Transportation management software applications

December 8th, 2009

Transportation management software applications typically consist of several related modules that cover the following tasks:
 

Outbound delivery network.  Planning and routing of deliveries from the warehouse to the stores.  This portion would interface with the warehouse’s order management system, which has information about the size and number of pallets or cartons to be delivered to each store.

Evaluation.  Tracks the history of what actually happened on the delivery route in order to make improvements in the future.  Information would include departure and arrival times at each store, route taken, waiting time, time to unload and reasons for any delays.

Backhaul.  Schedule of backhaul pickups, what is to be picked up, schedules and the transportation costs and documentation involved.

Inbound.  Database of approved third-party carriers and their rates and conditions, along with the status, location and arrival times of scheduled inbound deliveries.  Inbound modules will list the contents of the load and what the delivery costs total.

Yard management.  Location and contents of trailers parked in the yard and the status of the trailers.

Fleet management.  Fuel cost tracking, along with data about the condition of the trucking fleet and major components like engines, tires and trailers.  Module typically includes a maintenance history and dates for future scheduled maintenance.

Compliance.  Drive times for operators by trip to document that they have not exceeded the prescribed daily hours.

While the major focus of the applications has been on the outbound side - route optimization and fleet management from warehouse to stores- the big potential for savings in the future will be on the inbound side.

Typically, the inbound cost of freight is buried in the price of goods, and that price can be inflated as much as 30%.  The challenge is to get manufacturers to break out the freight costs separately, and that has to be done, realistically, at the time merchandise price is negotiated; otherwise vendors may grossly underestimate transportation costs.

The cost saving for the retailer or wholesaler on the inbound side comes from using the company’s own trucks to pick up merchandise or contracting with a third-party carrier to do it for less than the manufacturer charges.

A Package or a Menu
While some software vendors provide transportation management as one module within a highly integrated supply chain package, others sell specific applications, such as dock scheduling, route optimization, inbound freight and yard management.

Most transportation management software packages, even the integrated ones, are bought piecemeal.  This is not necessarily a bad thing, as it allows companies to figure out exactly what they need and buy just that module.

For example, not every company needs yard management software, especially those with 30 or fewer trailers sitting around the yard at any given time.

Taking small steps also make sense because vendors often understate the costs of implementation, including the management time and effort it takes to get buy-in for new programs from many different departments.

The mix-and-match approach allows companies to select the best software for every application.  Integration of individual applications into an existing supply chain management program is usually not a major problem because all vendors supply interfaces between their individual modules and those of other major software applications.

An alternative to buying a specific transportation management application for use on a company’s own computers is to buy an on-demand service like route management from a third party.  These Internet-based programs are growing in popularity.  The downside here is that some on-demand systems tend to be cookie-cutter and lack functionality.

While many retailers cherry-pick specific transportation applications from different vendors, there is an argument to be made for sticking with a single vendor for supply chain software.  One vendor equals one set of upgrades, which is easier than depending on various sources to upgrade interfaces on a timely basis.  There are also compatibility issues that companies do not need to face when they are dealing with one company’s integrated package.

Transportation decisions will have a major impact on warehouse operations and, as a result, how warehouse management software is used.

Picking to the Route
Outbound load planning, a part of the software, determines what sequence of store deliveries will result in the most efficient and cost-effective routing.  This information, fed back into warehouse management software, will determine the picking sequence for store orders and even the way the warehouse is organized.

For example, if a wholesaler has large and small store orders mixed on a single delivery route, this may affect how it organizes the pick lines.  The same issue comes up if non-pallet-size orders of private label products are included.  The reason, in these instances, is that a small mom & pop store order will include many different items on the same pallet, as opposed to larger store orders where individual products are palletized.  To complete the small orders, pickers need to range through many more aisles, which increases both time and cost.

The interface of two functions - warehouse operations and transportation management - creates an efficiency dilemma that is not easily resolved. The software program for each is set up to produce the most cost-efficient path within the application, but when the applications meet at the loading dock, management has to decide where to adjust.  Should managers try to optimize transportation efficiency, even if it means higher labor costs in the warehouse, or should they sacrifice routing efficiency to hold down labor costs for picking?

The answer is that management decisions on this and many other issues need to be built into the planning process from the beginning.  The key is to get to know the software very well, look at every function and demo it using your own data. 

Entry Filed under: Distribution Operations, General, Transportation