Transportation Planning and Optimization Application first came into widespread use during the early and mid-’80s. The trucking industry’s deregulation gave shippers more transportation options to consider, and the advances in computer technology gave them more ways to evaluate all those options. Shippers have increasingly sought to utilize new technology to reduce transportation costs and improve service in an increasingly deregulated market. Today Evos SmartTools provide a truly Fourth Generation Solution for shippers, 3PL, and others in the transportation industry. But to understand this new technology’s power, it is helpful to understand what has come before. Today, we examine the evolution of transportation planning software, the capabilities it provides, and its limitations. By reviewing First through Third Generation software, you will possibly develop an appreciation for Evos SmartTools Fourth Generation Transportation Planning and Optimization software.
First Generation Transportation Planning-Truck Fleet Routing
One of the first widely used application in freight planning were truckload routing programs. These programs were first developed by adopting the “traveling salesmen” problem to routing dedicated fleets of vehicles. Shippers used these programs for warehouses and distribution centers that use a dedicated fleet of carriers to deliver the product to customers in a specified geographic area. These applications consider two specific variables in the development of a load plan. First, the applications determine the amount of product that can fit on a single piece of equipment based on the truck’s capacity and the product’s physical characteristics be shipped. Second, the application determines the sequence of deliveries based on the least number of miles. These applications can calculate an estimated cost by applying a price to miles, hours, or the number of loads; however, these systems are optimized based on the least number of miles, not the least cost.
Second Generation Transportation Planning-Online Rating Calculations
Second Generation Transportation planning is a manual process of selecting the lowest cost carrier for a particular load based on stored freight rates or a route-by-route bidding event. This capability is an outgrowth of the rating diskettes provided by carriers that allowed them to enter shipping characteristics for an estimate. Second Generation systems expanded on this capability. When integrated with Transportation Management System or TMS, the user could select a carrier from a list of carrier’s rates and services. While these applications were useful, they were generally limited to truckload or LTL shipment and would not help develop and compare options involving modes or routes.
Third Generation Transportation Planning – LTL Consolidation into Multi-Stop Truckloads
Third Generation transportation planning sought to help shippers consolidate LTL shipments into multi-stop truckload shipments. The cost of the multi-stop truckloads are compared with the cost to LTL options and selecting the modes that resulted in the optimal combination of LTL, multi-stop truckloads, and full truckloads. However, third-generation systems are limited because they only consider one generic set of rates and accessorial for each mode; this dramatically limits the number of feasible options that they could consider. Additionally, these applications were also limited in developing useable routes and plans because they could not consider many real-world constraints, such as service required, carrier preferences, etc…
Fourth Generation Transportation Planning-Multi Modal Multi-Carrier Optimization
Fourth Generation Transportation Optimization combines the power of rate shopping multiple carriers with the analytical capability to determine the overall best combination of modes and carriers – considering all aspects of every carrier’s pricing, not just line-haul rates. This application takes load planning and route planning way beyond what a human planner can do. All elements are considered for each carrier’s pricing, including the actual line-haul rates, accessorial charges, equipment, and different service offerings (and their various prices) for every available carrier and mode. The number of potential options to be considered expands exponentially when considering multiple carriers.
In the next eight weeks, we explore how the Fourth-Generation application can save shippers more money, improve services, and help you manage these times of tight capacity.