Less than truckload (LTL) operations are mostly organized using the hub-and-spoke model. From an organizational perspective, we need to plan thousands of inbound LTL shipments for terminals and then create line hauls to move the freight to distribution centers. Additionally, there are smaller LTL carriers who practice direct-to-the-customer line hauls. Thus, we can conditionally divide LTL planning into;
a) inbound operations-when multiple multi-stop pickups are occurring
b) outbound operations-when LTL freight is being consolidated in the terminals and hauled to distribution centers.
As inbound operations are different in nature the approach to the planning and execution should be different respectively. Planners and executers are dealing with complexities that can potentially degrade service level, increase planning time, and result in more miles driven than necessary. Less balanced loads and the need for dynamic changes cause their efforts to be less effective and result in overall reductions in efficiency.
Demand in everyday LTL operations is highly variable
Unlike other pickup and delivery operations such as wholesale distribution, everyday demand for multi-stop LTL operations is highly variable. Distributors have a relatively stable customer base and therefore a stable planning process while LTL carriers are required to plan their inbound operations from scratch every day. Thus, the majority of planners use a zone-based approach; where specific drivers are assigned to specific zones and then planners try to create routes in these zones. While this helps planners to get their daily plans done this approach, unfortunately, creates lots of extra miles driven, unbalanced loads and consumes too much of planners’ time.
It is very hard to get balanced and timely loads while keeping mileage and other cost variables under the control
A planners’ main concern is to pick up orders from terminals by assuring accurate delivery windows. When demand is variable it often comes at the cost of mileage optimization or too many trucks thrown at the problem. Planners juggle many variables in their heads such as delivery windows, variable service times, HOS requirements, capacity constraints, and driver-specific requests. As a result of this complex process, a human being can hope to get 60-80% of optimality utilizing this manual method.
While ELDs or other GPS tracking software helps to trace trucks they have a little positive effect on communication between a dispatcher and dozens of drivers
ELDs are great at getting driving data for calculating service hours as well as monitoring the location of trucks. Additionally, LTL inbound operations are multistep in nature and often include dozens of stops. Large LTL carriers with 100+ trucks (the largest nationwide carriers have 1000+ trucks and dozens of terminals) should assign and monitor multistep pickups for thousands of shipments a day for a given terminal. Currently, dispatch sheets are printed on paper and communication is done via calls which is a time consuming and inefficient process. Dispatchers also don’t have full and timely visibility of the pickup process for each stop as well as dynamic ETAs for the planed stops. It makes execution time consuming and inefficient.
How Less® Platform solves above-mentioned problems:
1. Innovative planning engine. We have built a load and route planning and scheduling engine which gets 96-99% optimal load plans in minutes for thousands of deliveries. It involves all the real-life constraints such as the need to fit into delivery windows, variable service times for different sizes of orders, HOS requirements, order, and truck capacities. Thousands of pickups in dozens of terminals is no problem and can be planned simultaneously by one planner in 10-15 minutes.
2. Our Driver app is connected with a central console. Dispatchers can assign planned loads instantly to hundreds of drivers and they will have all the planned loads on their phones. The status of each stop will be updated instantly. Dynamic ETA’s for all stops, including service times, breaks, traffic, and other variables will be visible both for drivers and dispatchers. Thus, dispatchers will be notified as soon as an ETA for any stop will be beyond its delivery windows. The driver app also allows you to notify customers about the arriving trucks as well as to capture digital POD. All the information for implemented loads is stored in the database in which managers can monitor the efficiency of operations using summary tables and graphs for each instance.
The LTL industry needs new tools to solve old problems more successfully. Decreasing costs by improving efficiency has become an urgent need. They should also take into consideration new realities for remote operations that are here to stay. As a result, the long-term profitably and competitive position of a company depends on how fast the industry will adopt new technologies to improve their operations.
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