New ways to get your trucks in a row

Private-fleet managers are tapping into technology to gain better control over their operations.

By Bridget McCrea, Contributing Editor -- Logistics Management, 8/1/2006

Life hasn't been easy for truck-fleet managers lately. High fuel costs, driver shortages, capacity restrictions, and costly overhead are all taking their toll on those who are charged with ensuring the smooth operation of their companies' private fleets and dedicated contract carriers.

"Service levels are becoming more demanding, and customers are requesting smaller and more frequent deliveries, typically within a tight time window," says Adrian Gonzalez, director of ARC Advisory Group's Logistics Executive Council. At the same time, he adds, cost control is becoming more difficult and exceptions are becoming the norm, as the bestlaid plans quickly become obsolete.

For relief, some are turning to technology. "Fleet operators cannot afford to remain at the status quo if they expect to succeed in today’s highly dynamic and time-sensitive business environment," says Gonzalez. "Instead, they must adopt continuous-improvement methodologies that enable them to analyze performance, identify weaknesses and sources of variation, and rapidly make the necessary improvements."

That's a pretty tall order, but it's far from impossible. Industry analysts point to three technology trends that can help fleet managers do all of that, and more: on-demand fleet management systems, systems that provide real-time information, and solutions that bridge communication gaps between private fleets and for-hire carriers.

THE ON-DEMAND OPTION

Already popular among users of transportation management systems (TMS) and warehouse management systems (WMS), on-demand software is one of the hottest developments in logistics today. Under this model, multiple companies are able to share a single software installation.Rather than buy and install a full-scale fleet management system, shippers go to a password-protected website to access applications that include all of the functionality of a traditional solution. Offered by vendors such as Cube Route, UPS, Descartes, and Mobitrac, to name a few, on-demand fleet management systems typically work on a "pay as you go" pricing model.

Respondents to an Aberdeen Group study said they use multiple types of devices for fleet communications, choosing the appropriate technology for specific circumstances.

Dyrc McLeod, director of operations for Empire Distributors in Atlanta, warmed up to the idea of on-demand last year. The beverage distributor ships some 10,000 to 22,000 bottles and 7,000 to 14,000 full cases daily from eight warehouses. Singlebottle orders have increased, leaving McLeod to ponder a better way to manage a delivery schedule that’s changed from an average of two visits per customer each week to five per customer each week.

Until recently, McLeod used a software package that required two-and-a half hours to create a routing plan; it took so long because the output had to be manipulated in order to be useful. To avoid that problem, he turned to an on-demand solution from Cube Route.

Empire uses the software for routing and scheduling, planning, and real-time visibility of orders, assets, and events. That information lets the company manage its operations based on what’s really happening, as opposed to what was originally planned.

As exceptions and problems occur, the system alerts the shipper’s customer-service reps. They use a colorcoded system to view current routes and vehicle locations. They can also change the routes if needed and transmit those changes directly to drivers’ mobile devices. "We have strict time windows on all deliveries, and if [a customer] isn’t willing to accept a rescheduled time, we can quickly reroute that truck and get it on its way to the next stop," McLeod says.

With the on-demand system, routing plans are now completed 40 percent faster, and McLeod and his team have a detailed understanding of customers, routes, drivers, and other factors that impact operational performance.

Expect to see more shippers follow in Empire's footsteps. According to Dan Vertachnik, vice president of transportation at software vendor RedPrairie Corp., in just the past year, sales of on-demand fl eet systems have reached around 15 percent of the total fl eet management market. "We're going to continue to see that grow and probably reach 25 to 30 percent in the not-too-distant future," he says.

BRIDGING THE GAP

Historically, shippers haven't been concerned about forming links between their private fleets and their for-hire carriers. With competitive pressures taking their toll, however, they're now seeking to bridge that gap to help make their operations more efficient.

"Fuel costs and capacity constraints in the overall transportation market are making people look at how they can get more for their dollar," says Beth Enslow, vice president, enterprise research at Aberdeen Group. "They realize that using their dedicated resources more effectively takes some of the stress off of their core carriers and leads to fewer empty miles."

