Profitable orchestration of non-contracted lanes requires optimal decisions in the face of uncertainty and inconsistency. Our client, the logistics division of a global CPG brand and recognized among the top 10 3PL w.r.t. volumes and spends, moves 400,000+ shipments per month and traverses 1.3bn km/year, wanted to mitigate the inefficiencies in its non-contracted lanes with automation.
They wanted to eliminate manual planning, reduce spot spend, optimize truckload, and implement rate benchmarking to enhance the quality of outcomes across all movements. This required optimization in the absence of contractual rules. The client engaged Birlasoft to implement automation and optimize operations across its non-contracted lanes to realize this vision.
Birlasoft optimized and automated planning and execution in the client’s Oracle Transportation Management (OTM) environment and delivered significant cost benefits while reducing CO2 emissions. See the details of this engagement below.
The Challenge
#1. Manual planning due to non-harmonized master data
Due to the lack of master data harmonization across systems, the planning teams had to sift through inconsistent and incomplete data from multiple sources to build transport plans. As a result, they struggled to optimize shipments in real-time, leading to inefficiencies, delays, and missed consolidation opportunities.
#2. High spot spending and suboptimal truckload
Engaging transporters on a shipment basis led to a higher spot spend, which resulted from a reactive approach in the face of demand spikes and uncertainties. Moreover, manual planning led to inadequate fleet utilization, increasing operational costs and inflating carbon footprint.
#3. Inability to evaluate bids received from transporters
Without consistent evaluation criteria and historical data, planning teams resorted to manual judgment to assess the bids they received from transporters. Therefore, they were unable to negotiate the best rates or consistently pick transporters offering better service quality.
The Solution
To mitigate these issues, the client engaged Birlasoft to optimize planning and execution OTM automation. Here are the key aspects of the solution that Birlasoft delivered to the client:
#1. Identification of rules to optimize non-contractual planning
We identified several rules to optimize non-contractual planning based on differentiation between types of goods (raw materials vs finished products), temperature conditions, and movement classification (inbound/outbound/inter-plant). We also implemented constraints to honor delivery dates and criteria for critical orders.
#2. Automation of order bundling to exploit consolidation opportunities
Birlasoft introduced automated bulk planning in the OTM environment. The system ran scheduled bulk plans every few hours, grouping orders based on shared attributes (like delivery routes or materials) to exploit consolidation opportunities. This reduced manual overhead for planners who previously checked and merged orders across multiple OTM screens.
#3. Multiple options to calculate and benchmark spot rates
The solution introduced spot rate generation based on a combination of historical shipment data, distance-based auto-calculations, and third-party systems to handle spot shipments more effectively. This, in addition to a Reverse Dutch Auction process, helped secure the lowest possible rates, reduced planner bias and ensured competitiveness.
The Impact
1. Cost reduction and reduced spot spend
Order bundling automation and data-driven rate benchmarking enabled the client to realize 8-10% of logistics cost savings. In addition, order bundling enhanced truck utilization and reduced the frequency of unnecessary spot shipments.
2. Lower manual planning overheads
The system automatically grouped similar shipments, optimized routes, selected the best available carriers, and enabled planners to review and adjust shipments within a single interface, reducing manual intervention.
3. Reduced CO2 emissions and better transport stability
Truckload capacity optimization, dynamic route optimization, and reduction of underutilized vehicles had a sizeable impact on the overall CO2 emissions.
4. Enhanced reporting efficiency
The ability to visualize and analyze real-time data in a unified platform improved decision-making and facilitated more accurate performance tracking of non-contracted lanes at scale.
By engaging Birlasoft to enhance logistics operations in non-contracted lanes, the client has increased its competitiveness and set itself at par with the cutting-edge in logistics operations.
