4 Key Planning and Optimization Approaches To Consider
For many companies, the ability to optimize transportation planning and consolidation for shipments is a key part of an efficient logistics operation. Here are four key planning and optimization approaches you should consider for your shipping process:
Aggregation finds separate shipments going from and to the same places with compatible service requirements and puts them together. Doing this can result in significant cost savings, by changing the mode of the individual shipments from a higher unit cost option like Parcel or LTL, to a lower unit cost option like TL.
Routing combines shipments that don’t share an origin or destination onto a truck that makes multiple stops. Again, this can result in significant cost savings.
Another load planning option is pooling. When the user consolidates shipments with pooling an effective optimization solution considers the pool point locations appropriate for the shipment address to optionally create a line haul in or out of the pool point location. The engine considers multi-stop opportunities on the way to the pool point as well for additional savings over assignment to an LTL carrier.
Talking Logistics interviews Chris Jones on the history of pool distribution, its evolution for specialty retailers as a store replenishment strategy, and why it is more relevant than ever to much of the retail market and in other distribution-oriented industries.
Watch the YouTube video to find answers to:
- What is pool distribution?
- What are the critical components of making pool distribution work?
- Why is it in the spotlight today?
- What are the factors driving companies to explore it as a replenishment or fulfillment model?
4. Fleet vs. For-Hire
This approach to shipment optimization exploits the economic trade-offs of your fleet’s capacitated cost versus the for-hire carrier’s rate. By forcing your planning process to find solutions more profitable than the cost of moving a shipment on the private or dedicated fleet, the shipment’s alternatives can be back tested to ensure incremental cost improvements are made with every shipment added to a for-hire carrier assigned load. Similar techniques can be used to assign shipments to the correct route and resources, and for the trade-offs of parcel and LTL vs. Truckload mode assignments.