"Realistically, you can't construct a continuous move from a plan and expect it to be actualized. What you can do, however, is look at where there are repetitive volumes of movement in the network and hook them together when there is a large enough volume to justify what is in essence dedicated carriage. It's not a continuous movement, but you can use dedicated carriage to lower the cost for all the shippers while lowering the cost for the carriers," says Stiles.
"In this way, you are effectively taking empty miles out of the system. This is good news for everyone because when you are considering how to reduce costs for everyone in the face of out-of-control fuel increases, you can do this using excellent data, which increases your efficiencies."
Stiles claims some customers netted as much as 19 percent in savings off their annual freight bill, even before the CHEP acquisition. "At that time, we had about 5 million shipments a year going through our system. With CHEP we have a much larger base of information to work from and the larger the base, the better the information."
This rich information means benchmarking delivers decreases in freight simply by examining an individual network against the holistic network and taking out cost where anomalies exist. Visibility is now holistic and not limited to that of an individual company. Stiles says the CHEP partnership will allow LeanLogistics to expand its existing product base around benchmarking capabilities, providing quality information to shippers so they can evaluate their own networks.
The company is considering allowing carriers to apply to the network. Stiles admits the company has not conceived the how of this yet, since that is still in development. "But the ‘what' of this is a marketing information tool for carriers. They might want to know how to solicit volumes in certain lanes and how to participate with certain shippers when they issue a procurement. They are also looking for ways to bid for dedicated round-trip movements when they become available."
So these carrier services will allow carriers to view the network to see where their route patterns overlap and where freight is available-and which shippers they can service at favorable rates.
HighJump: Planning And Optimization
The 3M acquisition of Pinnacle Distribution Concepts Inc. in 2006 will merge Pinnacle's synergies with those of HighJump, says Bill Johns, director of transportation solutions sales for Eden Prairie, MN-based HighJump. "Pinnacle was a strategic target because of its existing customer base and because its transportation logic is a market differentiator because it is designed by industry professionals. Additionally, their on-demand solution had best-of-breed functionality in a hosted environment."
HighJump touts the business logic driving its solution. "All the algorithms of our transportation optimizer have been built into our product (and not by third parties), including our industry expertise," says Johns, noting some TMS solutions are being developed by engineers and mathematicians who have no background in transportation. "Customers like our planning and optimization logic in our algorithms because it is intuitive to a transportation planner."
The solution also includes freight bill management and auditing functionality, saving companies money and effort by not having to outsource to a third party.
Enterprise integration varies according to customers' operations. Johns says the solution can easily integrate into an ERP application or into a WMS, or a hybrid of both. "Every company has a different way of handling internal operations. Our solution doesn't require a company's IT department to be involved at all, except at the very beginning."
Understanding a customer's unique requirements is necessary to set parameters and to establish data points, known as business rules, for the algorithms driving an on-demand TMS. For example, a customer might want to deliver only on three particular days of the week during certain time windows and using certain carriers. "These data points become part of the algorithm," explains Johns.
"Companies using our TMS solution have four snapshots in load planning," Johns says. First, they can let the TMS program develop the transportation plan, using all the business rules and logic of a particular company.