Ask Good Questions
Do you need a transportation optimisation solution?
A surprising number of transportation and logistics executives would reply 'No' to that question. 'Our operations are not that complex,' they would say, or, 'We ship mostly full truckloads, so there is nothing to optimise'.
However, if you ask these same executives, 'Do you want to operate your transportation and logistics operations as efficiently and cost-effectively as possible while meeting customer requirements?' they would all reply 'Yes' (at least you hope they would!).
According to Merriam-Webster, to optimise is 'to make as perfect, effective or functional as possible'. Isn’t that what transportation professionals get paid to do? From this perspective, optimisation is not optional; it’s woven into the DNA of transportation management.
Then why the two different responses?
A continuous improvement mindset
I believe it is because many transportation and logistics professionals look at optimisation the wrong way.
They view it primarily as a software application instead of a continuous improvement mindset.
- Are we shipping orders from the best locations (DC vs store vs drop ship)?
- What would be the impact on cost and service if we had an extra day of lead time?
- Is less-than-truckload (LTL) still the right mode for our shipments? What about continuous multi-stop truckload?
- Should we use cross-docks or consolidation centres in our network?
- Why is there always a queue of trucks at our dock waiting to load or unload?
- Does it make sense to implement a dedicated fleet on some of our lanes?
- Are we utilising our transportation spend as effectively as possible?
- Why are we paying so much in freight surcharges?
Regardless of how simple or complex your transportation operations are, you should always ask questions that challenge the status quo and seek opportunities to reduce costs, improve service, reduce risks and enhance customer experience.
How do you answer these questions?
Trends in Transportation Optimisation Solutions
Well, that is where technology comes in, specifically transportation management systems (TMS) with optimisation capabilities.
Companies can use optimisation solutions to answer execution, tactical and strategic questions. 'Can we combine multiple LTL shipments into a single shipment?' is a classic example of an execution-focused question. 'How should we route our trucks for tomorrow’s deliveries?' is another example, particularly for companies with private fleets that want to minimise the miles driven while meeting customer delivery windows.
Examples of more tactical and strategic questions are: 'What would be the cost and service impact if we converted 20 per cent of our volume to intermodal?' and 'Should we convert from prepaid to collect on our inbound freight?'
- You don’t need a Ph.D. to use a transportation optimisation solution. Today’s solutions are much more user-friendly, configurable and intuitive than those in the past.
- Leading solutions use dynamic optimisation engines for execution. Unlike static optimisation engines that determine the best solution based on a snapshot in time (but that can become outdated very quickly), dynamic optimisation engines continuously analyse and come up with the best solution as new orders or exceptions come in.
- The scope of TMS optimisation is expanding beyond execution into the tactical and strategic realms too. Execution-focused optimisation has always been a part of leading TMS solutions, while tactical and strategic optimisation were typically separate, standalone applications. However, since all three types of optimisation depend on TMS data, TMS vendors are adding tactical and strategic capabilities to their platforms.
At the recent Manhattan Momentum 2019 conference, for example, Dr Kimberly Ross, VP, Science at Manhattan, provided an overview of the company’s transportation modelling capabilities and various use cases, including network design, determining fleet vs common carrier policies and fleet sizing. 'Transportation modelling is designed and built to help you evaluate the impact of a policy decision on your transportation network,' Dr Ross commented in her presentation. 'It does this through a combination of optimisation, simulation and analytics.'
Ask Good Questions
A few years ago, I came across the following story, which was published in The New York Times on 19 January 1988:
Isidor I. Rabi, a Nobel Laureate in physics, was once asked, 'Why did you become a scientist, rather than a doctor or lawyer or businessman, like the other immigrant kids in your neighbourhood?'
'My mother made me a scientist without ever intending it. Every other Jewish mother in Brooklyn would ask her child after school: "So? Did you learn anything today?" But not my mother. She always asked me a different question. "Izzy," she would say, "did you ask a good question today?" That difference – asking good questions – made me become a scientist!'
That difference is also what makes transportation professionals successful in their roles.
Transportation optimisation -- that is, the journey to make transportation 'as perfect, effective or functional as possible' -- begins with asking good questions. The process of developing questions, and refining and prioritising them, will lead you to new ideas and insights about how to improve your transportation operations. However, you can’t answer those questions effectively, even those that seem simple on the surface, with spreadsheets or back-of-the-envelope calculations.
So, the answer is yes: you need a transportation optimisation solution.
About Adrian Gonzalez
Adrian Gonzalez is a trusted adviser and leading industry analyst with more than 20 years of research experience in transportation management, logistics outsourcing, and other supply chain and logistics topics. He is the founder and president of Adelante SCM, a peer-to-peer learning, networking and research community for supply chain and logistics professionals. Adelante's services include Talking Logistics, an online video talk show and blog featuring thought leaders and newsmakers in the supply chain and logistics industry, and Indago, a market research service that brings together a community of supply chain and logistics practitioners who share practical knowledge and advice with each other while giving back to charitable causes.