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More transparency for Transportation Planning

Status: Planning of material calls

Material call-offs today usually follow the production plans and stock levels. Fixed reordering rules are usually used, or the releases follow tactically defined transport plans that are static in the short term. Shipments are triggered by the planning results mentioned above, but are not actively considered as part of the optimization framework. In addition, delivery schedules are carried out at the plant level without prior synchronization of demand.

Challenge: Lack of transparency

In day-to-day business there is a lack of transparency between storage and transport costs, i.e. a lack of software that compares these two factors for the material planner and takes all other relevant factors into account. Due to the lack of transparency, Planner can not optimally use their storage capacities and fully exploit cost saving potentials in the transport planning process. The result: suboptimal total logistics costs.

Solution: Total landed cost approach

Our software solution follows a total landed cost (TLC) approach: a cost equation is used that takes into account both storage costs (including capital costs) and transport costs and freight rates. On this basis, the most efficient call-off quantities and frequencies per material can be determined dynamically. If, for example, there are changes in capacities and freight rates, these can be taken into account immediately. The system therefore has the necessary agility to power real boosts in efficiency. The integration of such a TLC-optimized model creates transparency along the incoming supply chain and breaks down the typical organizational silos between production, logistics, and purchasing.

Result: Optimal utilization and cost transparency

Our solution goes beyond the capabilities of current MRP-based call-off systems by actually determining the optimal utilization of both warehouse capacity and truck manning. Furthermore, synergies of cross-plant transport control can be used to create cost transparency in the supply chain. A forecast function also gives suppliers and CSPs greater planning reliability despite the agility of the software.