Taking Strategic Design to Execution: Using LLamasoft Transportation Optimization to Identify and Execute Continuous Transportation Network Improvements
A U.S.-based logistics services provider works with large business clients to analyze their inbound and outbound routes to identify shipment consolidation opportunities to design routes that reduce time and distance for service improvement and transportation cost savings. In order to identify short-term optimal routings as well as longer-term network improvements, the company relies upon LLamasoft® Supply Chain Guru® transportation optimization, which enables the company to rapidly answer hundreds of what-if questions for decision support. For one major automotive manufacturer client, this could mean nearly $10 million in annual savings.
Short-Term Improvements: Using LLamasoft to Design and Execute Efficient Routes
As lead logistics service provider for a major automotive manufacturer, the company identifies optimal supplier routings for the manufacturer’s nearly 50 facilities, including assembly, power train and stamping plants, managing a total domestic freight spend of nearly $1 billion. In order to smooth delivery schedules, balance inventory and reduce the miles trucks are driven empty, analysts and engineers utilize LLamasoft technology every two weeks to identify the optimal transportation plan:
- With the short-term shipment forecast provided, analysts work with the plants to build a transportation model for the coming weeks in order to identify baseline cost.
- Then, analysts optimize this baseline model using the LLamasoft Supply Chain Guru transportation optimization design engine to identify alternate routing options to reduce miles and better consolidate shipments, given constraints. Supply Chain Guru’s transportation optimization identifies efficient routes by utilizing its distance matrix calculator which determines actual road distance and road speed for extremely accurate routing.
- Route and stop details are exported from Supply Chain Guru into spreadsheet format and engineers analyze different scenarios to decide which are feasible.
- The approved new transportation strategy is then fed into the company’s transportation management system (TMS) for implementation.
Since beginning this work in November 2014, analysts have built 40 different transportation models for the client’s various plants. Supply Chain Guru optimization identifies an average of around $4,000 in savings per week for each of the plants, which amounts to around $10 million of potential savings per year. In one study, a potential of $40,000 per week in savings was identified for one plant alone.
Long-Term Improvements: Uncovering Carrier and Scheduling Changes for Greater Cost Impact
In addition to bi-weekly routing optimization, the company also undertakes larger studies using Supply Chain Guru with the goal of uncovering opportunities for longer-term improvements such as carrier adjustments and dock scheduling changes, which can take several months to implement but could yield more significant cost and time savings over time. Often these projects are the result of utilization observations and trends uncovered in the bi-weekly routing optimizations.
The company works closely with the automotive manufacturer to provide an all-inclusive design package in which they handle long-term design and implementation strategies. For example, working closely with the automotive manufacturer purchasing group to put out bids for carrier packages, based on the designs they determine using Supply Chain Guru which includes specs for lanes, equipment required, continuous moves route designs and other details. Once they determine the carrier mix and scheduling, the company will implement the strategy.
Why Logistics Services Providers (LSP) Choose Supply Chain Guru
By rapidly taking countless transportation factors into consideration, Supply Chain Guru can identify efficient routes and transportation system structures much more quickly and efficiently than by-hand calculations which require time-intensive route costing, supplier groupings, mileage analysis, etc. Supply Chain Guru enables this LSP to save time and money for this automotive client by:
- Rapidly analyzing hundreds of what-if scenarios to identify many potential efficiency opportunities
- Providing an objective, new set of “eyes” on a network to uncover opportunities the human eye misses between the initial route design and the TMS
- Analyzing shipment consolidation, route design and scheduling frequency all in a single model
- Identifying cost, distance and time savings
- Providing an efficient and cost effective transportation design that can be executed to reap the savings