March 6th, 2014 9:32 am Category: Operations Research, Optimization, Optimization Software, Profit Network, Profit Vehicle Planner, Profit Vehicle Router, Supply Chain Improvement, Supply Chain Optimization, Supply Chain Planning, by: Jim Piermarini
In the recent weeks, I have been thinking about testing our applications, like our popular Profit Network, or Profit Vehicle Planner. When we test, we run data sets that are designed to stress the system in different ways, to ensure that all the important paths through the code are working properly. When we test, our applications get better and better. There are many good reasons to test, most importantly, is to know that an improvement in one part of the code does not break a feature in a different part of the code.
I have been thinking about how we could test our code a bit more, and the means by which we could do that. I have been reading about automated testing, and its benefits. They are many, but the upshot is that if the testing is automated, you will likely test more often, and that is a good thing. To automate application testing requires the ability to churn out runs with nobody watching. And to do that, the application needs to be able to be kicked off and run in a way that there are no buttons or dialog boxes that must be manually clicked to continue. There can be no settings that must be manually set, or information reviewed to decide what to do next. In addition, the application must then save the results somewhere, either in the instance of the application, or to a log file, or to a database of some sort. Then finally, to really be testing, the results must be compared to the expected results to determine the pass/fail state of the test. This requires having a set of expected results for every test data set.
In looking at this process above, I see numerous similarities to the process used to run a sensitivity analysis, in that many runs are typically run, (so automation is a natural help) and the results need to be recorded. Sensitivity Analysis is a typical process for user of our Profit Network tool, and out Profit Planner and Profit Scheduler tool. An additional step in sensitivity analysis however, is that you may desire to change the input data in a systematic way (say Demand + 5%, and Demand -5%), and to the extent that it is indeed systematic, this too could be folded into the automation. The results analysis is different too, in that here you would like to look across the final sets of results at the differences, while in testing you just compare one set of test results to its expected results. I can foresee difficulty in automating the data changes, since each type of data may need to be changed in a very specific way. Never-the-less, even if the data changes are manual, they could be prepared ahead of the run, and the runs themselves could be grouped in a batch run to generate the results needed for a sensitivity analysis.
Constructing a harness that lashes up to an application where you can define the number of runs to be made, the setting for that run, the different data sets to be used, and the output location for results to be analyzed, would be useful not only for testing, but for the type of sensitivity analysis we do a lot of here at Profit Point.
I am going to encourage our developers to investigate this type of a system harness to be able to talk to and control our applications to be able to run them automatically, and have their results automatically stored in a data store for either test or sensitivity analysis.
Jim Piermarini | CEO Profit Point Inc.
July 30th, 2012 12:56 pm Category: Enterprise Resource Planning, Global Supply Chain, Network Design, Operations Research, Optimization, Profit Network, Profit Vehicle Planner, Profit Vehicle Router, Risk Management, Supply Chain Improvement, by: Jim Piermarini
There is nothing like a bit of vacation to help with perspective.
Recently, I read about the San Diego Big Boom fireworks fiasco — when an elaborate Fourth of July fireworks display was spectacularly ruined after all 7,000 fireworks went off at the same time. If you haven’t seen the video, here is a link.
And I was reading an article in the local newspaper on the recent news on the Higgs: Getting from Cape Cod to Higgs boson read it here:
And I was thinking about how hard it is to know something, really know it. The data collected at CERN when they smash those particle streams together must look a lot like the first video. A ton of activity, all in a short time, and a bunch of noise in that Big Data. Imagine having to look at the fireworks video and then determine the list of all the individual type of fireworks that went up… I guess that is similar to what the folks at CERN have to do to find the single firecracker that is the Higgs boson.
Sometimes we are faced with seemingly overwhelming tasks of finding that needle in the haystack.
In our business, we help companies look among potentially many millions of choices to find the best way of operating their supply chains. Yeah, I know it is not the Higgs boson. But it could be a way to recover from a devastating earthquake and tsunami that disrupted operations literally overnight. It could be the way to restore profitability to an ailing business in a contracting economy. It could be a way to reduce the greenhouse footprint by eliminating unneeded transportation, or decrease water consumption in dry areas. It could be a way to expand in the best way to use assets and capital in the long term. It could be to reduce waste by stocking what the customers want.
These ways of running the business, of running the supply chain, that make a real difference, are made possible by the vast amounts of data being collected by ERP systems all over the world, every day. Big Data like the ‘point-of’sale’ info on each unit that is sold from a retailer. Big Data like actual transportation costs to move a unit from LA to Boston, or from Shanghai to LA. Big Data like the price elasticity of a product, or the number of products that can be in a certain warehouse. These data and many many other data points are being collected every day and can be utilized to improve the operation of the business in nearly real time. In our experience, much of the potential of this vast collection of data is going to waste. The vastness of the Big Data can itself appear to be overwhelming. Too many fireworks at once.
