Solving delivery route planning problems of asset-based 3PLs

We have seen a surge in B2B 3PL and fulfillment operations during the last few years. This trend continues accelerating as e-commerce grows at a steady phase and delivery times shorten. Thus, traditional asset-based logistic providers such as; FedEx Logistics, J. B. Hunt, Hub group, Kenko Logistics, Distribution technology, Atlanta bonded, Cardinal logistics, have to deal with larger volumes and faster deliveries. It should be noted that 3PL’s specializing in B2B distribution usually keep their fleet of trucks in combination with contracted carriers. So delivery route planning fo 3PLs is becoming both the source of great efficiencies and potential losses.

Why is this difficult?

Delivery Route Planning for 3PLs

Unlike city dispatch and delivery, 3PLs might have a multiday delivery route planning horizon from multiple distribution centers (DCs). The asset-based 3PLs main goal is to have the maximum number of orders delivered in the shortest possible time while simultaneously taking into consideration variable distances, delivery windows, and service times of orders. Ideally, companies should be able to reach a maximum loaded mileage to achieve this goal. The best-loaded mileage can be reached by;

1. – increasing the loading ratio and/or
2. – decreasing driving time or mileage

Along with the need to consider different delivery days, time windows, and service times, reaching the best-loaded mileage is becoming a next to impossible task. No solution in the market can compile optimal routes for 1000s orders for multiday horizons with tight delivery windows, variable service, and flexible start times. Less Platform does that in a matter of minutes.

Multi-terminal operations

Large 3PLs usually operate using multiple DCs, so they need to have an option to plan their routes simultaneously. The absence of robust delivery route planning solutions for 3PLs dedicates more resources than required and creates massive inefficiencies. Less® has a multi-depot functionality and a wide range of as-if scenario analysis to plan orders from DCs offering maximum deliveries. 3PLs can even use the tool to plan the next DC location for optimal logistics.

Visibility

Having visibility on potential late deliveries beforehand helps to mitigate their occurrence. This can be done only through maximum visibility. Most companies are connected to ELDs or they use other GPS tracking software these days. While it helps to trace truck locations, it does not allow us to anticipate potential late deliveries at the stop level.

The problem is that delivery time equates to driving time and stop level service (or dwell) and other HOS required stops time. Less® works as a sophisticated system by getting information from the driver app, recalculating ETAs, checking feasibilities with delivery windows, and warning about potential late deliveries. This information is visible both to dispatchers and drivers. Companies need to have a unified dashboard of ongoing deliveries and should be able to identify potential risks beforehand. This unified visibility is the key to decreasing late deliveries and increasing customer satisfaction.

Integration with current tech infrastructure

3PLs use different TMS’, WMS’, and other company-specific ERP software. So any complex solution should be able to integrate with all these systems in a matter of hours. Less® Platform’s API-enabled configuration helps connect to ordering, TMS’, and WMS’ even at the SKU level. If 3PLs have their homegrown ERPs, they still can integrate with less at the engine level. This helps to use the customized interface while still getting all benefits that Less® Platforms route planning engine offers

Reporting and analytics

A well-thought-out reporting and analytics system helps to get sharpen a firm’s competitive edge. Businesses operate in times of growing complexity of operations and an ambiguous external environment. Adding to this growing issue is that there is a considerable lag in terms of current solutions being offered in the market. 3PLs should be able to understand inefficiencies in their distribution operations at corporate, DC, and even dispatcher and driver levels. Due to a current lack of solutions providing proper visibility over analytics, this is not possible at an appreciable level of complexity. Along with performance analytics, accumulated information should be analyzed and turned into insightful forecasts for getting better plans and decreasing uncertainties. Data aggregation also should help to assess the performance of even more complex operations with thousands of trucks and 100s of fulfillment centers.

We tried to consider the major pain points that 3PLs have regarding increasing volumes and incorporate them into an enterprise-grade cloud-native SaaS solution. Please reach out at [email protected] for more info.

Author
Vardan Markosyan is the CEO at Less® Platform
MBA from the University of Chicago Booth School of Business
Ph.D. in Economics from the Institute of Economy of NAS RA
He spent decades of research and consultancy on business process optimization and system design