Great strides have been made in transportation infrastructure in the last 150 years; such feats as the construction of the Suez and Panama Canals, and the development of long-distance railroad and highway networks, have reduced cost and fostered trade for the world as a whole. And more changes are coming on line today, or are in the pipeline, including significant additional throughput capacity in Panama in 2015, and the gradual development of added rail capacity connecting Asia and Europe. (For more information on the latter, see the article The New Silk Road by my colleague John Hughes.
Another area where additional transport capacity would greatly benefit trade, and potentially bring a significant improvement in living standards, is central Africa. This area has immense natural resources, such as the copper and cobalt found in the Democratic Republic of the Congo and Zambia, and the coffee grown in Uganda, that require both land and sea transport to reach major manufacturing and consumer areas. A number of projects are under construction or consideration to bring change to the supply chains in that part of the world.
An article in The Economist earlier this year looked at barge and rail transport projects underway in Egypt, Guinea, Ghana and Angola, and profiled plans for future infrastructure improvements by firms such as Citadel Capital of Cairo.
The strategic thinkers at consultancy Stratfor have focused a number of their recent research articles on the different options available to better connect the rich ore in the landlocked central area of Africa to world markets. The South African port of Durban has the best developed cargo handling facilities among the ports in the southern part of the continent, and currently attracts large volumes of minerals, but this requires a long road trip from Katanga in the Congo through Zambia and Botswana to South Africa. Durban is substantially further from the sources than ports such as Dar es Salaam in Tanzania, or Walvis Bay in Namibia, but the road route to Durban is relatively safe and stable, whereas paths to other ports suffer from unreliable or otherwise inadequate infrastructure, or the requirement to switch between rail and truck en route from mine to coast. But that is perhaps just a short term issue – given the potential rewards, several plans to improve these routes are in various stages of planning or development.
As these changes become visible on the horizon, and gradually take place, companies would be well-advised to evaluate their options, and plan for these changes – strategic supply chain planning allows management to keep their firms at the forefront of the business world.
October 3rd, 2013 5:54 pm Category: Supply Chain Software, by: Richard Guy
Are you frustrated with your Supply Chain Software application? Is it time to pull the plug and start searching for a replacement application? Here’s a list of signs that we often hear from customers that motivates them to start searching for better solutions.
1. Installation is REALLY difficult.
2. It takes up a lot of space on the hard drive. Several gig.
3. It often throws errors with no obvious solution on how to fix it.
4. It frequently does not work properly, and you find out later, when someone questions the results.
5. Support for new features is very slow and cumbersome.
6. It leaves the user with the sense that you don’t want to touch it, it is delicate, sort of scary.
7. It has not grown with your business; business requirements have changed, but the software has not kept pace.
8. You are searching for others in your organization to own and use the application.
Any of these signs could indicate a time to question the usefulness of the software. If you identify more than four, you need to start searching for a better software application, switch jobs, or double up on those yoga classes.
Supply Chain Survey 2013:
Gaining Competitive Advantage
If you’re reading our blog, you are probably someone who is deeply interested in supply chain improvement. So we’d like to invite you to participate in this brief survey. And in return, we will send you exclusive, early access to the results of the survey along with our analysis .
Your insights and experiences are very important to us. And we are hosting the survey on a trusted, 3rd-party site so your responses will remain completely confidential. The survey is relatively short and should take only 3-4 minutes to complete. Please take a few moments to complete the Supply Chain Competitive Advantage Survey.
Start the Supply Chain Survey:
Gone are the days that supply chain was merely an expense. These days, savvy decision makers are gaining advantages over the competition by leveraging the data and tools available to them. In this survey, we will be exploring the methods, tools and processes that supply chain professionals utilize to gain competitive advantage via their supply chain.
The global economy hangs in a tenuous balance. U.S. growth has been slow, but steady, while the global economy has been mixed. The survey data suggests that logistics planners are most concerned with meeting service levels, driven by capacity concerns, rising costs and the need to increase productivity.
- A slow and uncertain economic recovery has begun to put pressure on transportation/distribution planners to plan for multiple scenarios.
- Rising fuel and driver costs remain a key long-term concern.
- Capacity is a significant concern. While trucking capacity has tightened, rail capacity is available.