Having the data is only part of the solution. Businesses are adopting systems to organize that data and make it available to their business users in data warehouses and other data cubes. Business users are learning to devour that data with great visualization tools like Tableau and pivot tables. They are looking for the trends or anomalies that will allow them to learn something about their operations. And some businesses adopting more specialized tools to leverage that data into an automated way of looking deeper into the data. Optimization tools like our Profit Network, Profit Planner, or Profit Scheduler can process vast quantities of data to find the best way of configuring or operating the supply chain.
So, while it is not the Higgs boson that we help people find, businesses do rely on us to make sense of a big bang of data and hopefully see some fireworks along the way.
Applying Lean Logistics Principles in Combination with Tactical Software to Improve Distribution Transportation Planning
May 23rd, 2012 3:56 pm Category: Distribution, Green Network, Profit Vehicle Planner, Profit Vehicle Router, Supply Chain Agility, Supply Chain Improvement, Supply Chain Planning, Supply Chain Software, Transportation, Vehicle Routing, by: Richard Guy
As the competitive environment changes the way companies do business, transportation managers are embracing lean principles mixed with tactical planning software to support cost reductions and quality improvements. Applying lean initiatives to supply chain and logistics operations is one method that allows businesses to reduce cost, but the marriage of tactical planning software with lean principles introduces a new approach and additional opportunity to eliminate waste.
Lean is a team-based form of continuous improvement that focuses on identifying and eliminating waste and increase of speed and flow of an operation, such as distribution of products. Waste can be defined as activities that do not add value for the customer.
A short waste target list for a distribution transportation planner may include the following:
- Underutilizing employees or behavioral waste
For example, managing a large delivery fleet with a relatively fixed, repeating delivery pattern will benefit from an optimal territory planning and routing solution. Since lean adds emphasis on waste, non-value added work, queue times, to traditional process analysis, improving the distribution and routing plan for a company’s fleet can eliminate waste in all of the above categories.
Selecting strategic territory planning software that will optimally divide a customer region into geographical “territories” based on customer delivery requirements can be an important first step in the lean process. Think of each territory is a contiguous area containing the customers that will form a single route, or a regular pattern of routes, over a day, week, month or other time period. Lean solutions can include optimal delivery territories shaped to minimize total travel and to equalize the delivery workload for drivers.
Most software packages utilize geographical mapping software such as MapPoint or Google Maps to generate a solution that will minimizes total travel miles while meeting customer service and delivery requirements. Some of these tools can also be personalized and customized to meet specific business requirements. Planning tools that create both territories and routes in a single integrated package appear to be the most popular.
Before implementing the territory planning software solution, let’s compare the results to the target list of waste. Transportation waste is minimized. Drivers (“employees”) become more productive since they now have a delivery territory designed to adhere to the driver profile, which may specify shift time and driving break intervals. Routes are optimized, so there is no more wasted motion time. Routes can be built to ensure sufficient inventory is available at all stops. Natural boundaries such as rivers, mountains, canyons and man-made boundaries such as rail tracks, major highways, canals can be model to create optimal delivery territories that are bounded by these constraints, thereby eliminating driver waiting to go around these obstacles.
In summary, managers that use transportation routing and territory planning software are following the lean principles to identify and reduce waste. Implementing the solution can potentially reduce transportation costs by 5% to 20% by decreasing miles traveled and increasing on-time delivery while dramatically increasing driver productivity. Lean principles when married to tactical planning software can be competitive weapons and a great advantage in tough economic times. Start considering lean logistics principles in conjunction with territory planning software applied to distribution transportation problems as opportunities to reduce waste.
Profit Point, a leading supply chain optimization company, today announced the introduction of Profit Vehicle Planner (PVP) and Profit Vehicle Router (PVR). PVP, a sales and distribution application designed to service large, nationwide operations, includes territory and cycle planning tools, as well as vehicle routing functions. PVR is designed for businesses that need to optimize their vehicle routing, but do not need the territory and cycle planning features that are included in PVP.
“Many people don’t realize that recent advancements in supply chain technology now allow low cost integration of sophisticated mapping tools to make daily planning activities fast and easy,” noted Jim Piermarini, Profit Point’s Chief Technology Officer. “Rising fuel prices have put pressure on every distributor. By combining advanced optimization algorithms with today’s mapping tools, our clients are able to make significant cost reductions while improving customer service levels.”
Profit Point’s PVR software is a streamlined route optimization tool that enables complete distribution analysis by daily routes. PVP includes all of the features of PVR and adds a number of territory planning functions to meet the needs of regional, national and international distributors. Both products are designed to reduce equipment and fuel costs, overtime pay and increase the volume of product delivered per driver.
