Truck optimization software can help fleets overcome their reliance on inefficient paper-based systems
One day, truck optimization software will wipe out the seat-of-pants approach to operations management the same way two-piece, composite hockey sticks have blown away all-wood models. So far, however, most trucking firms still cling to their old habits. According to the Logistics Institute at Georgia Tech University, more than two-thirds of companies operating private and dedicated truck fleets still rely on paper-based, manual systems for route planning and load building.
To some, even that statistic is misleading. “Most carriers are second time buyers of transportation optimization systems,” says Bob Maddocks, Langley B.C.-based president & CEO of Maddocks Systems Inc., “We estimate that only about 30% of carriers have an integrated finance/accounting and transportation optimization solution in place. The rest likely have a basic accounting and financial reporting system such as AccPac that is not linked to a transportation management system if they have one at all.”
Carriers face numerous choices. However, it boils down to two major categories. One is the end-to-end, enterprise management system (EMS) that consists of a transactions-based, backbone accounting and financial system. It takes care of front-end activities such as order taking and feeds basic business data into the corporate database. Some vendors also offer tightly integrated transportation operations management modules as part of the overall software suite.
The other is operational application software, so-called best-of-breed (BOB) solutions that can be integrated with backbone systems through standardized interfaces and exchange protocols. In both offerings, the most credible systems come from developers with trucking domain expertise.
Essentially, such systems provide real-time dispatching by converging planning and scheduling. Since dispatchers can see the location of all the trucks on the screen, they have enough information to make changes and re-allocate resources. Or they can let the system make those decisions automatically based on business rules. It also provides drivers with an electronic itinerary with ETAs and ETDs. It also captures the drivers’ actual performance and that of carriers enabling users to compare both against the relevant benchmarks and service level agreements.
The value of such optimization tools comes from generating business intelligence that delivers immediate, tactical advantages. Access to such timely, reliable information is invaluable to today’s hard-pressed carriers. With equipment in short supply and rates on the rise, carriers must focus on profitable lanes, loads and customers. And to make more profitable decisions, they need accurate information rather than relying on gut feel and guesswork.
For example, Maddocks Windows-based TruckMate provides textual and graphic screens that monitor as many 120 different KPIs (key performance indicators). Users can choose the indicators they want as well as the frequency of coverage.
Similarly, Richer Systems’ TMS system offers one platform, one database to provide senior managers with a real-time snapshot of the order desk as well as dispatcher’s view of fleet-wide operations. Richer started on the maintenance management side of transportation software that ensured vehicles spent the minimum time in the shop. For example, it tracks all vehicle repairs done internally or by third-party service suppliers.
“That information helps reduce repair costs and increase equipment availability,” says Tim Beaves, Calgary-based vice-president, sales & marketing for Richer Systems Group Inc. “One Ontario carrier reduced the number of fines by 90% by properly planning and forecasting vehicle maintenance needs.”
The system also boosts the accuracy of invoices and ensures that 95% of the time they are sent out the same day. By creating invoices at the same time as the order is taken, the system eliminates the differences between the two thereby speeding up payment since invoice reconciliation is no longer required. As a result, carriers enjoy better cash flow while shippers and consignees benefit from time and labour savings.
Another major TMS suite vendor is The Descartes Systems Group that offers two fleet optimization tools, ROADSHOW and Fleetwise. “Both enable users to improve the organization of their order taking and freight demand, says Michael Jakab, the firm’s Waterloo, Ont.-based vice-president routing & scheduling. “There is a growing convergence of planning and scheduling activities so that resource tracking through operations results in real-time dispatch.
According to Jakab, users typically benefit by driving 7% to 12% fewer miles, saving 5% to 20% in hours of use while improving asset utilization by 2% to 6%. “But not all three at the same time,” he says, “since users tend to have different productivity objectives at various times.
Based on business rules and other constraints, the Descartes’ TMS software organizes the routing and sequence of stops for each vehicle. It then monitors in real time the vehicle’s location and activities and then flows back the data to the EMS backbone. The scheduling and routing can be dynamically updated to meet changing conditions. And if pick up and delivery times are adjusted, the system issues automatic alerts.
On the BOB solutions developer side, ALK is extending its dominant PC* Miler product line with the introduction of CoPilot Truck Mobile that delivers street-level directions conforming with commercial truck restrictions to Windows Mobile-based smart phones. Besides spoken dock-to-dock directions, it also offers automatic route recalculation. Moreover, it features a Web-based tracking system that provides real-time updates on vehicle locations as well as P & D ETAs (estimated time of arrivals).
Consequently, CoPilot Truck Mobile can reduce non-revenue miles and fuel costs by as much as 10% by decreasing out-of-route and empty miles while increasing efficiency through hauling more loads in less time. That can amount to about C$2,000 per truck annually based on 10% X 125,000 total miles at an average operating cost/mile of C$1.62.
Mobile communications software and reception appliances such as on-board computers, laptop and tablet PCs as well as cell phones deliver the TMS to drivers on the road. The arrival of smarter, Internet-protocol (IP) cell phones is expected to ignite explosive growth in the LTL and local P & D (pick up &delivery) markets. “Until recently, mobile systems only made sense for truckload, long-distance carriers,” says Maddocks, “because of the cost involved – $2,000 to $3,000 per truck since they were satellite-linked. But now with more powerful phones and PDAs (personal digital assistants) it is possible to use cheaper cellular technology to handle the 20 to 30 daily stops that a local P & D truck would make.”
However, these new devices have limitations. One is fragility. Unless “ruggedized”, when they are dropped, they break. Another is the constant hassle of keying in data on a tiny keyboard. But help is on the way. New appliances such as the RIM pager and tablet PCs will soon offer touch screen technology, electronic signature capture as well as bar code scanner and eventually RFID reader capability.
Finally, Web-enabled or client-server separates new transportation optimization systems from the old. The difference boils down to transmitting messages through EDI vs. Web services. In simple terms, Web services transfers files electronically over the Internet. It’s basically free, similar to sending e-mail messages. In contrast, EDI messages travel over VANs (value-added networks) or phone lines that incur transaction charges and possibly long distance fees. Maddocks cites the example of a mid-size Canadian carrier saving $100,000 annually by switching to Web services from EDI.
That alone could be enough to drive carriers to upgrade to or install a trucking optimization system.