- Planners are equally concerned with meeting service levels, perhaps, caused by rising costs and capacity constraints.
To read the complete report, including our conclusions, click the link below:
Upgraded Vehicle Route Planner Software Improves Decisions in Distribution Planning, Fleet Sizing, Driver Productivity and Transportation Cost Reduction
Profit Point announces the introduction of Profit Vehicle Planner™ 3.1, a major upgrade to our distribution analysis and design software. Profit Vehicle Planner is designed for Strategic Logistic and Transportation Managers that have large fleets with multiple daily delivery stops and changing logistics processes. The software update includes a combination of new features and technical enhancements which combine to support richer scenario modeling for larger large fleets with multiple daily delivery stops and changing logistics processes.
Designed to be highly accessible and customizable, Profit Vehicle Planner (PVP™) uses standard Microsoft business tools for calculation and display of information, including Excel, Access and MapPoint. The software automatically creates and designs the optimal sales/distribution territories. It does this by dividing customers into territories and days of service, with each territory representing the volume delivered by one delivery vehicle and one driver over the course of the planning horizon. The objective of the proprietary heuristic algorithm used in Profit Vehicle Planner is to assign customers to territories that will minimize the number of trucks required to serve the customer volumes while delivering within the various common and business-specific constraints, including customer frequency of service, hours available per day, volume available per truck, unique equipment requirements and virtually any other custom constraint required.
“With 12 years in the field, Profit Vehicle Planner has been put to the test against some of the world’s largest supply chain distribution problems,” noted Jim Piermarini, Profit Point’s Chief Technology Officer. “Transportation best practices have expanded over time, so decision makers are looking for more comprehensive strategic logistics and transportation modeling solutions.”
With the new release, PVP’s expanded features include extensive customization of the software to tailor the territory planning solution to be cost and time effective to meet your unique and specific distribution requirements and the ability to use imported address data to automatically geocode customers for whom lat/long data is missing.
For companies that perceive distribution as mission critical, users have the option to integrate PVP deeply into their supply chain systems to import and export data in to their ERP system. Companies that seek the most cost-effective solution have the ability to import virtually any relevant data from an Excel template that includes the following:
- Customer data such as address, location, frequency of service, volume per stop, time required per stop, other data as needed
- Truck data such as size, days of the week that it is available, order in which it is to be scheduled, hours available each day, special equipment, other data as needed
- Warehouse and district data such as location and characteristics of associated trucks and drivers
- Time related data such as start date of planning horizon and number of weeks in the planning horizon.
- Product specific data such as unit of measure of the product being delivered
- Any other data required to accurately model unique constraints
Once optimized, users have the ability to review and assess the characteristics of the territories that are created using tables and maps to provide an enhanced visual experience. And to ensure the optimal distribution plan, users can manually move customers from one territory to another or from one service day pattern to another (e.g. from Monday-Thursday to Tuesday-Friday), if desired.
June 22nd, 2012 3:46 pm Category: Distribution, Enterprise Resource Planning, Global Supply Chain, Green Network, Green Optimization, Network Design, Optimization, Supply Chain Agility, Supply Chain Improvement, Supply Chain Planning, Transportation, Vehicle Routing, by: Editor
Supply Chain optimization is a topic of increasing interest today, whether the main intention is to maximize the efficiency of one’s global supply chain system or to pro-actively make it greener. There are many changes that can be made to improve the performance of a supply chain, ranging from where materials are purchased, the types of materials purchased, how those materials get to you, how your products are distributed, and many more. An additional question on the mind of some decision makers is: Can I minimize my environmental footprint and improve my profits at the same time?
Many changes you make to your supply chain could either intentionally – or unintentionally – make it greener, so effectively reducing the carbon footprint of the product or material at the point that it arrives at your receiving bay. Under the right circumstances, if the reduced carbon footprint results from a conscious decision you make and involves a change from ‘the way things were’, then there might be an opportunity to capture some financial value from that decision in the form of Greenhouse Gas (GHG) emission credits, even when these emission reductions occur at a facility other than yours (Scope 3 emissions under the Greenhouse Gas Protocol).
