routing and scheduling section five. load planning u mode of transportation u cargo characteristics...

Routing and Scheduling

Section Five

Load Planning

Mode of Transportation Cargo Characteristics Facility Constraints Business Strategy Security and Safety Considerations

CARGO CHARACTERISTICS

SIZE WEIGHT STOWABILITY HANDLING LIABILITY HAZARDOUS CARGO SPECIAL SERVICE REQUIREMENTS

Collaborative Transportation:Collaborative Transportation:The “Missing Link” of CPFRThe “Missing Link” of CPFR

Collaborative Transportation:Collaborative Transportation:The “Missing Link” of CPFRThe “Missing Link” of CPFR

Joel SutherlandSenior Vice President, Transplace

[email protected]

VICS CPFR® MeetingFebruary 7, 2003

$571 B Transportation by Mode

Truck Transportation = $462 B (Truck Transportation = $462 B (81%) Truck Transportation = $462 B (Truck Transportation = $462 B (81%)

Source: Bear Stearns, The Whole Trucking Story,

Cass/ProLogis, 14th Annual State of Logistics Report

6%

25%

2%

5% 6% 7% 21%

28%

For-Hire TLIn-House TLLTLLocal TruckingGround ParcelParcel ExpressRailOther

© Copyright 2003 Transplace, LP. All rights reserved.

Shipper/Carrier Challenges

Shipper

No single shipper has critical mass Logistics technology not a core competency Business is still managed in silos Lack of pipeline visibility Total logistics costs are too high

No single shipper has critical mass Logistics technology not a core competency Business is still managed in silos Lack of pipeline visibility Total logistics costs are too high

Carrier

No single carrier has critical mass High driver turnover Costly deadhead miles Excessive dwell time

No single carrier has critical mass High driver turnover Costly deadhead miles Excessive dwell time

There are nearly 600,000 active interstate motor carriers

Fragmented Industry

Source: http://www.bts.gov/publications/nts/html/table_01_02.html

CCCC

592,909592,909

J. B. Hunt

Swift

Werner

U. S. Xpress

Covenent

All Other

J. B. Hunt

Swift

Werner

U. S. Xpress

Covenent

All Other

Less than 5%Less than 5%

Source: Bear Stearns, The Whole Trucking Story

Out of more than 10,000 publicly traded truckload carriers

Driver TurnoverDriver

Turnover

Mode Turnover Conditions

TL 100% Away from home for

long periods of time

LTL 10% Home more often

Local 5% Home every day

Source: Dr. G.D. Taylor, University of Louisville


Costly Deadhead Miles

Empty miles in Europe run 25% to 40%Empty miles in Europe run 25% to 40%

15-20%

Waiting (Dwell) Time Abuse

The average waiting time

for (dry van carrier) drivers was

33.5 hours per week.

The average waiting time

for (dry van carrier) drivers was

33.5 hours per week.

Source: TCA, Dry Van Drivers Survey, 1999 © Copyright 2003 Transplace, LP. All rights reserved.

Trends in U.S. Trucking Industry

Shippers using fewer, larger (core) carriers In-House TL shrinking; For-Hire TL growing Consolidation within TL segment is increasing LTL declining; TL increasing (mode conversion) Connectivity and visibility enabling collaboration

Source: Bear Stearns,

The Whole Trucking Story© Copyright 2003 Transplace, LP.

All rights reserved.

Source: VICS Association Source: VICS CPFR

• Consumer Micro-Marketing

• Joint Business Planning

• New Item/Promotion Management

• Detailed Demand Forecasting • Supply Chain Process and Systems Integration

• Supply Chain Optimization

• Product Planning and Scheduling

Demand

Supply

A business process for value chain partners to coordinate plans in order to reduce the variance between supply and demand and share

the benefits of a more efficient and effective supply chain.

A business process for value chain partners to coordinate plans in order to reduce the variance between supply and demand and share

the benefits of a more efficient and effective supply chain.

