Using software to more efficiently route and schedule trucks was an early and successful application of technology in the logistics sector, but routing guides and even daily schedules, once created, are static and inflexible. As companies move more toward real-time information and operations, they are demanding dynamic routing solutions that enable greater agility and cost savings.
For sock maker Gold Toe, the demand for a dynamic routing solution first came from major retailer J. C. Penney. To gain better control and optimization of inbound, pre-paid transportation, Penny and other retailers began asking their primary suppliers to provide them with additional information earlier in the order-fulfillment process. "They were asking us to send them an EDI document that was a request for routing on orders to be shipped two days out," explains Dale Bias, manager of application development at Gold Toe. Penney would then send back via EDI specific routing instructions for those pick tickets. The problem was that the "ship to" and "ship via" instructions often would be changed from the original order. "This was going to occur after the pick tickets had been generated and the shipping labels printed. We were afraid that we were going to have to start printing new shipping labels and than somehow make sure they got on the right box," says Bias. "This was a big deal."
Previously, Gold Toe, which is located only 90 miles from one of Penney's big distribution centers, would simply load full trucks going to the DC, using carriers specified in a printed routing guide. With dynamic routing, some goods still go to the DC, but others are shipped direct to stores or to store support centers, often as LTL or parcel, and the carriers are more variable.
To meet Penney's requirements, Gold Toe turned to software partner Manhattan Associates, Atlanta, whose PkMS warehouse management solution it already was running. Manhattan was hearing similar concerns from other of its customers that were supplying to major retailers. At the request of these customers, Manhattan hosted a symposium last summer to collectively discuss and develop supply-chain processes and the technological requirements to support dynamic routing.
"One of the reasons we did the symposium was because when this was first put out as a requirement, the retailers looked at it as merely a new EDI request," says Bob Robertson, manager of retail compliance at Manhattan. "They didn't take into account the impact to suppliers' systems or operations. We already had had some discussions with retailers to better understand what they were trying to do, but it was very helpful to get everyone together for a couple of days and let both sides make their points. Coming out of that, we were able to help encourage a few changes as far as retailers' requirements or the way they were handling the dynamic routing process that made things a little easier for the supplier to accommodate." Manhattan then developed a solution that worked with its existing products.
"We thought about making a modification ourselves," says Bias, "but we were concerned about the viability of the software package. If you go in and start making changes like that your upgrade path becomes very difficult."
Bias has only praise for the dynamic routing solution. "I have to give kudos to Manhattan," he says. "Implementation was relatively painless and the software worked the first time."
Now, when order pick-tickets are sent to the PkMS system, Gold Toe runs a release or planning wave. "We do some pre-cubing on our host computer before the tickets go to PkMS so we have an idea as to what our cube and carton counts will be," says Bias. The dynamic routing solution automatically generates the EDI routing request (document 753) and sends it to Penney. This usually occurs around 4 p.m. each afternoon. Routing instructions (document 754) are received back in the early morning hours of the next day. Only after the routing instructions come back does Gold Toe begin picking, which means each carton is only touched once. In addition, the actual "ship to" location is known prior to printing shipping labels. Gold Toe also is aware of the proper carrier routing before picking and is able to process and stage its retailer-defined loads together.
Gold Toe has realized benefits over and above meeting its customers' requirements, says Bias. Product is delivered to the shelf faster, minimizing stockouts and increasing inventory turns. The company also expects to see a considerable reduction in chargebacks as a result of implementing the dynamic routing process because issues such as early or late shipments or incorrect routing are minimized. "It forced us to do some planning on the front side and actually allowed us to organize the outbound flow going to Penney's a little better," says Bias. "We have to decide on Monday what we think we can get out of here on Wednesday, instead of just shooting pick-tickets out to the floor, picking and then calling to say 'OK, send a truck.'"
Logistics.com, Burlington, Mass., which recently was acquired by Manhattan, also has included a dynamic routing option in its online transportation procurement and management applications.
"Most execution systems try to execute a static plan to the best of their ability, but executing daily a plan that was developed sometime in the past is not an optimal process because things happen," says Joe Wagner, senior vice president of global sales and marketing at Logistics.com. "Creating routes based on real-time information reference the plan, but also reference other variable factors, such as a carrier's most recent on-time performance, or opportunities for creating a continuous tour. The result is the ability to select the best optimized route and the most appropriate carrier at the time you are shipping."
Changes also are occurring with routing and scheduling software for outbound shipments. One driver in this area is a move toward centralization of the routing process.
"A number of years ago we made great strides to push out the decision making in distribution and sales to people who were geographically very close to the customer," says Michael Jakab, senior vice president of routing and scheduling at Descartes, a software developer and services company based in Waterloo, Ontario. "The problem with that strategy is that it carries a fairly hefty expense tag, so now we are seeing a fair number of organizations streamline and re-centralize the routing and scheduling process. We are seeing this across industries, whether it is food and beverage, LTL carriers, propane gas distributors, appliance companies or other manufacturers."
Cyndi Brandt, product manager for the Roadnet Transportation Suite, a division of UPS Logistics Group, agrees. "I think the biggest concern driving centralization is maintenance costs," she says. "Companies look around and see five, 10, 25 systems out in the field and upgrades become expensive and time consuming. With centralization they only upgrade in one spot and everything is standardized."