As an example, let’s consider the possible implications of changes in the transportation component of the footprint and decisions that might allow for the creation of additional value in the form of GHG emission credits. In simple terms, credits might be earned if overall fuel usage is reduced by making changes to the trucks or their operation, such as the type of lubricant, wheel width, idling elimination (where it is not mandated), minimizing empty trips, switching from trucks to rail or water transport, using only trucks with pre-defined retrofit packages, using only hybrid trucks for local transportation and insisting on ocean going vessels having certain fuel economy improvement strategies installed. These are just some of the ways fuel can be saved. If, as a result of your decisions or choices made, the total amount of fuel and emissions is reduced, then valuable emission credits could be earned. It is worth noting that capturing those credits is dependent on following mandated requirements and gaining approval for the project.)
If your corporate environmental strategy requires that you retain ownership of these reductions, then you keep the credits created and the value of those credits should be placed on the balance sheet as a Capital Asset. Alternatively, if you are able, the credits can be sold on the open market and the cash realized and placed on the balance sheet. Either way, shareholders will not only get the ‘feel good’ benefit of the environmental improvement, but also the financial benefit from improvement to the balance sheet. If preferred, the credits can be sold to directly offset the purchase price of the material involved, effectively reducing that price and so increasing the margin on the sales price of the end-product and again improving the bottom line. If capital investment is required as part of the supply chain optimization, the credit value can also be a way to shorten the payback period and improve the ROI, or to allow an optimization to occur
So, when you consider improving your environmental impact or optimizing your supply chain, consider the possibility that there might be additional value to unlock if you include both environmental and traditional business variables in your supply chain improvement efforts.
Written by: Peter Chant, President, The FReMCo Corporation Inc.
Profit Point, the leading supply chain optimization software and services company, today announced a partnership with TBB Global Logistics, a leading domestic and international transportation management provider. The two companies have partnered to provide an integrated solution of logistics and supply chain optimization software and services to provide global manufacturers and distributors an integrated supply chain network and distribution plan.
As a logistics industry leader since 1946, TBB Global Logistics has the knowledge and expertise to develop and manage the most complex supply chain strategies for your company. Together Profit Point and TBBGL can deliver a complete solution to provide increased efficiency, lower total costs, superior customer service and a more competitive position in a dynamic global marketplace. TBB Global Logistics is a non-asset based, supply chain management company that relies on superior, web-based technology and relevant expertise to enable clients’ ability to effectively and profitably compete in a global marketplace.
“Large domestic and international clients are pursuing deeper integration of their supply chain strategies into their day–to-day operations,” noted Dr. Alan Kosansky, Profit Point’s CEO. “Partnering with a company like TBB, provides our clients the ability to develop a seamless transportation and distribution strategy and implementation plan.
Profit Point now has access to global transportation data resources and 3PL expertise insight to deliver the entire package: the strategic supply chain plan along with an operational solution covering supply chain distribution, logistics and transportation engagements. Together, the two companies deliver a unified team of dedicated professionals to meet the demands of global manufacturers and distributors by helping customers design and implement an optimal supply chain.
To learn more about Profit Point’s supply chain software and services, call us at (866) 347-1130 or contact us here.
About Profit Point:
Profit Point Inc. was founded in 1995 and is now a global leader in supply chain optimization. The company’s team of supply chain consultants includes industry leaders in the fields infrastructure planning, green operations, supply chain planning, distribution, scheduling, transportation, warehouse improvement and business optimization. Profit Point’s has combined software and service solutions that have been successfully applied across a breadth of industries and by a diverse set of companies, including Dow Chemical, Coca-Cola, Toys “R” Us, Logitech and Toyota.
About TBB Global Logistics:
Founded in Baltimore in 1946, TBB Global Logistics provides complete supply chain management services. TBB provides domestic and international transportation management and supply chain solutions through its Supply Chain GuardianSM brand. Supply chain support services include sourcing, procurement, customized warehouse logistics, inventory management and reverse logistics. TBB offers web-based supply chain management applications and supply chain consulting. Headquartered in New Freedom, Pennsylvania, TBB Global Logistics also has offices in Maryland, located in Hanover by BWI Airport and sales teams throughout the United States. TBB Global maintains a network of agents in countries around the world. TBB is a third generation, family-owned company.
The following is a guest blog post from Sam Polakoff, President, TBB Global Logistics.
