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Route2000 - Rolighed

• Real time routing

Challenges and experiences from real life large scale implementations

• Ole Kessel,Partner and DPS managerPricewaterhouseCoopers

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Introduction to DPS CoE

• There is real value in real time routing !

• The challenge in the transportation market

• Our vision and messages to customers

• The DPS service offerings

• Our market position and references

• Short presentation of real life solutions

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There is real value in real time routing

• Aalborg Portland (100 truck cement distribution):- 7% in operating costs, - 75% in administrative staff

• KFK (700 truck fodder & grain transporter):- +10% improved truck work load

• Swedish Postal Services:- 10% reduction in routing costs

• MD-Foods (400 truck dairy & fresh food distributor):- 4% in total route costs

• SPF (100 truck living pig transporter)- 7% in operating costs

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The challenge in the transportation market: 1

• JIT & e-business imply:

– Shorter business cycle

– Faster and more in-frequent deliveries

– Smaller order sizes

– Focus on precision and flexibility

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The challenge in the transportation market: 2

• Transportation is an important but often overseenpart of the Integrated Supply Chain (ISC):

– Transportation is the crucial physical link- between suppliers, manufacturers & buyers- internally in multi-site manufacturing

– The weakest link decides the value of the ISC

• Substitution between transportation, warehousing and manufacturing costs should be considered

• Using transportation more offensive createscompetitive advantages

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The challenge in the transportation market: 3

• The transporters must act to survive

– Agility through dynamic decisions

– High customer service a necessity

– But keeping low costs is a pre-requisite

• First movers will get the competitive advantage

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Our vision and messages to customers

• Agility, speed and precision in transportation scheduling

– Avoid unnecessary locking in the planning

– Booking on longer term, locking just before doing

– Dynamic decisions are superior to pre-planning

– Event-driven optimisation

• Combine IT & human intuition

– Making it easy to get info and overviews

– Overruling automatic decisions

• Focus on using transportation as an offensive differentiator

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The DPS service offerings: 1

• Routing and simulation packages

• Postal transportation ERP-like solutions

• Dynamic transportation optimisation systems

• Fleet management and scheduling systems

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The DPS service offerings:

• Creating customised component-based solutions :

– Basic components

• GIS, Geo-coding, distance- & time calculations

• GPS, Real time positioning, self-reacting control, Proof of Delivery, para

meter-estimation

– Business intelligence components

• Real-time event-driven optimisation engine

• Route optimisation algorithms

– Interfacing components

• Mobile communication

• Internet connection

• Gantt-charts as active desk-top

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Route optimisation engine

• Event-driven optimisation engine

– Events that drive optimisation:- New orders- New truck status- Time goes

• Real time status known, locked resources and orders

• Permutations on most likely and acceptable changes

– Qualification control engine

• Calculating consequences of changes

– Time and cost consequences

– Penalty calculation engine is the criteria-function

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Our market position and references

• By geography

– Denmark - Scandinavia - Europe

• By industry

– Energy, Services, Postal, CIP/CPG

• By service

– Goods distribution, collection, mixed

– Field Services

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Who is DPS ?

• DPS in short facts & figures

– Started in 1975 as Peter Matthiesen A/S

– Merged with Price Waterhouse 1997, now PwC

– 45 consultants based in MCS Copenhagen

– 25 years of experience in logistics

– Focusing solely on transportation optimisation

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Short presentation of real life results:1

• Case Aalborg Portland (100 truck, cement distribution of 1,5 million tons per year)

– 7% reduction in operation costs

– No order entry deadlines and centralised planning

– Reduction in office staff from 19 to 5

– Automatic order booking and re-scheduling

– Integration to ERP system

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Short presentation of real life results:2

• Case KFK (700 truck, fodder and grain distribution of 3,5 mill. ton per year)

– +10% improved truck workload

– Improved utilisation of stocks and fodder-factories

– Higher delivery precision and flexibility

– Calm and non-stressed paper-free planning office

– Automated payment for hired trucks

– OnBoardComputing in all own + 50 hired trucks

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Short presentation of real life results:3

• Case Swedish Postal Service Used in:

– Operational planning of business parcels– Collecting from mail boxes– Planning inbound and outbound– Rural mail– Express mail

• Savings (example rural mail delivery)– 10% reduction in routing costs– Improved vehicle utilisation– Workload balancing

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Short presentation of real life results:4

• Case SPF (100 truck distribution of 3 mill. living pigs per year)

– 7% reduction in transportation costs

– Improved vehicle utilisation

– Improved planning according to health status

– Capability to act qualified on changes in the plan

– Disease contamination control

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So there is really value in real time routing!

• Pay back typically in less than one year

• Together with many other improvements:

– Improved customer service and reliability

– Improved agility and flexibility

– Improved administrative routines

• And it is done in practice !