CPFR® is all about Integrating

Demand with Supply


Source: VICS Association

The Penalty of Working Alone

Supplier30 days

Supplier30 days

Manufacturer30 days raw materials

30 days finished product

Manufacturer30 days raw materials

30 days finished product

Customer30 days whse21 days store


141 days

Supplier15 days

Supplier15 days

Manufacturer15 days

raw materials15 days

finished goods

Manufacturer15 days

raw materials15 days

finished goods



66 days


An independent yet concurrent process with CPFRAn independent yet concurrent process with CPFR Begins at order confirmation, continues through Begins at order confirmation, continues through

shipment delivery, and includes carrier payment shipment delivery, and includes carrier payment Requires Requires reengineeringreengineering the whole process so the carrier the whole process so the carrier

is part of the larger, more focused, buyer/seller teamis part of the larger, more focused, buyer/seller team

An independent yet concurrent process with CPFRAn independent yet concurrent process with CPFR Begins at order confirmation, continues through Begins at order confirmation, continues through

shipment delivery, and includes carrier payment shipment delivery, and includes carrier payment Requires Requires reengineeringreengineering the whole process so the carrier the whole process so the carrier

is part of the larger, more focused, buyer/seller teamis part of the larger, more focused, buyer/seller team

Source: VICS Association

What is CTM?

Strategic PlanningStrategic PlanningSuppliersSuppliers

CustomersCustomersCarriersCarriers

Strategic PlanningStrategic PlanningSuppliersSuppliers

CustomersCustomersCarriersCarriers CTMCTM

CPFRCPFRCPFRCPFR

Time in Business CycleTime in Business CycleTime in Business CycleTime in Business Cycle


Source: CPFR/CTM

Two ways to Achieve CTM Benefits

1. Direct communication between carriers and trading partners

Source: Williams and Esper, University of Arkansas, 2002John Karolefsky, Collaborating Across the Supply Chain, 2001

BuyerBuyer SellerSeller

CarrierCarrier

3PL3PL

2. 3PL facilitation of the communication and execution process


The Planning Process

Execution

Value is greater when the time buckets are larger

Shipmentand Carrier Management

Transportation Modeling

SupplyChain

Strategy/NetworkDesign

TransportationProcurement

Fleet Routing& Scheduling

ROAImpact

Years Quarters…….Months Days

Strategic Tactical Operational

Source: CPFR/CTM

Level of Collaboration

Traditional Vendor

Transactional No visibility

Trading Partner

Collaboration Shared Forecast by

Lane of Traffic Automated transactions

PartnershipCollaboration Shipper,

Consignee, and Carrier

Shared Forecast Committed

capacity• Visibility

ConsortiumCollaboration Multiple Shippers,

Carriers Third Party

Information Hub Collaboration

Services Relationship

Management

Value

CTM Continuum

Source: CPFR/CTM

MetricMetric ExampleExample

Reduced transportation costs Eliminate excessive empty backhauls and dwell time

Increased asset utilization Reduced empty miles that are unpaid to the carrier

Improved service levels Higher on-time performance

Increased visibility Identifying location of freight in the supply chain

Improved end-customer satisfaction Increased number of “perfect orders”

Increased revenues Improved fully load miles; better on shelf performance; increased order quantity

Potential CTM Benefits

Source: John Karolefsky, Collaborating Across the Supply Chain, 2001


Before Reengineering

After Reengineering


Results

Before ReengineeringBefore Reengineering

• Vendors Controlled Freight • 77% of Vendors Converted to Collect

• 85% LTL Inbound Shipments • <2% LTL Inbound Shipments

• 1 Week Average Transit Time • 1.5 days Average Transit Time

• No Pipeline Visibility • Complete Pipeline Visibility

• Excessive Freight Damage • Freight Damage Nearly Eliminated

• High Transportation Cost • >20% Transportation Cost Reduction

• Growth Constrained • Significant Inventory Reduction

• Poor On-Time Performance • 99%+ On-Time Performance

• Poor Utilization of Private Fleet • 25% Increase in Private Fleet Utilization

After ReengineeringAfter Reengineering


routing and scheduling section five. load planning u mode of transportation u cargo characteristics...

Documents

u consolidation

u ltl declining tl

trucking industry u

mode conversion u connectivity

high carrier

single carrier

b transportation

collaboration source