Now sit down and think about it for a moment. Exactly when did your company establish its current distribution network? In all likelihood, the answer is three or more years. Is your business the same as it was three years ago? Probably not. What factors commonly drive change necessitating a shift in supply chain strategy? There are many including, but not limited to, the addition of key customers, product introductions, changing sources of supply, competitive threats, mergers, acquisitions, natural disasters and shifting demographics. So how do you rationalize using yesterday’s supply chain for today’s business needs? At best, you are getting by with higher costs and lower margins. You may feel as if you are losing the battle to stay competitive in a difficult economy.
To compete effectively in a dynamic business environment, continuous evaluation of the marketplace is a critical success factor. Once knowledge is in-hand, your supply chain must be built in an agile manner allowing for efficient shifts to accommodate expected and unexpected change.
I recently spoke to the owner of a U.S. manufacturing company that dates back to the early 20th century. He was explaining how he was in the final stages of divesting the company of all its hard assets. They had long ago moved manufacturing offshore. They had evolved into a substantial importer managing a series of company-owned distribution centers. Today, all of the distribution is outsourced and the old company headquarters building is up for sale. The shift to a virtual company is near complete. The executives are now free to work on product innovation and the related sales and marketing. They still compete effectively but with higher margins and more agility. This old line company has adapted and overcome, multiple times, aligning and realigning supply chain process with strategic business objectives and changing marketplace conditions. The results are higher profits, supply chain flexibility and happier customers.
Establishing and using key performance indicators will serve as confirmation of effective supply chain process or as a red flag requiring attention. Aligning supply chain with strategic business objectives and keeping your finger on the pulse of the customer will propel you forward on the road to prosperity.
Okay. I am an anomaly. I live in Utah and drink coffee. The majority of the people that live in Utah do not drink coffee, and that is OK, but I do. So, is there a shortage of coffee Cafés in Utah? No. There are many cafés and several that serve outstanding coffee.
We have an exceptional espresso café downtown, located on a side street off of Main. They roast their own coffee and use triple certified organic grown beans. It is the type of place the local coffee lovers go to hang out and have good conversation over a morning or afternoon latté or espresso. Possibly the best coffee I have ever had. What is interesting to me is that a large percentage of the residents in my area do not even know that this café exists.
So what is my point? When it comes to outstanding services or products most people are unaware of what is available, primarily because it does not fit into their lifestyle or what they’re accustomed to. I believe you can transfer this similarity to the business world. Manufacturing logistics and transportation people become accustomed to doing things a certain way. Over time they may become blind to ideas for improving the supply chain. They are unaware of an exceptional Supply Chain Café, even when it is located just seconds from a combination of keystrokes and Google.
It is not their fault they are missing the best latté available. We, as consultants, who prepare those delightful solutions from the Supply Chain Café menu, have probably not done the finest job of promoting our services and software to your neighborhood, but that is changing.
There are many empty cups in the supply chain, waiting to be filled with successful solutions. Supply Chain and Logistic managers tackle difficult supply chain problems every day, but they are so focused on getting their job done and making it through the day that they have little time to think of alternatives that may improve their processes and well being. I am not sure how we can help everyone, so let’s focus on the window shoppers. These are the ones that are aware of the café, but have never been inside. Maybe you are one?
If you are reading this blog, then you must be a window shopper. I am guessing you are looking for a better espresso. OK, you found “Profit Point”, although you may not know what we do. Guess what? Help is on its way. We can share our menu with you. We just published four videos that will introduce you to the Profit Point team and what we do. Embrace three minutes out of your day, select one of the videos, and watch it. Learn how we help companies improve their supply chain, by serving the best coffee with a smile.
Yes, you can improve your supply chain with our help. The supply chain solution that you are looking for, is about to be yours. And if you place an order, we can fill your cup to the top, with the “good triple certified” stuff. If you cannot seem to find that special item on our Supply Chain menu, then no fear, we love special orders.
So, is there a shortage of Supply Chain Cafés? No. You just need to find the one that serves the optimal latté. I know it’s out there somewhere.
With the timing and velocity of an economic recovery uncertain, many companies are looking for new ways to improve profits without risking growth capacity. One key opportunity for gaining competitive cost advantage is transportation spend.
