The last four months have been tough on freight transportation. Specifically in India, we witnessed a combined surge in demand for essential products with a shortage of trucks – and, most critically, drivers. This begs the question then: Can a company deliver more loads with fewer vehicles? In our experience, the answer is “yes.”
Logistics managers around the world have faced many challenges servicing loads since the start of the COVID-19 pandemic. Regulatory requirements are obstructing the free movement of trucks, drivers are not reporting for work, and warehouses or distribution centers are temporarily closed—just to name a few. A decrease in working capital further complicates matters for many “non-essential” manufacturers. Despite these issues, there remain loads that desperately need to move, even with limited trucking capacity.
COVID-19 transport challenges in India
Driver absenteeism has been a pervasive issue, as are frequent road closures and ensuing traffic tie-ups. Many cross-dock locations have been rendered off-limits by containment (i.e., quarantine) zones, and labor at the drop locations has been in short supply, whether by headcount, time available, or both. In India, as well as other regions, optimizing your transport network can unlock opportunities to keep your products shipping and customers served, despite the ongoing chaotic conditions.
The benefits of optimizing your transport network
Transportation optimization models employ heuristics-based, mixed-integer programming approaches to solve complex network problems. Models can replicate real-life business constraints, and if built properly, generate a level of high confidence which leads to implementable tactical plans. A transportation network model addresses essential network issues, such as:
- Trailer utilization through optimized loading and stacking
- Route optimization to reduce the number of needed vehicles to serve the same customers
- The best locations for consolidation points or hubs
- The right truck size for each load
The objective of transportation optimization is finding the lowest cost routes which reduce miles traveled and maximize the capacity of the available rolling stock.
Leveraging a transportation network model to keep your supply chain moving
Ideally, every truck should be filled using 100% of its available capacity. When loading a trailer for a run between a distribution center and a single destination, that may not be possible. If, however, you add two or three intermediate stops to the route, then you will probably begin to approach full capacity. A model is useful to determine the number of intermediate stops to make and to what locations—and scale this decision-making capability across your entire network.
As with most scenario-based planning tools, you can ask “what if” questions to evaluate the impact of various decisions. For example, when determining the optimal number of stops, you would need to answer several questions. First, if we incorporate additional stops into the route, what will happen to the overall number of miles in the network? Second, if stops are added, do the corresponding loads satisfy the maximum weight and cube limits of the specific truck available?
This type of systematic route optimization across your network is tough to accomplish using a spreadsheet-based analysis, let alone manually. Transportation optimization using an advanced decision support tool has as many tactical benefits as it does strategic ones, making it a justifiable investment for companies navigating disruptions like COVID-19.
Data-driven models help you make informed network decisions with confidence. Chainalytics’ combination of top supply chain talent, proven methodologies, and exclusive market intelligence consistently puts our clients ahead of the curve. Reach out to us to see how Chainalytics can help you harness transportation optimization to realign your network under the “new normal.”
George Kochumman is a Sr. Manager in Chainalytics’ Transportation consulting practice, working with clients globally to help uncover more value by realigning their existing transportation assets and realize more significant cost savings through their optimal usage. Yashish Sahoo is Chainalytics’ Associate Director of Consulting with expertise in supply chain network design, transportation optimization, sales, inventory and operations planning, and operations strategy.
