LLamasoft Supply Chain Blog

← Back to Blog

Transportation Challenges and Best Practices: The Supply Chain Design Perspective Panel

By Rebecca Koke  June 17, 2015

The transportation and logistics marketplace often talk about volatility in the industry, but today they seem to be facing more challenges than ever. From the driver shortage, increasing compliance complexities, volatile fuel costs and constantly-evolving consumer demand, the tension between cost-cutting and maximizing profit is at a fever-pitch.

TO Panel Blog Image

Using Transportation and Network Optimization for Continuous Improvement

With the mounting challenges in the industry, it can be difficult for supply chain and logistics professionals to even know where to start to make the right improvements within their transportation network. Many of the world’s leading companies are finding results by implementing a transportation and network optimization strategy.

Building a Baseline Model

Before organizations can select what strategy will have the most impact on their business, it’s important to first establish a baseline model to assess the current state. By utilizing detailed data, often down to the SKU level, of the actual transportation network teams can build a living model of their network, easily updated and consulted for the most up-to-date and accurate view.

Consider alternate modes of transportation or the use of private fleets

Despite the logistical challenges a vendor is facing, consumers still need their goods. In order to meet service levels, organizations can expand the modes from truckers to air, ocean or rail.

Additionally, companies may also consider right-sizing your inventory in order to meet desired service levels at the lowest possible cost. This can not only address the capacity challenges but also result in significant cost savings. Private fleets can also serve as a cost-effective alternative.

Use modeling technology to run what-if scenarios to test various strategies before implementation

Through the confines of your baseline model, you can test the effects of some of the strategies discussed by running “what-if” scenarios. This allows modelers the freedom to assess the impacts of various strategies prior to implementation in a risk-free environment separate from real-world practices. This empowers modelers by allowing them to accurately analyze potential network configurations and provide predictions of performance, making it easy to gain buy-in for a new strategy.

Adopt transportation modeling as an ongoing business process

While using transportation network modeling on a project basis is helpful and a great way to get started, the most long-term and impactful benefits arise out of adopting transportation optimization as an ongoing business process. These provide organizations a long-term view of their transportation network and the ability to track historical trends. Businesses can also access living models to mitigate risks and engage in long-term planning.

To learn more about transportation optimization, click here.