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:
Isn’t that one of our main objectives in life, whether the setting is business, participation in sports, your personal life?
I see part of our role at Profit Point as helping our clients to achieve their potentials. We do this by applying mathematical techniques to find good solutions to the problems that business leaders face. Many of our clients call upon us when their business is going through a time of transition, particularly when there is a merger of organizations.
Analyzing the potential for facility rationalization is one of the standard uses of our Profit Network infrastructure planning software. We, and clients, have used this software to decide how many plants, production lines and warehouses they need to best serve their customers in many different types of situations.
But mergers present opportunities to organizations further down the supply chain as well, of course. Many companies use vehicles to deliver product to customers on a regular basis, and when there is a merger (and at other times) well-run businesses are looking for ways to ensure that these types of activities are carried out efficiently.
Our Profit Vehicle Planner (PVP) software can help in planning for a merger at that next level down – for instance, when you have two organizations serving customers in a metro area, how do you combine them together?
The diagrams below give you an idea of the situation a company might face. They have operations in various parts of the country, serving hundreds of customers in each area. Their Southern California customers might be spread as in the pattern in the diagram below on the left.
To serve these customers they currently have five route territories, covering the customer deliveries, as is shown in the diagram on the right.
Now they plan to merge with a smaller competitor in the same type of business. The acquired company has customers in southern California with a similar spread across the geography, divided into two territories, as is shown in the diagrams below.
PVP will allow the analyst to look at all of the customers together,
and in this case, when the territory planning algorithm runs, it finds that deliveries can be made in six more-compact route territories, covering all customers. Separately the two companies had seven territories – and merged they have the potential to serve them with six – thus saving a truck and various associated expenses. The merged solution is shown below.
Implementing this merged solution can help the company better achieve its potential – for profits.
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.
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.
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/.
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.