So this year, we conducted a survey transportation decision makers to learn more about their concerns and expectation for 2011. Supply chain professionals from a variety of companies and industries were polled. Here’s what we learned:
- In today’s environment, cost and service still dominate all other considerations
- Despite current economic conditions, 87% of respondents are concerned about rising transportation costs
- 75% of all respondents find it challenging to balance the tradeoff between cutting costs and adding too many carriers
- One in four respondents were not able to measure the impact of their “improvement initiatives”
To read the complete report, including our conclusions, click the link below:
At Profit Point we are in the ‘Science of Better’, and we are always looking for new ways to do business, both for our clients, and for ourselves. When we started, we had the challenge of being a virtual company, that is, we have never had a corporate office space. Since 1995, each of us has always worked from home. While there are numerous benefits of this style of company architecture, including having a family that actually knows who you are, and keeping the company’s overhead to a minimum, it also has its drawbacks. Like forcing each person to make the deliberate decision about when to start work, and harder still, when to stop work each day. We knew when we started this company that we wanted to keep our overhead costs low, so a virtual office seemed like the natural choice.
More recently, we have been faced with another challenge, how to reduce the cost of the projects we do. Projects in the supply chain business require a certain amount of industry and company specific knowledge. Until recently, we had been building into our projects ample on-site time where the project team could gel and collaborate and build the trust that is needed for the free flow of ideas. But the world has changed, and we have changed with it. No longer are big travel budgets a normal part of the projects we see. So the challenge was: how to reduce the travel expense line item, without sacrificing the project speed or quality?
In the consulting business, there is sometimes no substitute for ‘face-time’. So travel to the customer site perforce happens. Over the course of the last 15 years, I have seen a marked drop in the amount of time that we need to travel, going from 60-70% a decade ago to less than 20% currently, and this has been brought about primarily by two factors: 1) Companies simply do not want to pay the travel expenses. Since 9/11, most major companies have been slashing their travel budgets, and expect their consultants to follow suit. One particular project comes to mind where I had seen travel expenses that were as much as the consulting bill each month. But in general, we see pressure to reduce the travel expenses that are generated by projects across the board. 2) ‘Remote Touch’ Technology has provided the means to travel less. There are some great remote desktop control tools that allow two or more people to have a telephone or VOIP conversation, and look at the same computer screen, to discuss and collaborate on ideas and tools. These web based telephony and remote control tools have eliminated the need for travel to a greater extent than you might think. Many of our projects today have only two face to face meetings, one to kick it off, and one to present the results or close it out. Some of our clients are handled successfully without any face time. I must say though, that in our experience, low face-time projects only work well within the culture and language: that is, when language and culture barriers exist in the project team, face-time is the best way to bridge these gaps, and mitigate the risk of project overruns and delays.
In business, technology comes into being as a means to enable better business processes. The processes that we use that are enabled by this remote touch technology includes an agile approach to solving business problems or developing software solutions. We use several readily available web based tools every day in our business, and boy have they allowed us to reduce the travel expenses. These include:
This is the best remote touch tool out there in our opinion. Until a robust free app comes along, this will remain the best value for the money. The best part of the app is the recent addition of the integrated VOIP, where you can use a head set (I would recommend the Logitech ClearChat PC Wireless Headset: http://www.logitech.com/en-us/webcam-communications/internet-headsets-phones/devices/4226) to join the integrated telecon line. This has the advantage of freeing up your phone, and being instantly connected to the telecon as soon as you start it. No more long telecon numbers with their passcodes! We use this many times every day, and it is the primary reason why we can travel less.
This is a simple to use and secure web based file storage and sharing application that fosters and supports collaboration with people both in your company and externally. We love this app, and my clients seem to as well. Just drop a file into this app, and share it securely with anyone with an email address. Use it when email attachments just will not do, due to size limitations, or just when the email hassle is too much.
This is a terrific project management tool that is designed for agile projects, and makes it simple to create and manage user stories for tool development. While inviting new members can be a hassle (since their email seems to get caught in many spam filters), once they are in, these folks have made a stellar user interface to manage the tasks in a project of nearly any size. Use it to track bugs too. We have done several projects using this tool. and we will be using it for many more. Great tool.
