Maersk makes investment in optimization. He invests millions of dollars in a company developing optimization software to manage drayage at ports better.
We all know the problems:
- Long lines
- Insufficient truck use – too few daily turns
- Upset contractors
These problems stem from the inefficient matching of containers with dray operators. For example, a truck gets assigned a container at the bottom of a stack rather than a similarly suitable container at the top of a stack. LoadSmart claims to match carriers with containers based on various factors = faster turns, fewer touches, and less congestion.
It drives a broader 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 the software, and most IT groups are perceived as “blockers.”
Optimization software
In reality, optimization in logistics is becoming a “must-have” because most problems are hard to solve. Depending on the cargo, the level of automatization, and many other factors, load building (also called load planning) optimization software AutoO2 saves up to 8% of the transportation costs. Moreover, the steady growth of diesel, labor, and other transportation expenses, and truck driver and equipment shortage, makes using optimization software more profitable daily.
Additionally, load building optimization software cuts the number of trucks needed and reduces the company’s carbon footprint and produced waste.
Investment in optimization is profitable; one of our customers claims that their monthly economy from integrating AutoO2with their systems from one warehouse is $300,000, so quick ROI is guaranteed.