“Delivery costs represent a significant percentage of our overall distribution expenses,” said Ken Burkey, Logistics Manager of DS Waters. DS Waters is the U.S. leader in home and office water delivery, including 26 manufacturing facilities which delivers to millions of homes, offices, retailers across the country. “Profit Point’s software and optimization expertise has enabled our company to easily reengineer our distribution plan to cuts costs and improve customer service.”
Speed is a common measure for many of today’s supply chains. We all want to know how quickly we can respond to the customer’s request. Speed of response is one of the main drivers behind the current thinking on the Demand Driven Supply Network (DDSN) and many other recent supply chain innovations. One important thing about “speed” is that it comes in at least two flavors, “fast” and “slow”. Many of today’s best supply chains use both. A key supply chain opportunity is to know when to use which speed for transportation to meet customer service targets at the lowest total cost.
You might ask yourself, “Why, if my supply chain is supposed to be quick to respond to customer requests, would I want to include any speed other than “fast?” One “fast” answer is cost. We see this cost almost every day in our personal lives as well as our professional lives. When we purchase something off the internet, we always have the choice of “standard shipping” for a certain price (sometimes free) for delivery in a few days, or “premium shipping” that can have the package on our doorstep the next morning. However, this next-day service almost always costs us more. Likewise, when a supply chain professional chooses rail for his/her long-distance shipments the costs are substantially lower than they would have been for truck, but at the cost of a longer transit time.
Because of this cost differential, many of today’s supply chains use multiple modes (fast and slow) of transportation. The slower mode of transportation is usually applied to lower cost materials that have a longer shelf life and are consumed in a predictable pattern. That is, their demand can be reasonably accurately forecasted. However, in practice there are often significant numbers of shipments of this same material that are made using faster, more expensive modes of transportation. Why is this, and how can we minimize it in our supply chains?
A major factor contributing to the freight premium seen in these types of lanes is the fact that most supply chains are planned with “steady state” in mind, using average demands, average transit times and average supply capacities. Steady state looks great on paper, but rarely happens for prolonged periods in the real world. Thus, we find that natural variation in customer demand, transit time or manufacturing capacity can create low inventory situations that require expedited shipments to avoid a stock-out. In addition, unplanned surges in demand, transportation interruptions (like port congestion, strikes or storms) and temporary shortfalls of supply perturb the system and push us to expedite shipments that are supposed to move by a cheaper mode of transportation.
Reducing the premium freight caused by the natural variation in demand, transit time and supply should happen at the supply chain design stage. Using the right blend of statistics, modeling and experience will result in a much more robust supply chain that balances the additional cost of inventory, and logistics assets against the high cost of premium freight. Dealing with the issue of large, unanticipated perturbations to the supply, demand and transit times is another kettle of fish.
This issue may best be explored by using an example. Profit Point was retained by a large specialty materials manufacturer to help solve this precise problem. The specialty materials company manufactured a number of key raw materials at a large, integrated site on the US Gulf Coast. From there, they were shipped to nine company locations around the US and Canada as well as to a number of external customers. Although there were multiple products manufactured at the site, the level of integration among the products was such that an upset in one part of the process could impact the supply of a number of these raw materials. The preferred mode of transportation for all of the material was by rail in tank cars. However, each year the company was spending millions of dollars in premium freight to move the materials by tank truck to the very same sites. The root causes for the premium freight were:
1. The manufacturing site was required to operate very close to its instantaneous maximum capacity to meet demand. Thus, any small interruptions in supply had large ripple effects through the system because “catch-up capacity” was almost non-existent to rebuild inventory. (This is why you need significantly more inventory when you operate so close to capacity, but that’s the subject of a future article. )
2. Rail transit times were extremely variable, particularly to sites in the Far West.
Because neither of these problems would be solved in the foreseeable future, we needed to develop a customized solution that would minimize their premium freight costs while continuing to deal with the ongoing perturbations in the supply chain. In other words, how could we manage the transition from all rail shipments to partial or full truck shipments and back to rail at the minimum cost while meeting customer service requirements?
Using a customized heuristic algorithm, Profit Point developed a finite capacity scheduling application that created a product/customer-site specific schedule of tank cars and tank trucks that maintained minimum safety stocks at the nine company site and met customer service goals for the external customers while minimizing the total freight spend. With this new tool, the manufacturer cut the premium freight cost dramatically and improved overall customer service.
With the tool, the scheduler could create much better schedules in a fraction of the time required with the spreadsheet approach she had been using. (Those of us who have worked on the plant floor remember that “optimum” can be loosely defined as “the first schedule that works,” when you’re up to your eyeballs in alligators with people calling to find out when they’re going to receive their next shipment. The new scheduling algorithm was able to look at hundreds of schedules that would work and choose the best one.) She was able to quickly orchestrate the moves of certain lanes into trucks and then back into rail cars as conditioned changed either on the supply side or on the transit-time/demand side of the process.
