Investment in optimization

Maersk is investing millions of dollars in that company that develops optimization software to better manage drayage at ports.  We all know the problems:
  • Long lines
  • Insufficient truck use – too few daily turns
  • Upset contractors
These problems stem from inefficient matching of containers with dray operators.  For example, a truck getting assigned a container that is at the bottom of a stack rather than a similarly suitable container on the top of a stack.  Loadsmart claims to match carriers with containers based on a variety of factors = faster turns, fewer touches, and less congestion.
This drives a wider question:  why aren’t more companies using optimization to get better results?  I think the reasons are:
  • Some optimization tools, for example, SAP APO, are hard to understand, virtually impossible to configure, and wildly expensive (other than that they are great!)
  • The concept advanced by Dan Gilmore at Supply Chain Digest that most companies think they are doing better than they really are:  "Generally, in my experience, a huge percentage of companies believe they are in the top quintile (20%) of supply chain performance.  But 75 or 80 percent of them are wrong."
  • Optimization is part of software and most IT groups are perceived as “blockers."
In reality, optimization in logistics is becoming a “must-have” because most problems are hard to solve... if you don’t think so, try getting one more 2,000 lb pallet on the load in the picture above by moving pallets between trucks.  If you want to see the solution -