance of the business as a whole during Financial Years 2008-2009 and 2009-2010 is also summarised below.
|The number of vehicles held.
|The number of days of vehicle use.
|The number of accidents
|The total miles driven.
||-17.1% decrease (Note 1)
|The accident rate per vehicle.
|Accident free days per vehicle.
|The accident rate per 10K miles
|The cost of accidents
|The accident cost per mile driven.
Business Benefits - Management of Costs Attributable to Accidents
- Hermes experienced an overall drop in vehicle mileage by 17.1% as the result of 3 factors:
- The opening of the Nuneaton hub.
- An improvement to route planning.
- The drive to reduce the Hermes carbon footprint.
However, the business view is that this alone does not account for the dramatic initial and ongoing reduction in both fuel usage and driver accidents. Both change in process and improved training together are believed to contribute to this culture change and improvement in business results.
Analysis of Training Need
Similarly, detailed analysis of incidents involving Hermes vehicles focussing on the following also takes place:
- Employee or agency driver.
- At fault or not at fault.
- Cause of incident (for example - during delivery; striking a fixed object; during reversing; etc.).
This type of analysis easily identifies particular shortfalls in training standards which can then be addressed. Where individuals are at fault, the Depot or Line Managers can nominate them to receive the appropriate additional training.
Analysis of Individual Performance
Individual performance at the Driving School is assessed as follows:
- Student Participation. Hermes has purchased the Quizdom technology for the Driving School to ensure student participation and to receive immediate confirmation and feedback on the success of the training delivered.
- Detailed Evaluation and Debriefing. Detailed evaluation and debriefing against the standards set is carried out at the end of all courses.
- Practical Assessments before and after Training. Trainees are assessed for their understanding of the importance of managing fuel consumption against a standard set by an instructor for distance and fuel consumption. They are encouraged to match or improve against the score of the instructor. To ensure that the lessons of the importance of fuel consumption have been assimilated, this process continues with Depot Champions at their home depot. The aim is to continue to drive up performance improvements.
- Business Results. Drivers are made aware of the impact they deliver to business results through the improvements deliver in reducing incidents involving Hermes vehicles and improving their fuel efficiency.
Hermes has monitored the fuel consumption of individual drivers since 2002. In the early monitoring work, it became apparent that there were significant differences between the performances of individual drivers. Steps to improve individual performance on the basis of information gained from the DfT SaFED and Fleet Best Practice programmes were introduced. Fuel usage benchmarking (at the end of training) showed that all drivers made an improvement on their miles per gallon rating. Improvements ranged from 15%-47% per individual, with a company average of 24.4 %.
The setting of performance measures is a Depot responsibility. These performance measures reflect the emphasis of the Depot Manager on improving performance of his Depot against the performance standards of all other Depots.
In 2008-2009 an update to the training was introduced and a number of individuals were trained as Depot Assessors/ Trainers and Depot Champions in both defensive driving and fuel efficiency. The first Depot to complete this process was able to reduce its fuel consumption by 5 percent almost immediately and over a year reduced the consumption by at least 6.3 percent. However, it has also become apparent that those Depots with Depot Champions showed a greater improvement in reducing fuel consumption than those Depots without.
Hermes is pleased that a reduction of at least 4.5% percent in fuel consumption has been achieved in the past year across the business as a whole. This has resulted in significant cost savings and delivered a positive impact towards reducing Hermes' carbon footprint.
The analysis of the costs to the business caused by incidents involving Hermes vehicles is based on the use of information reflecting cost per mile per vehicle. These figures are reflected in the Table shown above. In FY 2009-2010, Hermes introduced a broader, more rigorous and encompassing definition of the term "accident" to include minor bumps and scratches which had not been covered in earlier periods of evaluation.
In FY 2009-2010 Hermes achieved a 33.5 percent reduction in these costs across the business as a whole. This resulted in a saving of £240k reflecting, surprisingly, a more accurate picture of the business benefits of managing these costs in greater detail. The accident costs per mile were reduced (see Table above) and one Depot achieved a 75 percent reduction in these costs. These results have been achieved during a time in which the number of vehicles increased by 11% and the number of days on which vehicles were used increased by 16.9%.