If you like to look at data, like we like to look at data, then you will want to look at Tableau. You can think of it like a pivot table / chart on steroids. You open it, connect to you data, (whereever or what ever data you’ve got, it can connect to it), and then you start to explore your data like you’ve never been able to before. Like a pivot table, you can drag and drop fields, aggregate data along dimensions, and make sums, etc, but the really cool part of Tableau is the part where it suggests new ways of the looking at the data. Go ahead, make maps, heat charts, time phased graphs, whatever. Then you can assemble the graphs into a dashboard. Dashboards are the best. Want to see a ton of data distilled down into a very compact visually stunning view suitable for management? Get a copy of Tableau, and you can make that view in minutes.
Used appropriately, these tools, and others like them, have enabled us to travel less, and work faster and better. (and more!)
If you have other great apps like these that enable better business processes, I would love to hear about them.
I’m a picture guy. In our kind of work, we have to be able to take a lot of data and make sense out of the process or processes that generated it. I used to work with a fellow named, Bill, who has a PhD in Operations Research, and is probably one of the smartest people I’ve ever met in my life. Bill is a guy who can look at six or seven big tables of numbers and then say something like, “… and the answer is 7.563.” He was usually right. I don’t have that talent to create the linkages among lots of different types of information in my head to come up with a conclusion like that. That’s why I like pictures.
Recently, one of my colleagues and I were visiting a manufacturing plant to assess their production scheduling process. The client invited us to visit the plant because they knew they had a problem. As we followed the scheduler through his day, we began to understand the root causes of the problem. So how did I choose to communicate what we’d found to the client? You guessed it; I drew a picture.
When the plant manager first opened the file containing the flowchart of their existing process, she told me she only needed to see that it took me three letter-sized pages to document to the process to know that the process was much too complex and cumbersome to be fixed with a couple of “quick hits.” Why is it that she knew without studying the details that we needed a full redesign to fix this process?
I think many of us are just built that way. I know there is a lot of clinical and academic research that shows how we human beings use our sense of sight as a first preference for observing the world, and that there are specific parts of our brains that are able to detect visual patterns or the lack thereof. However, I don’t think we need to see the results of that research to know why the phrase, “a picture is worth a thousand words,” is such an enduring statement. It rings true with all of us.
That’s why I like a software product called Tableau. It is marketed as a visual analysis tool and I think it does its job quite well. Although I don’t claim to be an expert user, I have found it quite useful when I need to understand what’s going on in a large dataset. Let me illustrate using an example from a recent transportation analysis that we did for one of our clients.
Our client had grown by acquisition and managed its transportation in a very de-centralized manner. Each of the sites contracted individually with their own set of carriers, using their own set of criteria for selecting and then awarding business to the carriers. Profit Point was called in to help the client understand the cost-savings opportunities that would result from a more centralized approach to carrier contracting and management.
Our first priority was to find out what was going on at all of the different sites so we developed a database from the client’s freight payment records to do it. Now, picture this (pun intended). We now have over 63,000 individual shipment records to analyze and we needed to do it in a way that told a story that we could understand and that we could then communicate to the client. The first thing we did was look at the spend by plant and by carrier. The spend by plant was more of a prioritization issue, to understand which of the plants had the highest freight spend, but the spend by carrier became the first part of our story as you can see in the two pictures below.
This second chart was a very powerful image to help the client quickly see that the number of carriers being employed was out of control. You don’t even need to be able to read the name of the carrier on the Y-axis to know that there are too many carriers in this picture. Many of these carriers had only a single load all year long, but were still carried in the system.
We also wanted to show the client the significant different in pricing policies across their carrier base. The following slides show how we used some more of Tableau’s functionality to make our point.
By plotting cost vs. distance for all of the shipments, we were able to see the general correlation of cost with distance that we expected, but we also saw a number of outliers that we wanted to better understand.
We then highlighted a group of very high-cost shipments and kept only those points to see what we might find out.
Using a simple stacked bar chart, it was very apparent that carrier “C-g,” the red bar in the chart at left, was the main player in this group. Once “C-g” was identified, we were able to demonstrate that their cost was always greater than the average cost for shipments with distances greater than 200 miles and by as much as 50-66% for shipments with distances greater than 1000 miles.
Again, these pictures allowed us to find one of the smoking guns inside this mass of data. Suffice it to say that we found many other opportunities through similar visual analysis.
