Are You Getting the Most out of Your Transportation Modeling Tool?

| By Scott Gowan | Director, Transportation | Chainalytics |

Strategic transportation planning tools can prove to be a valuable asset as long as you take full advantage of what they bring to the table. The capabilities of these types of tools allow for deep and complex studies of your transportation network, as well as shorter, quick hitting analyses. Oftentimes, companies invest large amounts of capital into a modeling tool or software but fail to reap all the benefits associated with the system, thus denying themselves the full return on the investment.

To help determine if your organization is embracing all the numerous functions associated with these tools, this blog will focus on two main areas. First off, I want to outline the various types of analysis that can be handled by these tools. Secondly, I will provide some tips on how to minimize the overall time and effort involved in these types of projects so that you can tackle more analyses and drive more value for your organization.

Key areas of focus include:

Fleet analysis – There are several areas organizations should explore and a properly utilized Transportation Modeling Tool can help you answer some of the following questions:
- Is there value in starting a private or dedicated fleet? Can the acquisition and investment in our own assets help drive costs down?
- How large or small should my fleet be? How can I recognize when adjustments should be made?
- Are my domiciles in the most strategic locations?
- Which lanes and volumes are best suited for my fleet and for common carriage?
Procurement event / carrier rate inflation impact – Rate increases for specific modes can directly impact your optimal mode mix. Following a recent procurement event, you may want to reevaluate your current mix and determine if it still holds up with the new rates or if significant changes need to be incorporated. Modeling the new rates and anticipated capacity changes will allow you to evaluate future projections of rate increases more accurately and gain a better understanding of their overall impact upon your strategy.
Shipment consolidation / cross dock opportunity – This is another good area for the “What If” type analysis and can help you build better loads and move inventory more efficiently. Similar to the fleet analysis scenario, your Transportation Modeling Tool can help you answer questions such as:
- Would opening hubs/cross docks add value, and where should they be located?
- Are any existing hubs in the optimal locations?
- Which locations are the best candidates for closing?
- How do changes in dwell time impact potential savings opportunities?
Impact of key operational constraints – These are often considered as sensitivities to other models or scenarios you might run on your network, but they can also be leveraged as periodic reviews of past models. Common constraints or parameters include:
- Shipment visibility
- Hours of operation
- Drop trailer program impact
- Transit time or road speed adjustments

When it comes to model creation efficiency, there are some processes you can follow for minimizing the total effort needed for these types of analysis. Many of these projects can take months to complete and are very involved, but in some cases, you can achieve a quicker turnaround by maintaining the key inputs used to build your models. Below I will discuss the main inputs for these models and highlight the areas that will help reduce total time and effort.

If you have not previously created a strategic transportation planning model, there is quite a bit of effort involved to gather and create the key building blocks. However, once these key areas are defined, it will prove incredibly beneficial to maintain these and periodically update them.

Rates – Your core mode rates for fleet or common carriers can be easily updated once the main rating source structure is put together. These can be reused or modified as needed to support your strategic planning initiatives.
Data – Good quality data is often the most time consuming element when building these models. Developing a process for refreshing this data and having it in the correct format for the models can be extremely beneficial in supporting a shortened project schedule. The most common type of data needed for these analyses is transactional shipment history. Key required elements include:
- Origin and destination detail
- Mode
- Ship and delivery dates
- Service and/or equipment requirements
Locations – Internal or External company location data should be readily available and unlikely to change that much from year to year. This type of data is easily updated and maintained in the appropriate format to support ongoing analysis.
Operational Constraints – Business hours, handling times, road speeds, shipment visibility rules…are just a few of the constraints and parameters that can be defined up front, easily updated, and reused.

A strategic transportation planning tool can help validate critical decisions or changes to your network. Furthermore, it can help you anticipate the impact of future projections or forecasts. Incorporating periodic modeling into your strategic planning process should be part of your overall approach.

Making it an ongoing part of the decision process ensures you will drive value from your investment and also keep your team fresh on how to use the tool.

If your organization owns one of these tools and needs help getting up to speed, seek advice from outside professionals who have extensive experience and expertise in managing these tools. If your organization has yet to use the tool and simply has it sitting on the shelf, now is the time to let the experts show you how to drive value from it now and in the future.

As Director of Chainalytics’ Transportation competency, Scott Gowan specializes in providing clients with supply chain planning and optimization, transportation optimization, and logistics management and optimization services to enhance their bottom line.

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Are You Getting the Most out of Your Transportation Modeling Tool?

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