Centralized decision-making on routing and scheduling requires a centralized repository of information. "You have to provide visibility of operations across the enterprise, which means you have to integrate across these functional boundaries," says Jakab. "When companies distributed the work and pushed the decision making and responsibility out, point solutions worked well. But when you pull this process back in-house and centralize it, you want to make it real time and make a common database. You then can share the information between delivery, dispatch and customer service - now you are affecting a process at a much higher level than just managing the way you sequence stops on a route. You are driving a lot more value and that drives significantly larger projects and the solution footprint becomes a lot broader. Our footprint has probably quadrupled in the last two years," he says.
Centralization has issues of its own, however. "There are some rather large tech issues that have to be considered," says Brandt. "Companies have to think about buying servers now instead of PCs and combining all their databases may mean they will need a database administrator to do some of the fine-tuning and updating." To make up for the loss of local knowledge, she says, it is particularly important that the data be current and correct.
Roadnet, whose products include Territory Planner, Roadnet 5000, FleetLoader and MobileCast, recently introduced an online center to facilitate the sharing of routing and scheduling information. "What we have done is opened up that routing and scheduling database to expose the information to various people," says Brandt. "If you have ever been in a router's room you know the phone rings every 10 seconds with customer service people asking, 'When is this truck going to get there?" or 'Where is this order?' We have taken all that information and made it accessible on any desktop or laptop through a set of web tools to anyone that is plugged into a local- or wide-area network." The Roadnet Info Center has inward-facing web pages for transportation managers, customer service reps or warehouse managers. In addition, outward facing pages are accessible through the web sites of Roadnet's customers. For example, Brandt explains, a customer of Cicso can log onto Cicso's web site with his ID and see when his shipments are scheduled to arrive. Real-time execution information is provided through MobileCast, Roadnet's integrated wireless application.
"Info Center is still very early in its product lifecycle, but our hope is that we can make the life of routers easier and more productive - give them time to try some of the 'what if' capabilities in the software. And with more time we hope many that don't have the time right now to go in and do proper system maintenance will be able to do that. Routing and scheduling systems are maintenance intensive in terms of the data and if that starts to lag then the systems don't produce the best answers."
Descartes' Fleetwise Monitor similarly collects and distributes information on the status of deliveries via a web browser. Its wireless product, MobileLink, enables the reporting of real-time events in the field. "The MobileLink connection is there to do three things: communicate with the driver, assign new work in a pickup and delivery environment, and manage exceptions," says Jakab.
Descartes first introduced a wireless application in 1995, but Jakab says he is still waiting for the use of wireless devices to explode. "There still are a lot of transportation companies that are not capturing things in real time," he says. "But hardware costs are coming down, air time costs are coming down, and air time coverage is going up, so the trend is very positive."
Three years ago, he says, Descartes' typical wireless client would deploy 20 to 30 units. "About 18 months ago we started getting orders in the 200- to 300-range of units," he says. "Now in the last 12 months, we have entered into three large deployments with 1,000-plus units each, so interest definitely is growing."
One key to success is having a system flexible enough to allow the customer to write their own applications that reflect their brand and the way they do business, he says. A third-party logistics provider using Fleetwise Dispatch and Fleetwise MobileLink, for example, has a retail customer that requires its providers to scan each carton unloaded at their docks using the retailer's software. "So we are actually running our application on the pocket PC device, as well as two or three other applications. Our drivers just toggle between them."
Another area where Descartes is adding value is in its business-to-consumer scheduling - one aspect of solutions that also encompass replenishment, typically in a route-sale environment, such as soft drink and snack food distributors; business-to-business distribution; and pickup and delivery operations.
The consumer direct business is focused on home delivery, and typically involves industries like grocery, appliances, furniture, and other items too big to carry home but with a high enough value that consumers will pay for delivery. "These are operations that really have to balance that challenge of arriving at a customer's home within a preferred time slot so as not to completely disrupt their day while at the same time creating the density of stops necessary to be operationally efficient," says Jakab.
Descartes has developed a product called Fleetwise Reservations that is used by such companies to meet and influence consumer delivery requirements. As an example, Jakab cites a retailer in the U.K. that services high-end clients for expensive items like furniture. When a customer purchases an item, such as a sofa, a screen driven by Fleetwise Reservations pops up on the sales clerk's monitor. The screen shows the sales person which delivery times to offer - as determined by Descartes' scheduling optimizer running in the background. It also allows the retailer to attach premium charges to the most requested delivery times.
"This is very new," says Jakab. "When the clerk is arranging delivery he is looking at a schedule that has been optimized based on orders taken up to that point and values presented back that encourage the customer to select the time that meets his schedule, as well as needs of the delivery operation. So you are balancing these two things in real time. Typically what is taken for efficiency today is if you give a customer a delivery day and then the night before you optimize your stops and the customer calls the day of delivery to get an approximate time. We present values that allow the store to understand in real time when is the optimal window for servicing this customer."
This software is an outgrowth of a solution initially developed for Webvan, the online grocery retailer that failed during the dotcom bust. The solution still is being used in the grocery industry, however. In another example from the U.K., online grocer Ocada uses Fleetwise Reservations to offer optimized one-hour delivery windows to households across Hertfordshire and London. The software has enabled Ocada to increase the number of deliveries per route by 40 percent and to boost its on-time delivery rate to 98 percent.
"This is about the third version of what we started with Webvan," says Jakab. "We think it is going to pay off in spades."
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