Because of these pictures, and others like them, it was an easy sell. Using a tool that makes it easy to use the built-in “intelligence of our eyeballs,” we were able to develop a convincing call to action for our client, who went out to the market with a targeted freight bid and reduced their transportation spend dramatically.
As technology continues to penetrate more and more aspects of business and our everyday lives, it makes more and more data available for us to turn into useful information. But it’s only useful information when we can put it into a form that we understand and can communicate it to others. That’s why I’m a picture guy.
Many carriers went out of business in 2008 and 2009. The stronger ones survived and have typically sustained their business by establishing high levels of asset utilization. This has been achieved by limiting empty miles and finding complementary loads to ensure trucks are being used in both directions. This creates a wonderful opportunity for shippers: By identifying those carriers who can offer you the lowest rates because your loads help them balance out their network, you can find significant cost saving opportunities when purchasing transportation.
Learn about the essential steps that you can take today to cut costs and gain advantage in your carrier negotiations. Click the link below to access our new white paper:
solutions that are designed specifically for the transportation industry
can reduce transportation costs by up to 20%. “
Profit Point’s supply chain consultants have seen decades of economic boom and bust. Learn about the essential steps that you can take today to cut costs in the near term and prepare for future economic scenarios. Click the link below to access our new white paper:
The U.S. Department of Transportation (DOT) has issued final guidance for the $1.5 billion in surface transportation grants it will award by next February, and among the top selection criteria will be environmental sustainability, innovation, and partnerships. DOT has included sustainability – improved energy efficiency, lower greenhouse gases, and/or less dependence on foreign oil – as one of five criteria it will consider in evaluating a proposed project’s long-term beneficial outcomes for a metropolitan area, a region, or the country. Long-term outcomes, along with a project’s impact on job creation and near-term economic stimulus, will be DOT’s primary criteria for awarding grants.
DOT will also be considering two secondary criteria – innovation and partnerships. DOT is soliciting projects that use innovative technologies to achieve long-term outcomes or significantly enhance the operational performance of transportation systems, and projects that involve partnerships with non-Federal entities and the use of non-Federal funds. Priority will be given to projects for which a grant will help complete an overall financing package.
Recent estimates from DOT suggest that up to $50 Billion in grant requests may be submitted, making this a highly competitive process. It will be essential for an applicant to thoroughly meet the primary guidelines and to score well on secondary guidelines to win tiebreakers. If your project doesn’t yet adequately address the three considerations of innovation, sustainability and partnership, Profit Point may be able to improve your chances of success:
Profit Point provides mathematics-based solutions that optimize the use of resources for maximal efficiency. Frequently this optimization results in reduced transportation mileage which minimizes greenhouse gas emissions as well as fuel consumption. It might also involve minimizing water use, minimizing output of toxic pollutants or maximizing production of beneficial byproducts.
Some examples include:
- Scheduling ship berths at ports to minimize ship idle time in a harbor
- Scheduling port (or canal) maritime traffic
- Optimizing a port drayage schedule to minimize delays and overland carrier idle times
- Optimizing local school bus or public transit system routes to minimize greenhouse gas emissions while providing optimal service
- Routing your deliveries or pickups using the fewest miles traveled
- Providing the algorithm to trigger variable speed limits on traffic leading to a congested area such as a city center or bridge
- Optimizing deliveries for the elderly, such as “Meal on Wheels,” to minimize vehicle costs and emissions
- Conducting infrastructure studies to evaluate the full impact of a project, such as a port expansion with intermodal considerations
If you need to address the sustainability criterion in DOT’s guidance or if you can benefit from including an optimization study as part of your application, we may be able to help you. Profit Point was recently awarded the Supply & Demand Chain Executive Green Supply Chain Award for its Green Network product. Profit Green Network can be used along with our Profit Vehicle Planner and Router Applications to create better plans and improve sustainability.
While innovation is not a primary criterion for selection, it will be used to rank similar projects in order to break a tie. Adding leading edge technology such as mathematics-based optimization to your grant application provides one way of strengthening its innovative appeal.
Optimization is one of the hottest topics in industry today because it not only ensures operations are maximizing their current objectives, but also allows ‘what if’ modeling for future scenarios. “What if modeling” helps ensure continued achievement of your objectives, no matter what set of circumstances may occur.
