Proven teve Twydell, CEO of the 3T Group offers some advice based on over 30 years in the logistics industry, in the first of a series of articles on buying domestic transport.
In our line of work, we often come across the attitude: “Our transport needs are simple. We just move products from A to B. How difficult can that be?”
Well, let’s think about that for a moment…. For starters, there are many ways to ship goods, from a parcel to a full truckload. Are we talking air, sea, rail, land, short sea, barge – or if Richard Branson has his way – by rocket ship!
Let’s keep it (relatively) simple and focus on land.
Managing transport variables
So what’s next? Well, just find a truck and off we go. However before you do, you might need to answer just a few questions.
First of all, is it a full truckload (FTL), a partload (LTL), groupage or a single pallet shipment?
Next question: how are these trucks filled? Pallets? Loose loaded? Roll cages? Stillages – and if so, what type of stillage? Probably pallets, you say (after all, it’s a simple operation).
OK then – are these Euro, standard or non-standard long pallets? Do you overhang (it’s not a medical term), can they be stacked and how heavy are they?
Don’t forget, that size does matter – especially when you are talking about containers. Should you opt for 20ft or 40ft? Do you need any specialist equipment, such as refrigerated vehicles or specialist containers for hazardous goods? And what about the different types of tankers for liquid or powder – or do you need those sizeable but short and mean-looking machines for moving aggregate?
What about the truck itself? 20ft, 30ft, arctics, single axles, tri axles? Or perhaps you want rigids, wagon and drag or flat bed?
Now, it’s time to think about trailers – do you need stand trailers or is it live loading? Do you want box, tall, double deck, teardrop? Skeleton, swan neck, tautliners, tilts? And is that with or without pillars? What height and length? After all, a matter of inches makes all the difference.
Once your head stops spinning, you get the picture. And, for all the different types of shipments and trucks I have mentioned, there are many, many more. If I have omitted to mention your particular favourite, my apologies, but it’s really time to get a life!
The point is, transport is not as easy as it sounds.
Let’s focus on domestic, and what we call “standard transport” in the UK, which is pallet, or loose loaded product going onto 40ft articulated vehicles, or 20ft rigid vehicles. Whilst this may sound simpler, there are still many different scenarios which involve significant complexity and can perplex even the most experienced transport manager.
Transport: there are more questions than answers
As the great Johnny Nash sang “there are more questions than answers” –and this is certainly true of transport. At 3T we speak from experience.
Six years ago, we decided to create an optimisation-planning tool to revolutionise the way transport could be managed. Whilst routing and scheduling systems using heuristic algorithms (basically, a lot of ‘what ifs?’) had been around for 30 years, the biggest challenge we were facing at 3T was not just the routing and scheduling element of optimisation, but how best to incorporate the different carriers – as well as the routes and specific lanes that the carriers liked to work with, and where they wanted to finish. There were also other variables to consider, including different rates and charging methods – all in the one-optimisation scenario.
Proven transport management misconceptions
We investigated all the options, looking for a company that could help us. We also looked at the possibility of developing the product ourselves before realising that what we were aiming to develop needed more mathematical expertise. Basically, the functionality we were looking to develop was revolutionary for the industry.
We found the ideal partner in the University of Nottingham, linking up with the Computer Science department. Having assessed the problem and various scenarios, they were confident of being able to develop the optimisation product over a 3 to 4 month timescale, using specific algorithms, which were suited to what we wanted to achieve. There was even some discussion that this could be achieved on an Excel spreadsheet using some of its linear programming capabilities. This proved once again the existence of the misconception that managing transport is the simple process of loading a truck and delivering that load to its destination.
A stereotypical mad professor. The professor from Nottingham who worked with us was not mad, He was Mexican and wore a suit!
However, after six months of wrestling with the problem, it became clear that the complexity of the issue had been seriously underestimated. In fact, due to the number of constraints and variables involved, the programme we were looking for was similar in sophistication to those used to predict the weather. There were also other elements with requirements verging on an artificial intelligence approach to automate the processes.
Eventually, the Optimiser was developed to complement the EVENT platform, but the process wasn’t easy. The Optimiser is able to create the most cost effective transport plan, using the tariffs and availability set up on the system and taking all modes and service levels available for the operation into account. Sounds simple – but it took over five years to develop and involved some of the most talented IT specialists around, from professors to PhD students.
In a nutshell, the system enables transport planners to work more closely with carriers and clients –and we believe it is the future of TMS.
The transport planner – an endangered species?
Returning to the present, most companies have transport planners, who, in my experience are often something of a breed apart. They have an amazing capacity to know every possible postcode region there is and where and when deliveries are going to happen and an uncanny understanding of where there will be a back hail opportunity. In fact, they are an essential part of any commercial organisation, often more so than is realised or acknowledged. However, as the source of so much knowledge, they can also be a bottleneck if absent from the process. Just one transport planner on annual leave can create a significant additional cost in transport, especially if the cover planner does not have enough knowledge of the current flows of transport in that particular operation.
Is the role of the transport planner dead? Well no, not yet, but once the type of TMS we are developing is commonplace, their role will be more about tweaking routes and looking at what causes cost in the supply chain.
A huge misconception is that the procurement of transport can be treated as a commodity. Unfortunately, the cost of a vehicle prohibits individuals just paying a price as and when required. There has to be an element of planning and an understanding of the availability of equipment. The cost of a vehicle is very high, the cost of running an artic unit with a 40ft trailer and driver for 1 year is approximately £120k. A company running trucks e.g. a 3pl carrier, must be looking for at least £420 every 24 hours to cover the costs of that vehicle. No company can afford, unless they are making vast profits in other areas, to have vehicles doing nothing and being available for someone on a whim.
So what’s the answer? In a very basic nutshell – it’s utilisation. But that’s a whole different topic…….
In our next installment, Steve will look at how issues such as time, utilisation, forecasting and transport patterns can impact on transport cost and efficiency.
