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Want to cut transportation costs further, but don't know where to begin? You could save significantly using load-planning programs, say software providers. Although other industries are using these programs, few in the food and grocery industry are.
Providers guess the reasons include cost and pushback from planners who fear the technology could put them out of their jobs. Despite the reasons, providers state companies can expect savings of up to 5 percent in overall transportation costs. Other benefits include optimized asset allocation, damage abatement, and increased customer satisfaction.
Before discussing load planning, people must dispel some misconceptions, says Roy Jonker, president of MagicLogic Optimization Inc. in Vancouver, British Columbia, providers of Cube-IQ, a load optimization software program. "Some people interpret it in two distinct ways. For some, load planning means building routes—but this is better described as route planning or route building."
Load planning is all about optimizing a load, states Jonker. "You know what you're going to load and in which sequence. Then we optimize so you get as much loaded into the truck or container as possible."
Some providers offer software they call load planning software, reports Jonker. "But this software does something completely different from load planning—it builds routes. Ideally, you should combine the two because it's very possible software can build a route that's impossible to plan for loading." Once a route is planned, load planning software considers that and loads according to the route sequence.
For instance, NetWise Supply Chain is a load planning program Integrated Decision Support offers. "Our program optimizes the placement of product on the trailer in order to optimize the order of multiple delivery points," says Brandon Hodges, product manager for the Richardson, TX-based company. "We interface with every major routing package in doing this."
Hodges adds the benefits are increased utilization of both drivers and trucks. "You will reduce your extra miles in delivering loads—as well as reducing empty miles to get the loads."
"From our perspective, an input file comes in with what we need to load," continues Jonker. "The output file shows how we loaded and what we loaded into the container, truck, or pallet. People don't always know how well a route will load and they may well give us too much to fit into a truck. So part of our output can also say we can load the truck up to this point and the rest is too much. Also in our output we give a complete load plan and we literally tell you what goes where in a visual load plan graphic so you can see exactly how things are loaded."
Some routing systems can actually lower the bar in achieving maximum cube, adds Bill Rehring, president and founder of TOPS Engineering in Dallas. "Instead of shooting for 85 percent cube, they might shoot for 75 percent or 80 percent to guarantee that everything they say will fit in a route actually does fit. But they are lowering the bar so it looks like the routing package is doing its job."
This can result in extra costs using more trucks than necessary. "We get a lot of cross-dock trucking companies wanting to use our software, but I tell them unless they have the dimensions our software will not help," Rehring says. "We need to know the dimensions because we know exactly every x, y, and z corner of every box going into a truck. They will all fit if the dimensions are correct."
Optimize Asset Allocation
Load planning, when done correctly, translates into better asset allocation, allowing companies to ship more products in fewer trucks. Software packages can range anywhere from $200 to $500,000—so be prepared to ask a lot of questions so you understand which program best suits your needs and your wallet.
MagicLogic offers single-license software programs for $2,500 and larger companies might expect to pay up to $20,000. "The general feeling is our software is top-of-the-line in terms of optimizer, features and graphics," says Jonker. "We have to keep our prices relatively low because we sell to many small companies so we position our pricing carefully."
Ideally, companies should weigh-out and cube-out simultaneously, continues Rehring. For instance, a truckload that is weighed out might be only half-cubed, while another truck might be cubed out but not weighed out because it contains boxes of feathers. "MaxLoad takes both cube and weight into consideration in planning loads."
Dispatching trucks that are not loaded to capacity is like throwing away transportation dollars. "You know before you get to the dock whether you have extra space left because our software is dimensional-based," Rehring says. "So if the truck is loaded according to directions, the shipment definitely will fit."
As for price, MaxLoad costs in the range of $3,500 to $6,000 for standalone systems, and up to $60,000 for enterprise licenses for hundreds of installations. "We are among the largest suppliers, but not the most expensive," Rehring says. "There are a lot of what I call software houses that take some university-developed algorithm and write a special program for this type of thing. But these programs are run by programmer types and not by engineering types. The differentiator is about two zeros—that is $600,000 opposed to a $6,000 package."
Cargo sizing is another issue to consider in load planning, says Jonker. "One of the features we have in our system is what we call 'two-stage loading.' In the first stage, we optimize boxes on pallets, getting as many boxes as possible on a pallet. Stage two involves optimizing pallets onto a truck."
Load planning can reap overall savings between 5 percent and 8 percent in most industries, notes Jonker. "But my best guess for the food industry is they would save less because they ship so many full pallet loads and there is less flexibility to optimize. The savings here could be in the range of 3 percent to 5 percent, which still adds up very quickly."
Consuming Interest?
Despite the numerous benefits, why are there so few in the food and grocery industry using load planning software programs? Jonker guesses that, because the industry does a lot of last-minute loading of pallets full of single products, companies feel loading pallets onto a truck is easy. "One of the main difficulties in doing mixed pallets is you need to do some kind of brick building—even if that is at the expense of volume," explains Jonker. "So your objectives in optimizing can switch a bit and you may have to drop a bit of utilization so you can produce a more stable pallet. This is very difficult because many optimizers out there can't handle these situations requiring stability.
Hodges notes: "The industry has a careful and lengthy decision process on these types of products; but our experience shows it's something of interest to them."
Producing mixed pallets is MagicLogic's specialty, adds Jonker. "We can load more into a mixed container or pallet than anybody else—between 5 percent and 10 percent, which is quite a significant amount."
"The biggest benefit companies can expect is cube savings," adds Rehring. "You will save on transportation costs because you can fix any problems ahead of time if a load doesn't fit and you are not putting that decision on the guy at the dock." —April Terreri