After DOT considers primary criteria, priority will be given to innovative projects and those that involve State and local governments or private or nonprofit entities.
While there are certainly many partners available, adding a private, small business partner such as Profit Point, Inc. to the application may strengthen its overall appeal. Building on Profit Point’s extensive sustainable logistics and mathematical optimization experience can help make your project application unique.
Presenting the Proposal
Should you need assistance preparing your application or prefer advice from a transportation expert, you may wish to work with an experienced consultant on surface transportation issues. Phillips Strategic Services, a Northern Virginia firm with strong ties to both industry and government, is one firm available to assist you. Phillips Strategic Services experience includes:
- Policy leadership at the Federal Highway Administration;
- Policy development and lobbying for American Trucking Associations;
- Senior staff to a Senate Committee handling surface transportation issues; and
- Various government affairs, marketing, and strategic planning positions with Union Pacific Railroad, Conrail and CSX
In conclusion, nearly any type of surface transportation project is eligible for funding under the discretionary program, which was authorized by the American Recovery and Reinvestment Act (ARRA) of 2009. DOT has named the program “Grants for Transportation Investment Generating Economic Recovery” or TIGER Discretionary Grants, and applications are due by September 15, 2009 with all grants to be awarded by February 17, 2010.
If you’d like to improve your chances of success by strengthening the sustainability and innovative appeal, or if you need a partner to help you present your application most effectively, please contact us:
Profit Point, Inc.
No. Brookfield, MA
Cindy Engers: (925) 736-6800, email@example.com
Richard Guy: (435) 487-9141, firstname.lastname@example.org
Phillips Strategic Services Ltd.
Mary Phillips: (703) 360-3560, email@example.com
Profit Point’s transportation procurement optimization service reduces outsourcing costs by quickly analyzing multiple carrier bids and provides insightful data for decision makers
Profit Point, a leading Supply Chain Optimization company, today announced the introduction of Transportation Procurement, an optimization service that will cut costs for manufacturers and distributors that outsource some or all of their shipping to third-party carriers. The service provides transportation analysts and procurement managers unsurpassed ability to quickly analyze carrier bids and evaluate the best combination of carrier discounts, enabling them to negotiate rates to ship at the lowest total cost.
“Our clients are looking for new ways to reduce costs and gain productivity in every aspect of their business.” said Alan Kosansky, Profit Point’s President. “With the constant fluctuations in the transportation market, this service enables clients to manage their core carrier base and make effective decisions quickly, negotiating with carriers from a position of strength.”
The company’s optimization service and technology provide the analytical horsepower to the transportation or procurement professional to quickly evaluate different mixes of carriers and lane assignments, making trade-offs among both quantitative and qualitative business goals. The service’s richness and flexibility enables clients to dictate constraints to enforce site-specific, regional or global limits on the number and types of carriers that are included in the awarded lanes.
“We have deployed carrier bid optimization software to our clients in the past; however we have found that many of our clients prefer to leverage our deep analytical expertise. By partnering the client’s negotiating team with the analytical insights we provide them, they are able to reach the best possible outcomes in their negotiations with carriers,” said Kosansky. “And when our clients are ready to bring the analysis in house, we readily provide our Profit Procurement for Transportation software.”
Most large manufacturers have hundreds of carriers and thousands of lane options available to ship products from their manufacturing and distribution centers to their customers. The firm’s procurement optimization service addresses all inbound and outbound transportation routes, including rail, truck (bulk, packaged, and LTL), and marine bids, and simplifies the selection process while lowering the overall transportation costs.
To learn more about Profit Point’s transportation procurement optimization services, call us at (866) 347-1130 or visit www.profitpt.com.
About Profit Point:
Profit Point Inc. was founded in 1995 and is now a global leader in supply chain optimization. The company’s team of supply chain consultants includes industry leaders in the fields infrastructure planning, green operations, supply chain planning, distribution, scheduling, transportation, warehouse improvement and business optimization. Profit Point has combined software and service solutions that have been successfully applied across a breadth of industries and by a diverse set of companies, including The Coca-Cola Company, General Electric, Logitech, Rohm and Haas and Toyota.
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/.