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Transport logistics – optimising truck productivity and haulier payment schemes: Karsten Horn, INFORM GmbH (Germany)

Filmed at Cemtech Europe 2015, 20-23 September, Intercontinental Hotel, Vienna, Austria.

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There are lots of challenges in today's business so it is not easy to handle the supply chain so you sometimes have to do some hard turns or used diversions to get the business running and it is not only haulier's that our could be internal processes, customer requirements or even own employees as well.

Today I'd like to show you how the benefit with an example of haulier payment schemes from planning and optimization in our industry. My name is Karsten Horn, I'm responsible for business development for company inform, we're an optimization company means we're developing optimization solutions especially in the construction and building materials industry.

What does optimization mean? if I would ask you, what is your definition of optimization, properly you would tell me, well to optimize something means to improve something that's a colloquial way from a mathematical point of view optimization means the best fitting, alternative from a given set of alternatives.

And that in for all we combine this mathematical approach with real auto main knowledge in this case materials building materials or construction material management and optimization. Talk about software what does the architecture look like usually you have few system in place where you get the orders from then you do a pre planning usually today for tomorrow or maybe for the next shift simply to know what is expected it is to happen and then usually dates could always be kind of a bottleneck, so makes sense to put on top some time slot management even to try to convince the customers to come at a certain time to be served there, and what is really important planning is good but it is always good what happens during the day.

So what is the real time giving you and therefore we will tamarack optimization that means feedback for example from the trucks if the they have stuck in traffic or whatever. Look at the financial benefits from this planning optimization here we have a certain kind of annual transport folio you have a number of trucks that you have to use to fulfill this volume your fixed cost arrival cost are kind of matching so you have annual cost suck and you have cost per tonne, if you do know optimization on yeah, showing the saving is zero, if we use an intelligent system that could be element add on to your B system or maybe on your B system as well it's possible to reach all the stuff with less trucks which in the end means less cost per tonne so that's quite a potential to save and if you then use about optimization usually on operation research approach behind very high sophisticated mathematics, very specialized systems sorry, it's also possible in this case to reduce the number of trucks further on and save another in this case to €250000. But planning not only has an impact on cash it also has additional benefits, so besides those financial ones you improve your quality, for example due to a data throughput, there are less queuing of even no trucks are queuing on side your plant, you don't have to rearrange them because they;re standing somewhere whether you don't have to.

Which also has an impact on your HSE issues so the chance of accidents is getting lower for sure if the there's many trucks as it could be. Take into consideration availability, you can avoid stock out of your products, telling your customers when to appear at your plant, to be served without any waiting time is also take advantage and especially in areas where you have more than just one cement plant it helps you to avoid waiting times due to the fact that you then don't lose any orders because the truck drivers are deciding to go to a different plant.

Having a spotlight on a customer service how to achieve, so I already mentioned this real-time optimization means system is usually every minute they calculating through what happens right now and then put it back to the software. I already mentioned this availability to promise, that means if you receive orders to tell the customer immediately what is the best time-slot to come the next day the next trip or whenever so that the customer don't have to wait let us go back to either possibility of giving the customer the opportunity to choose delivery slopes that he would like to have, and with these you're in full control of this untimely and full performance.

Looking at know those orders what does it mean what are they talking about especially from a financial point of view, this is a pretty easy example with a pretty easy numbers an annual output you have a certain percentage rate of lost orders due to waiting time, and at the end of the day we are talking about whole lot of money and all the figures are pretty easier for me to calculate it, but it does not matter what kind of figures put in here is a lot of money that simply got lost due to this waiting time factor.

And what are the look like from a software point of view? You have your trucks what about the properties of the trucks. You have your orders that you have to fulfill in a way and the most important thing is the scorch the scan shot where you see our track what are the orders that a truck has to do on this day and here you'll also get, it's not only the planning view like I mentioned, but it's also the real time optimized view so if there are any incidents you can see track lights in here as well, which tell you maybe be careful as in Petra certain things could happen that could harm your whole thing and the software will then calculate it through again and suggest maybe another option or another routing.

I mentioned this availability to promise thing so if a customer calls you and asks, may I have a that tomorrow at seven o'clock, you are OK, yeah no problem that it's also possible to do it at ten, fine problem solved, because there you see one is my ability to be able to fulfill, and so I'm able, and I'm in consult to shift the orders to the point of delivery where it fits best, last but not least you have Maths, so we have for the snail trail here for example, you see this is my plan, this is the customer's' place, and that's the rout that attracts it's going OK, and if there are any incidence in between, it will also be re routed and this is also done in an online matter I already mentioned things like the gate as possible or potential bottleneck here is also possible to go forward and go probably up to and completely automated and as well as you're able or if the plant is coming regularly to your plant it's also possible to use the telematics data which are inside which are installed inside the truck to keep this whole thing better running.

So what I have a challenges? If you do this planning and optimization in a better way your productivity goes up like this and on the other hand transport cost should decrease in the same way. Really? Let's have a look at a typical working day from one of our customers where we simply compare the manual planning of the dispatcher without optimized planning and from our logistical point of view the numbers are great, fantastic results, -9% empty mileage, minus more than 40% and use of the number of trucks that looks brilliant.

The question is what's the impact on the financial and therefore we took a cost model from our customer and compared it or an cost model for the haulier industry and just 2. Something decrease of cost for the supplier and remember the supplier was the one who is responsible for this whole productivity improvement so he had to pay all the money for it.

And on the other other hand the once screaming hurrah are the hauliers because they benefit much more from this and remember what are we doing optimization for it's a customer service reduce cost. Let's have a closer look at this pricing thing. Usually you'll find kind of a tonne pricing today so that means you pay per distance and per tonne.

That means that from productivity improvement only the haulier is the one who is benefiting from what about a different approach a more cost based one. And this cost based one. And in this cost based thing we have kind of a flat fall kind of a best price per hour and the price per kilometer and if we put our numbers that we've seen a couple of slides before and in the smallest again with this cost based approach that looks much better because now we are back in the game and also the supplier gets his piece of cake and the good thing for the haulier is that this operational costs are also nearly staying the same, so this is the possibility for both sides, to have a win-win situations from this changed, schemes so that means it's just a matter of looking at your contracts.

So what are the things to remember the end? Proper things are algorithms so make sure if you use an optimization system have a look at that we have proper algorithms in place, and maybe much more important is what is the the industry expertise offers the supplier officer of the merger is not the solution, because that usually is the key to success, and look at your internal processes, check your contracts and if necessary we negotiate them, come in back to one of my first slides where I mentioned on those thing with standard planning intelligent advanced, planning and by using different approaches and new algorithms it's simply possible to save even more money.

Thanks a lot.

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