Load planning can we make better decisions faster?

Load planning is a central, but very specialist part of any logistics or supply chain operation. In order to find out exactly how load planners make decisions and what pressures they are under, Magenta Technology, a leading provider of real-time planning solutions, invited load planners from some of the UKs top logistics operations to a roundtable discussion. The session yielded some fascinating insights and important conclusions that will be of use to anyone interested in maximising their business from the warehouse floor up.

Every business relies at some point on the efficiency of its supply chain, yet how logistics decisions are made remains a relative trade secret. Load planners are responsible for choosing where, how, when and by what means materials are transported between businesses. But they are a specialist group, and often rely largely on their experience and knowledge of their business to ensure they make the decisions that will be best for the company. By learning more about the processes load planners go through the roundtable aimed to pinpoint where changes could or should be made to increase performance, in terms of improving service levels, cost saving and minimising risk to name but a few, and whether there is any place for technology in an area that has always relied largely on human capabilities.

It is suggested that around 80million km of road is travelled by empty trucks each year in Europe. This is at the heart of the issue for load planners, who spend their time balancing resources with demand and, in an ideal world, would never have a truck travelling empty. An empty truck is essentially a wasted truck it is a drain on resources and produces no return. Planners are responsible for trying to maximise the value of every load, every trip, and so an empty truck is the antithesis of best practice.

This problem is particularly pronounced in the UK, where the amount of empty mileage is far higher than the rest of Europe or the USA. There is a combination of reasons why this occurs, not least of which is the inability, or unwillingness, of UK companies to share resources amongst other parties. The lack of a shared network where organisations are able to combine and share resources is a significant hurdle to achieving more effective planning and scheduling.

Compounding this problem is the fact that each software system used by UK logistics organisations only has one specific function and is not scalable for other services. For example, there may be one system in place that deals with the relationship between a retailer and distribution centre, but other systems would be required for the relationship between other elements of the supply chain. These point solutions have limited capabilities and allow no scope for use within shared networks.

How load planning works
So how do load planners actually go about their business? The first thing our panellists check when an order comes in is its physical characteristics how can it be transported? They then evaluate the different available options in terms of routes and timings and try to optimise their traffic so that as many trucks as possible are full and take as direct a route as they can. Richard Conneely of Wincanton described this as both tactical and strategic: We see load planning as a process of integrating the needs of the load with those of all the other networks as seamlessly as possible. We then measure these journeys against their key performance indicators (KPIs) to make sure that they are meeting our business targets and contractual obligations to the customer.

This process is easier for some businesses than others. Firms such as Wincanton for instance work with large supermarkets that have regular routes and loads that make it far more straightforward logistically. Journeys can be planned further in advance to maximise loads and minimise time. Back-hauls (when goods are picked up on the return leg of a trip) can also be more easily planned to make the most of the journey and reduce wastage. Hauliers such as Eagle on the other hand have to deal with far less predictable loads. Orders can come in early or late, cover a variety of routes, and have special requirements (such as needing refrigeration during transport). This makes planning in advance difficult at the best of times, and means that planners are under increased pressure.

Load planning technology
Most planners also use software to aid in their decision-making. The systems that planners have traditionally used to support their intrinsic knowledge and experience-based calculations are mainly rules-based, following a formula that allocates resources according to pre-determined decisions. In essence this means that if X happens, then Y should be the outcome. For example, if an order for 50 pallets comes in for a particular location and for delivery at a certain time, there is already a route and truck combination assigned to it.

This system has its advantages in that it cuts down the time needed to make a decision and allows relatively simple orders to be processed with minimal effort. It becomes less helpful however when X is a new situation that has not yet been accounted for. When there is an unexpected change at any stage of the order (different quantity or deadline, driver shortage, or if part of the route is closed off), the system simply does not have the information it needs to make a decision and it is up to the load planner to draw on their experience and come up with a best-fit solution. If the planner wants to add this new scenario into the rules-based system it must then be programmed in, and this often takes too long to be practical in the fast moving world of logistics. As Brian Bolam of Columbus Logistics Corporation commented, Our planners need to be able to evaluate every option in real-time, otherwise by the time a process has been worked through the outcome might already be redundant.

