The first car I bought was a 1978 Audi 100 two-door sedan, pretty rare and in rusty condition. I found it in the backyard of a local car dealer, trapped between many other vehicles. So my test drive was limited to a half meter trip back and forth. Since it aced the test, I bought it straight away – for just 290 Deutschmark (the equivalent of 150 EUR today).
Buying a truck isn’t that simple and a bit more expensive. But experienced fleet managers know their checklists by heart when they go through the process of sourcing new trucks and analyzing their total cost of ownership. And as soon as the first payload has been delivered, the return on investment (ROI) gets into gear.
However, when investing in logistics software, many decision-makers feel a bit like they are buying a shiny car with its hood welded shut, particularly when it comes to enterprise solutions that are expected to deliver a bigger ROI.
In this three-part series, I’ve prepared a checklist that will help you get the most out of your next logistics software test drive. In part one, I’ll examine common driving mistakes and outline the different roads to transport optimization. In part two, I’ll take a look under the hood of optimization engines and explain how algorithms add digital torque to your transport planning. And in part three, we’ll find out why speed records aren’t important and what set-up is most suited for your test drive.
Common Driving Mistakes
The continuous technological acceleration of logistics software makes it hard for decision-makers to keep pace. It is easy to get dazzled by bright and shiny features that increase costs but don’t necessarily add value. Finding the right transport planning software to optimize truck fleet utilization can be a rough ride since there are no simple “from 0 to 60” metrics that quantify and compare their performance.
A common driving mistake many companies make is to label this an IT project. It is seen as the responsibility of the IT team to take the lead, while the necessary business inputs are provided half-heartedly or not at all. As a consequence, the project takes a wrong turn at an early stage and the finished product eventually falls short of expectations.
There are plenty of other potholes that can damage the software buying process. Feature checklists may help to avoid time-wasting detours. But even the best sat nav system won’t work without specifying a destination. “Transport optimization” is the most popular point of interest on any logistics map.
Different Roads to Optimization
Before embarking on a road trip to transport optimization, decision-makers need to define their goals. Suffice to say, that “I want to optimize” is nowhere near a proper goal. Optimization affects many aspects along the supply chain and depending on what needs to be achieved, different approaches are required and different software packages are available. Some of them are either tailored to suit a specific problem or cover a wider range of goals:
- Route planning to cut mileage and lower fuel consumption.
- Managing freight rates and haulier payment schemes when operating a mixed fleet of own trucks and hired hauliers.
- Freight, or auctioning, portals to integrate a larger number of hauliers into the pool of external contractors.
- Tactical scheduling to determine the delivery schedule and fleet configuration for the following day(s) or shift(s).
- Real-time operations to prevent industry dynamics like ad-hoc orders, traffic delays, truck or machine breakdowns, etc. from affecting the efficiency of your delivery schedule.
- Time slot management to allocate time slots to hauliers in order to reduce queuing in front of the entrance gate.
- Strategic planning to prepare your supply chain and network for the season ahead.
- Combining inventory and transport planning into a material replenishment process (MRP) that prevents stock-outs, excessive stock levels, or wasting inbound transport capacities.
Selecting a suitable software package - or a combination thereof - should follow the same logic used when buying a car. One may be tempted to pick a muscle car when all they need at this particular stage in their life is a family van. Companies should carefully consider their current situation as well as their mid and long-term goals.
In part two of this series, I’ll take a look under the hood of optimization engines, explain how algorithms add digital torque to your transport planning, and retell the story of how I drove my Audi 100 on the famous Grand Prix track of Monte Carlo.
What was your first car and how was your first test drive?