Transportation Optimization is the use of technology to improve supply-chain management processes. It can help save money, time and meet sustainability goals.
Route optimization helps to respect commitments to customers, especially in terms of delivery times. It also reduces fuel consumption, carbon emissions and logistics costs.
Most ERP and TMS systems support some transport planning functions. But powerful optimizers that are capable of assigning orders to routes and incorporating detailed restrictions like driving time regulations, congestion and required capabilities are rarely found.
Cost Savings
When it comes to reducing transportation costs, there are many factors at play. These include the product itself, which will influence shipping costs due to its size and fragility, as well as delivery area, affecting how far freight has to travel to reach its destination. Other expenses include fuel, tolls and vehicle maintenance fees, insurance, and driver salaries.
Using transportation optimization to address these challenges can help organizations reduce their logistics costs and achieve their financial and sustainability goals. This requires a holistic process that integrates S&OP, APS and transportation planning to enable better sourcing of capacity and more efficient routing.
Efficient route planning, for example, ensures that vehicles are driving on the shortest routes possible, saving time and fuel costs. This also helps to minimize vehicle wear and tear, lowering maintenance costs over time. For instance, Autoshred, a paper shredding company, saved more than 11% in cost when they used Routific to optimize their routes.
Time Savings
There are several ways to reduce the time required for transporting freight. One is to use the best route based on road networks, vehicle capacities, loading constraints and other factors. This reduces travel times and fuel costs. In addition, it ensures that shipments are delivered within the desired time window and helps meet customer demands.
Another way to save time is to consolidate orders and shipments to minimize the number of trips required by trucks. This also reduces the need for storing excess inventory and the cost of handling and transporting it.
Finally, using advanced route optimization technologies also allows for more efficient utilization of vehicles. This results in less miles travelled and reduced idling, which in turn translates into fuel savings and environmental sustainability. To get the most out of your transportation optimization, choose a software provider that provides thorough user training and offers fast access to support. This will ensure that your team is utilizing the technology to its full potential.
Efficiency
Many companies use transportation optimization to reduce their transport costs and delivery times. However, it's possible that they may not be getting the full benefit of this tool.
It is necessary to look beyond the two most obvious benefits of transportation optimization – cost and time - and consider other benefits that come with it such as better quality management during transit, sustainability, and more. In some cases, these benefits are less apparent, but they can be significant.
For example, routing optimization can help reduce mileage, fuel consumption and road wear while providing better on-time delivery performance. Additionally, some solutions provide continuous re-sequencing of routes based on driver availability, traffic, and new pick-ups.
Finally, deploying a transportation optimization solution frees up the time of planners and dispatchers to focus on meeting customer expectations and communicating with drivers. This also helps ensure that the most optimal decisions are made. The result is that the underlying cost of cartage is reduced, which improves outcomes for all shippers.
Sustainability
Sustainable transport means "sustainable in the sense of allowing the fundamental access and development needs of individuals, companies and society to be met safely and economically." (UNEP, 2013). It involves choosing vehicles, fuels and other infrastructure that are earth-friendly and efficient. It also includes considering the social implications of transportation and how it can promote local and regional economic activity.
For example, trains are considered one of the most earth-friendly and energy-efficient modes of transportation. They produce a low amount of carbon emissions compared to planes, even with a full load of passengers. Cities that Operational Audits are transforming their public transportation systems to be more eco-friendly can encourage ridership with cost-effective and easy ticketing solutions such as mobile apps, kiosks, onboard fare collection and web portals.
Transportation optimization takes into account shipping rates, lanes, business requirements, constraints and logistics tactics to create an optimal plan for each shipment. It saves money, time and carbon emissions while helping businesses meet sustainability goals.