Another problem with rules-based planning is that it cannot take account of shifting objectives. If the business prerogative changes from making the journey in the shortest time, to travelling the shortest distance (which is often not the same thing), again the system must be re-programmed to reflect this. The principle that rules-based systems rely on decisions that have already been made restricts their value. As Richard Conneely points out, Restrictive decision-making processes can hinder some businesses, as they are unable to take advantage of unexpected opportunities such as late orders or back-hauls. With increasing pressure to cut costs and maximise benefits, reliance on anything other than a truly dynamic network is not something that most businesses can afford. With such high commercial pressures, it is imperative that companies learn how best to manage trade-offs and balance costs versus service most effectively.

External pressures
What came across vividly in the discussion was that all these decisions are being made under a further set of external pressures that can have a significant impact on an organisations operations. The upcoming Working Time Directive (WTD) is of greatest concern. This European legislation will place increased restrictions on the number of hours that drivers can work, and will also place stricter rules on what constitutes rest time. Brian Bolam explained that in one case this means that a trip from the UK to Spain could take up to 24 hours longer due to enforced rest periods. 24 extra hours is a lot of time and will cost the business a lot more money leaving planners with even more ground to make up if they are to maximise the benefits of the journey. Richard Conneely added: If my company could save 12 minutes per day, per driver, over the course of a year it would save around 8million. This equation also works in reverse however and makes clear the impact that the WTD will have on businesses.

In light of this, we asked the roundtable panellists what, in an ideal world, they as planners would change about the systems and processes they use? All agreed that more flexibility was the key. Richard Conneely pointed out that unless a planning system can accommodate every available source of information at that particular point in time, careful planning can easily come to nothing. He cited the example of carefully laid plans coming totally undone even while they are being put into operation, by an unforeseen incident such as a road closure or excessive waiting time at a warehouse causing a knock-on effect that disrupts many different loads. Brian Bolam added that planning systems should be able to operate across a far broader spectrum, taking into account different transport modes and even the availability of resources of third parties or those in other countries. Paul Humphries picked up on this point, saying: It would be an advantage to be able to collaborate further with other companies so that opportunities could be passed on if the business was unable to use them, or resources such as trucks could be pooled to allow for extra usage. Planning systems should work on the same basis as consumer route planning software allowing the user to select their criteria for the journey depending on their business priorities.

New technology
These concerns about traditional planning software led to the final part of the discussion how can new technology help surmount these challenges? New systems that provide event-based decision making by evaluating real-time information are capable of revolutionising the way that planning takes place. They have the flexibility to take unforeseen events into account on a continuous basis, adjusting schedules whenever necessary to ensure that the business is maximising its opportunities at every step. The panellists all agreed that the key is to integrate this with the vast amounts of knowledge held by planners and drivers, and to help planners to understand that it is not a replacement for their expertise. As Brian Bolam pointed out: Drivers have vast resources of local knowledge, and a good driver will combine this with good logic to come up with a satisfactory solution. At the operational level people need to feel that any technology in place is supporting them and offering them options, rather than simply replacing them.

If the new breed of planning technology can get decisions made better and faster, with the resulting benefits this will have for a company, there was no doubt for our panellists that it will catch on with both planners and the board alike. Paul Humphries commented, Smarter technology will be increasingly necessary as companies look for new ways to maximise profit without sacrificing customer service. With huge financial pressures on logistics firms, it is clear that as traditional technology cannot keep up with the demands of the fast-paced modern logistics industry, new solutions will be welcomed. While load planners can do a great deal to ensure their networks run efficiently under current constraints, there is always scope in business for improvement. By working alongside planners proven skills, new technology should be able to help achieve that.

Roundtable panellists:
Richard Conneely, head of transport solutions, Wincanton
Brian Bolam, CEO, Columbus Logistics Corporation; and board member of the European Logistics Users, Providers and Enablers Group (ELUPEG)
Paul Humphries, director of European ground and express services, Eagle Global Logistics

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