If you’d like to find out more about managing multiple transportation modes in common lanes in your supply chain, please call us at (866) 347-1130, or send us an e-mail using the following link: http://www.profitpt.com/contact/.
Look for our new web-based release of Profit Network in spring 2008. Profit Network is a stand-alone optimization planning software package that is used to design better supply chain networks. Profit Network can be used to analyze the placement and location of production facilities, distribution centers and warehouses over a multi-period planning horizon. Profit Network helps firms restructure their supply chains after mergers, periods of rapid growth or in anticipation of geographic or product preference shifts in the market. Savings of 10% of supply chain costs and 25% of supply chain cycle time are typical.
Profit Vehicle Router (PVR) helps distributors save money by cutting the time needed to develop sales/distribution territories and schedules, as well as reducing delivery miles and the number of sales/delivery vehicles and drivers needed. PVR helps you plan optimal delivery or sales territories, cycle-day territories (what days each site will receive deliveries), and daily routes from a distribution center or office, improving customer service, employee productivity and ultimately increasing profits.
SuperShuttle introduces “Auto Routing” for Quicker Pick Up and Delivery to most of the nation’s largest Airports
Profit Point, MapInfo and SuperShuttle team up to provide the ultimate in Passenger Customer Service
PHOENIX – (December 18, 2007) – SuperShuttle just made getting to the airport and home easier with the introduction of “Auto Routing” a unique system for the delivery of real live people to and from most of the nation’s leading airports. Auto Routing is the brain child of Profit Point, Pitney Bowes MapInfo and SuperShuttle coming together to create a state-of-the-art pick up and delivery system for people that allows for the most efficient routing of SuperShuttle customers yet.
Profit Point, Pitney Bowes MapInfo and SuperShuttle created this programming capability which integrated their individual systems in to the centralized dispatch capabilities at SuperShuttle to provide passengers with a quicker and less complex pick up system for SuperShuttle customers nationwide. “Auto Routing” will reduce the pick up times, less time spent on the shared-ride vans for customers and quicker turn around at the airports overall.
“This has been a true team effort,” said Mike Hogan, Chief Technology Officer for SuperShuttle International. “The functionality of ‘Auto Routing’ is different than the typical delivery optimization of packages since we’re essentially delivering people. Packages don’t mind sitting in the delivery truck and going out of their way a bit. People, on the other hand, don’t like to be on the van too long, go to far out of their way, or backtrack to the airport. This new system actually delivers a whole new ‘on-time’ delivery system for our customers.”
Basically, “Auto Routing” can route each drivers entire day’s work in less than a minute whereas it would take a dispatcher anywhere from four to eight hours to accomplish the same.
Profit Point, Inc.
Profit Point is about the “Science of Better,” specializing in the improvement of a broad range of complex business processes in several industries. Profit Point’s solutions provide immediate benefits using cost-effective technology improvements with Targeted Software and focused consulting services. Please go to www.profitpt.com for more information.
SuperShuttle International, based in Phoenix, AZ is a division of Veolia Transportation On Demand and a subsidiary of Veolia Environment (Euronext: VIE, NYSE: VE). SuperShuttle serves 27 airports, carrying more than eight million passengers a year. Airports served by SuperShuttle include some of the largest in the country including Los Angeles, New York, Dallas/Ft. Worth, Washington, D.C. and Miami. Please go to www.supershuttle.com for more information.
Veolia Transportation, Inc.
Veolia Transportation is the leading provider of passenger ground transportation services on the North American continent, operating bus, rail, taxi, shuttle and para-transit systems in over 120 locations in the US and Canada. Veolia Transportation entered the North American market in 2001 and has quickly expanded to a national presence, with over 16,000 employees and annual revenues approaching $1 billion.
Profit Vehicle Router (PVR) is a sales and distribution territory planning application as well as an operational routing application. The software helps distributors save money by cutting the time needed to develop sales/distribution territories and schedules, as well as reducing delivery miles and the number of delivery vehicles and drivers needed. PVR helps you plan optimal delivery or sales route territories, cycle-day territories (what days each site will receive deliveries), and daily routes from a distribution center or office, thereby improving customer service, employee productivity and ultimately increasing profits.
PVR Assigns Your Customers to Efficient Route Territories
Go from chaos to organized in minutes. Create new territory assignments:
- As customers are added or deleted
- Or as often as you desire.
Suitable for both operational and planning purposes, streamlines your route-planning process, using computer-aided technology to:
- Reduce the staff time required to determine the optimal territories and routes,
- Reduce the number of delivery miles and delivery time, and
- Decrease the number of delivery vehicles and drivers you need.
To learn more about how Profit Point can help improve your vehicle routing and transportation systems, contact us here:
(866) 347-1130 or