Tremendous benefits can be realized by integrating and optimizing across a company’s own fleet and purchased transportation
Companies choose to use a private or dedicated fleet for many different reasons, such as ensuring capacity and service, branding, scheduling flexibility, and fulfilling requirements for specialized equipment, configurations, and capabilities. The perennial challenge for private or dedicated fleet is to continuously find new ways to take cost out of the operation, while enhancing customer service. Decisions about when and how to use ‘for hire’ services vs. the private fleet are often made using static rules (such as distance from the DC) during the planning phase. Conversely, unplanned last-minute events can also result in suboptimal decisions, expediting, and higher costs. A more promising approach is emerging: taking the dynamic and holistic approach of looking at fleet and for hire together.
The fleet is typically managed separately from for hire transportation, creating isolated ‘islands of capacity’ and missed opportunities to optimize across modes. Once integrated, new opportunities are realized, often through seemingly counter-intuitive choices, using carriers where you previously used the private fleet or vice-versa.
Similar to the way omni-channel integration2 has become critical to the success of retailers, leading firms are starting to do ‘Omni-Mode Integration’ for transportation. This entails having visibility across all available modes (private fleet, common carrier, parcel, rail) with the ability to optimally select the best one to fulfill any given order. Just as with omni-channel integration, 3 tight integration with execution systems is critical for the success of Omni-Mode Integration. Selecting a mode, only to discover that you do not have the capacity, is not a winning strategy.