Vendors such as i2, @Road, Intermec, Manhattan Associates, Manugistics, Oracle, and RedPrairie are helping shippers achieve those goals with fleet management solutions that integrate communication tools. Enslow says shippers are using both strategic and tactical solutions to get the job done. Using systems from Oracle, for example, shippers are looking at historical data and ferreting out opportunities for backhauls that could be handled more efficiently by a dedicated fleet.

Others are looking at today’s shipments, comparing cost and capacity availability to figure out if a private fleet would be most cost-effective. "They’re giving those fleets first right of refusal and then tendering out to a common carrier anything that the private fleet doesn’t want to take," Enslow explains.

While it may sound good in theory, getting private fleets and common carriers on the same page can be challenging. "Oftentimes companies operate these groups in isolation," Enslow says. "From a process perspective, the key is to get these teams working together by aligning performance measurements in a way that lowers overall transportation costs for the company, instead of just meeting independent goals."

That exercise can pay off, says Razat Gaurav, vice president of the Global Transportation and Distribution Group at i2 Technologies. He sees more shippers using optimization capabilities to identify opportunities for backhauls, continuous moves, multiple pickups, multiple drops, and consolidations. "Clearly," says Gaurav, "technology plays an important role in improving the utilization of these assets, and some companies are doing that very effectively."

IN REAL TIME

Most fleet-mobility systems use satellite-based, real-time feeds, with the equipment itself placed in the cab of the truck or in a driver’s hand. The driver maintains the information, which is then fed back to a hub. Because these systems provide real-time data, expect to see more of them in the future, says RedPrairie’s Vertachnik. "Nearly every fleet management system we’re quoting now includes a GPS or global resource management component," he says. Determining Total Cost of Ownership "People are looking for real-time feedback, and we don’t see any end in sight for that demand."

In Enslow's view, private-fleet operators, for-hire carriers, logistics service providers, and field-service businesses are budgeting for mobile computing technology across four categories: basic driver communications, value-added information collection, automatic vehicle location (AVL), and vehicle sensors.

Whichever type they decide to use, they all want that information right now. An example of a fleet management solution that addresses that trend is one offered by Manugistics, which takes EDI, XML, and other Web-based, shipment-status feeds, processes them in real time, and compares them to preestablished business rules (such as having a specific stop completed by a certain time). Shippers receive the alerts in real time, and can take necessary action if activities do not occur as scheduled, explains Dawn Salvucci-Favier, director of solutions management.

Such capabilities are proving to be attractive to shippers like Memphis-based AutoZone. Right now, Richard McDuffie, vice president of logistics, is evaluating several onboard communication systems for the trucks that drive between the company’s seven U.S. and Mexican distribution centers and its customers' retail locations.

AutoZone already uses Rockwell’s Trip Master software to capture diagnostics like miles per gallon and idle time, and Descartes' Road Show for routing and scheduling. McDuffie says that he'd like to implement a PeopleNet or Teletrack-type system that would allow the company to dispatch drivers in a more "dynamic environment," as he puts it, and create a single platform for tracking his fleet’s vital statistics.

Driving the decision to upgrade the system to include real-time tracking, says McDuffie, is the need to combat the high costs of insurance, maintenance, and fuel. "We're looking for ways to offset those high costs, while at the same time improving the overall management of our fleet," he says.

McDuffie isn't alone. An Aberdeen Group study found that mobility technology is a key competitive tool for almost three-fourths of private fleets that are seeking to increase real-time control and enhance their valueadded capabilities. And no wonder: Eighty-seven percent of respondents said customer-service improvements from mobility technology have met or exceeded their expectations, while 50 percent reported that deploying mobility technology boosted fleet productivity by more than 10 percent. "Mobility is no longer a nice-to-have feature for fleet operators," says Enslow. "Rather, it is instrumental in keeping customers and maintaining a company's competitive position."

Contributing Editor Bridget McCrea frequently writes on logistics and supply chain technology.