Long-range Itinerary Generation Enhances Operation
This is a second of the third part series by Donn Deffebach. Find out what the benefits of looking farther ahead during the planning cycle are.
What are the benefits of looking farther ahead during the planning cycle? First, transportation companies can improve the ratio of revenue to empty miles. Expected savings from better routing will vary—depending on the firm’s business practices. But reasonably, they can be expected to range from 2% to 10% of total miles driven.
For a 500-truck fleet, 2500 miles per truck per week, and $1 USD operating cost per mile translates into $1.3 million USD to $6.5 million USD in annual savings. This does not include the extra capacity that is now available because empty miles are not being driven.
Second, one surprising result observed when implementing the long-range planning system—an increase in backhaul activity. The increase occurred because fleets got the right truck to the origin of the backhauls as a result of the increased visibility that long-range planning provides.
Long-range planning systems also make allocating and dispatching personnel more productive. While certain aspects of the driver-dispatcher relationship will not change, fewer dispatchers can support a larger number of drivers. Operators can move to a management-by-exception mode, with some assignments automatically accepted and forwarded to the driver for execution.
Increased driver satisfaction is another benefit. For some operations, attracting and retaining drivers is hard. Increasing driver pay is usually not an option, and the cost of finding and hiring drivers is very high. By planning long range, drivers can be home when promised, which should lead to higher satisfaction and increased driver retention rates.
Total savings from these measures can be considerable. And additional savings can be realized by handling some loads on contracted or private fleet capacity, rather than a short term, spot basis. Long-term traffic lanes, currently handled by outside carriers, can be assigned to in-house resources.
Drive home operational efficiency- An investment in a rules-based, analytics decision-making engine that links long-range planning with the need for short-term agility is a compelling proposition. It holds the promise of better managing assets, preserving capital, and increasing driver retention and customer satisfaction, which all drive better margins and operational efficiency.
To continue this discussion and hear from experts at HP make sure to come along to eft's Logistics CIO Forum happening in Austin, April 20-21.