The process of analysing these costs showed that drivers provided by agencies were a significant source of increased costs against the business. As a result the decision was made only to deal with agencies whose drivers were trained by the Hermes Driving School. The work with Drivers Plus to assess drivers before enrolment was part of this process.
The EMEX reporting system has been introduced to all sites to improve the reporting of accidents. In addition, 50 new Daf 7.5t and 12t radial trucks are in the process of being delivered to depots. They have been equipped with driver aids such as automated gearboxes and reversing cameras to improve safety and reduce the risk of accidents.
Financial and other benefits
Some of the financial benefits stemming from effective management of driving have been listed above. Hermes (for insurance purposes Otto in the UK) enjoys a significantly advantageous relationship with its insurer in regards to its insurance premiums as a direct result of the benefits which its driver training process brings to its safety record. There are also, more importantly, other commercial benefits particularly in its outward facing relationships with its customers. Its safety record and care in dealing with environmental issues are significant advantages with a sizable part of its customer base.
Claims related to accidents have reduced by 60% and insurance premiums for Otto in the UK have reduced by 10% in the last 10 months.
A knock-on effect from the improved accident rate per vehicle and the increase in the number of accident free days per vehicle (see Table above) was the significant reduction in vehicle "down-time" and the cost of vehicle replacement across the fleet. This, in turn, had a significant impact on the service to Hermes customers because it was possible to make improvements to client delivery and collection times.
Hermes has successfully achieved year on year growth in volume; revenue; market share; and profit. This success stems largely from a change in management culture which addressed, among many other factors, the need to manage those driving on behalf of the business more thoroughly and to scrutinise the costs associated with them more effectively. An initial assessment of the impact of this change in culture attributes a saving across the business of £1m in FY 2009-2010. The catalyst of change has been the Hermes Driving School.
The Driving School has delivered enormous benefits for the Hermes business.
"We operate in an industry that is constantly feeling the pressure of rising fuel prices, new legislation, increasing customer demands, market competition and an economy in recession. At Hermes we are successfully meeting these challenges with continued year on year growth in volume, revenue, market share and profit.
We have continued to invest in training to help us meet these challenges. The success of the driver school has had a direct impact on the achievement of these results and in addition the reduction of our carbon footprint. The driver school has strengthened our new brand and is a catalyst internally for realising our strategy of 'Making delivery easy'.
In addition, as a result of this initiative we have been able to develop strong partner relationships with organisations like ours, committed to improving Driver and other critical training across the industry. We now have a strong platform to continue to effectively meet the increasing capability demands the industry challenges us with for the benefit of our drivers, employees, business and customers". Susan Tew, Head of Learning and Development at Hermes
Current and future developments
The success of the Driving School has prompted an internal review to examine the feasibility of expanding and extending the courses and programmes offered. An important element will be to assess the feasibility of offering training to other businesses and professional organisations. In particular, there is also an identified training need to improve the existing scope of training to cover issues such as:
- Recruit and Driver assessment.
- Self improvement schemes to cover issues such as defensive driving and driving automatic vehicles.
The Driving School is very proud of its record, the 93 percent pass rate of its students, with 82 percent of drivers passing the Driving Standards Agency (DSA) practical driving test at their first attempt.
"They have immeasurably improved me both as a driver and as a Depot Trainer. As a driver for my first 12 years with the company, I can confess to having had one or two incidents, a small accident and one or two lost wing mirrors. Since the Driving School training, I am glad to say I have now gone 9 years without an incident. I put this down to a greater awareness and better driving skills". Hermes Employee
"May I also point out that the CPC course was very informative and its structure and delivery were first class. Very professional. A credit to you and the Hermes Driving School. Keith Moseley, Depot Transport Manager, Hermes Portbury
"As Director of Transport for Igloo, I have been using the Hermes Driving School since April 2009. Since then, the Driving School team has visited the site in Nuneaton on 11 occasions and has inducted, trained, and assessed over 150 of my Class C+E drivers. As a result of the excellent training, I have seen a dramatic increase in the driver productivity. I have a more professional and informed workforce and reduced driver infringements relating to European hours and working regulations". Craig Brodie, Director, Igloo
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