May 2008 | Commentary | IT Matters

Improving Fleet Management Performance

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The nation's trucks hauled 10.7 billion tons of freight in 2005, according to the American Trucking Associations' truck tonnage index. This figure represents nearly 70 percent of tonnage, including manufactured and retail goods, carried by all domestic freight transportation modes.

Yet many in the trucking industry have been slow to recognize the strategic importance of transportation optimization and the value it can contribute to overall business performance.

Despite rising costs, ineffectual asset utilization is rife across the industry, characterized by inefficient routing, haphazard route assignments, and empty backhauls from product delivery runs.

At the heart of these issues lies the absence of total visibility across the transportation network, as well as a lack of strategic planning, collaboration, and connectivity—all of which can be achieved using advanced transportation management technology solutions.

A Two-Part Plan

Because fleet management plays a key role in transportation planning and execution, optimizing the network—whether private, dedicated, or 3PL-contracted—can help drive profits without compromising efficiency.

The scope of a fleet optimization initiative can be defined in two parts: shipment planning and dispatch optimization.

Shipment planning makes it possible to create efficient loads within the scheduling process and maximize asset utilization while complying with industry regulations.

Dispatch optimization is a continuous process that enables ongoing evaluation and allocation of resource assignments and loads, based on up-to-the-minute knowledge of conditions and events.

Together, these capabilities help ensure 360-degree visibility and integration of the entire transportation network, and can help shippers and their carrier networks manage operations more efficiently and productively.

For example, optimizing driver and route assignments at the outbound or store delivery end, as well as the inbound or materials/supplies end, can help reduce empty or partial backhauls.

In addition, integrating both the dedicated fleet and common carrier network can provide total network visibility and allow for real-time reactions, interactions, and predictive event management to reduce inefficiencies, avert potential bottlenecks, and head off disruptions that threaten on-time delivery and customer service.

Reaping the Business Benefits

The keys to successfully transforming the transportation network are dynamic route optimization, maximum asset utilization, and real-time information sharing.

Through the intelligent application of technology, top performing organizations have increased the productivity and profitability of their transportation networks, while significantly reducing overall costs—despite the challenges.

In fact, after implementation, many shippers report cost savings totaling millions of dollars. These savings result not only from significant improvements in fleet productivity, detention charges, and regulatory compliance, but also from back-office time and labor savings due to more streamlined business process flow.

For those who have not yet explored the potential of transportation management solutions, maybe it's time to take a more holistic view toward overcoming today's challenges by developing a strategic plan of action.

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