Logistics Quarterly Magazine - Volume 15, Issue 3, 2009 - Innovative Opportunities in Load Building and Route Planning - LQ Archives
Sign up to Executive Dashboard
Toolbox Icon

Innovative Opportunities in Load Building and Route Planning

Being able to build loads from demand line items versus a shipment provides the greatest amount of capacity utilization opportunity. Here’s an overview of the advantages of applying technology to define your forecasting requirements in advance instead of using traditional load building methods.

By Chris Norek, PhD, and Don Addington

Illustration of 2010 We had covered the selection and implementation of transportation management systems (TMS) in a one of our first Technology Toolbox columns (March 2005). While we try to cover various aspects of technology, we also try to make sure that updates are made to previous columns as warranted. There is new software functionality that complements existing TMS solutions, particularly in vehicle load building and route planning. In this column, we’ll focus on the new capabilities which utilize data from supporting upstream transportation processes to increase truck utilization and route planning efficiency.

Why Is It Important?

Like any shipper, fuel prices have had a significant impact on supply chain operations by increasing an already large portion of logistics cost. Fortunately, prices aren’t where they were a year ago (over $4 per gallon for diesel), but they have risen significantly in recent months. As a result, companies are looking at ways to be more efficient with what fuel they do use. In addition, direct store delivery (DSD) is on the upswing which requires smaller and more frequent shipments. Lastly, in the retail space, the large customers are now demanding more mixed orders (multiple items on each pallet) which add complexity to picking and loading. Therefore, improvements in load planning and route optimization can significantly reduce fuel usage.

What’s New?

Traditional load building is done once shipments have been booked in a TMS. In doing so, forward looks into the demand stream are not utilized in load planning. Now, however, load building can incorporate information from earlier upstream decision making stages such as building loads at order create time, stock replenishment and VMI planning stages. As mentioned, existing TMS functionality is only able to build loads with current shipment requirements which gives up some utilization and therefore isn’t as efficient in regard to the use of fuel.

Being able to build loads from demand line items versus a shipment provides the greatest amount of capacity utilization opportunity. Forecasting trailer requirements in advance is a key factor in enabling advanced load building. In addition, newer routing functionality can address multi-day delivery requirements while simultaneously addressing utilization of the trailer.

On a different note, the ability to calculate a carbon footprint to address sustainability concerns is also now available with new functionality. The goal is to reduce fuel usage to reduce costs while simultaneously reducing carbon emissions. Essentially, the new functionality is a complement to existing TMS solutions—it improves load and route planning with traditional TMS applications.

Questions to Answer

  • How many trucks do I need to ship my products?
  • Which product (s) should be shipped first?
  • How can I reduce cut orders and upsize LTL shipments?

Available Functionality to Answer the Questions

  • Optimization of driver territories and routes of each driver
  • Optimization of vehicle capacity utilization
  • Optimized visit frequencies to stores given their fixed hours
  • Quick generation of routes

What Executives Should Know

In looking at load building and route optimization solutions, executives should be aware of the following issues:

  • Can I identify load utilization of orders as far in advance as possible to offer the customer full truck load discounts?
  • Can the solution handle future trailer forecasts or only currently committed loads?
  • Can the software address multi-day route requirements?
  • How can I get the necessary advance data on demand from other company systems?

Benefits of the Load Planning and Vehicle Routing Solutions

  • Improved mileage per truck via route optimization
  • Improved truck utilization via advanced load planning—Additional yield can be any where from 10 to 15 percent by incorporating advanced information to optimize loads
  • Fewer shipments and therefore fewer drivers, tractors and trailers used
  • Identification of optimal axle positions to increase load weight
  • More predictable labor needs in the warehouse for better staff utilization
  • Provision of loading instructions to pickers and loaders
  • Generation of optimal pick pallets to reduce pick/stage/load time
  • Real-time update to optimization at load time to capitalize on recent shipment changes
  • Improved customer satisfaction by respecting customer time windows and additional restrictions
  • Balance of cost, time to deliver and CO2 emissions
  • Multiple users can access solution simultaneously

Summary

Traditional load building in a TMS now has a complementary capability that incorporates more advanced information to improve yield and efficiency. The update is getting demand data in advance and using it to plan loads that offer the opportunity over the traditional method of load building once shipments have been booked. By leveraging this new functionality, there is an additional 10 to 15 percent yield available in truck utilization in addition to more efficient routing opportunities.


2 Bloor St. W. • Suite 100, Box 473 • Toronto, ON M4W 3E2 • Tel: 1-800-843-1687 • 416-461-8355