February 2008 | Case Studies | I.T. Toolkit

Solving the Cube

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A tissue manufacturer wipes up excess costs with load optimization software.

Remember the Rubik's cube, the 3D puzzle that drove adults crazy, although kids solved it with ease? Getting the colored squares to line up on each face of the cube was hard enough.

Imagine if every movable piece were a different size and shape, and you had to make them fill an oblong box with no leftover space.

That's just the sort of puzzle shippers wrestle with every time they fill a trailer or shipping container.

"Calculating how cargo fits on a trailer, and the best way to load it, can't physically be done at the customer service desk or in the shipping department," notes Mike Jansen, vice president, supply chain management at SCA Tissue North America, Neenah, Wisc.

For SCA Tissue, it's crucial to make an accurate match between a full truckload order and the space on a trailer as it struggles with rising diesel prices and customers who hate leaving part of an oversized order behind on the dock.

Last year, SCA brought some heavy computational power to this problem. Since implementing the Ortec optimization system in June, SCA has squeezed significant air from its truckloads and increased its already excellent order fill rates.

SCA Tissue North America provides tissue products - napkins, toweling, bath and facial tissues, and specialty wipes - along with dispenser and soap systems for the food service, office building, health care, and industrial markets. A unit of Swedish firm Svenska Cellulosa Aktiebolaget, SCA Tissue North America sells its products through a network of distributors.

A Guessing Game

Most distributors order product from SCA in full truckloads. But with a product line of several hundred SKUs in a variety of dimensions, it's hard to know how much product will actually fill a trailer.

In the past, as a rule of thumb, the company called 3,300 cubic feet a full truckload. As they built orders with customers, service representatives relied on their experience to determine when they reached that limit.

But some product mixes fill the space more tightly than others. Less optimal loads leave empty space on the truck, a luxury that shippers can't afford as diesel prices keep pushing up the cost of delivery.

"We pay close to $1,000 to get the truck to its destination whether it's nearly full, or 100-percent full," Jansen says.

On the flip side, sometimes a "truckload" order ended up with too much bulk. "We would build a load that was not able to be shipped," Jansen recalls. "We'd have the product available on the dock, but our dock workers would discover they did not have room to load all the cases."

The excess product had to stay behind until the next time the customer placed an order. So although SCA had the product in stock and was prepared to ship it, all the customer saw was a shortage - a service failure.

"In the past, nearly 30 percent of all case shortages were the result of a lack of space on the trailer," Jansen says. "The alternative would have been building smaller cube loads to avoid shortages, but that would have significantly increased transportation expense.

"We ship bulky products and spend a lot of money on freight. It's important that we optimize the process," he adds.

Jansen considered the solution a change management project more than a logistics challenge. To get more bang from the company's transportation buck, it would have to get the customer service department, customers, and the shipping department to do their jobs differently.

"So instead of appointing the director of transportation logistics to head the project, I asked the manager of customer service to be the project leader," he says.

Choosing a Solution

After exploring numerous load optimization solutions and issuing a request for proposals, the project team chose Atlanta-based Ortec.

Ortec's optimization solution helps shippers better match loads to capacity, taking into account both volume and weight. Ortec sells the solution in two formats: fully embedded with SAP's enterprise resource planning (ERP) software or as a standalone system that interfaces with another ERP system. SCA uses the embedded version.

Ortec draws on four kinds of data in its calculations. The first accounts for product dimensions - the height, length, width, and weight for each SKU the shipper might transport.

The embedded version of the software takes that data from SAP's material master table, eliminating the need to collect the information during an Ortec implementation, says Bobby Miller, vice president of industry operations for consumer products at Ortec.

The data might require some special attention, though. "The information is often old and hasn't been maintained," Miller says. "So it's best to assemble a data integrity team to make sure the data is correct."

The second category of data gives the dimensions of each kind of trailer, railcar, intermodal container, or other equipment the shipper might use.

The third provides a list of restrictions that customers impose on shipments for their own convenience. These might dictate, for example, that certain products must always travel together, or that pallets containing certain products need to face a particular direction in the trailer.

The fourth category covers stackability rules: "What products can be stacked on top of something else, and how many times can they be stacked?" Miller says.

Given these parameters, Ortec's software determines how best to fit a specific order into the available space and, if there's room left over, how much more product the shipper can fit. At SCA, customer service reps use this information to get customers to increase their orders, when appropriate, to better fill the equipment.

"The buyer has to work with the customer service person to understand what's optimal to fit on the trailer and how they can change their order pattern," Jansen says. "That gives us the flexibility to swing an order up to take advantage of the trailer space."

Instructions for Loading

Once the buyer and rep finish building the order, Ortec's software creates instructions for dock personnel to follow as they place items on pallets and load pallets on the trailer. Besides allowing the shipper to make the best possible use of trailer space, these instructions can help cut down on loading time.

"With potentially 26 to 30 slots on the trailer, the software will tell dock personnel which unit goes into each slot, and which orientation it should go in, to physically get the most out of the trailer," Jansen says.

Experienced employees probably can figure that out on their own. "But for new, inexperienced people, the learning curve goes away, because the answer to the test is handed to them for every order," he says.

For shipments that involve multiple stops, Ortec also offers route optimization, although SCA, with its full truckload shipments, doesn't use that feature.

When SCA started using Ortec's solution, many customers increased their orders to better fill the trailers, but some balked at the idea.

"A number of them are incented on turns and inventory levels," Jansen says. "So when we told them we want to ship another hundred cases of a certain item, some buyers said they didn't need those cases."

To help win them over, reps explained that ordering more product would save labor in their own DCs. "Over time, instead of 13 trailers coming to their dock, they're receiving 12," Jansen says. "That's worth something to them as well."

Many shippers use price incentives to get their customers to order fuller loads. "The more customer behavior changes, the better for them, because they'll get some kind of discount," Miller says.

Working Together for Savings

SCA doesn't use that strategy, but its customers understand that better capacity utilization saves them money in the long run.

"They realize that if we're inefficient, eventually we will pass that along in the form of higher prices," Jansen says. "But if we work together, all of us in the supply chain can be more efficient."

Since SCA started using Ortec's software, the company has been averaging five to six percent better cube utilization on its trucks.

"In addition, our case fill rates of 99.6 percent have increased to 99.8 percent, primarily driven by eliminating 'trailer full' shortages," Jansen adds.

Besides using the software to optimize outbound shipments to customers, SCA Tissue recently started using it to build more efficient loads when shipping product among its own facilities.

"It's a different process," Jansen acknowledges, "but we should realize the same benefits."

Load Planning/Optimization Solutions

If you are looking for a little more logic in planning your truck shipments, here is a list of companies that can help take a load off.

MaxLoad Pro

TOPS Engineering estimates that 10 to 25 percent of all shipping costs can be cut by using MaxLoad Pro. The software utilizes a 3D drag-and-drop editor, which allows shippers to build and edit load plans that can be e-mailed to customers or co-workers using any e-mail client. MaxLoad Pro also provides users with the best container to ship loads, while rules and calculations are used to minimize transient damage.

CargoWiz

CargoWiz offers an easy-to-use interface and simple integration with shippers' current cargo data. CargoWiz can also provide swift information to customers who ask for a certain number of different products. After running a quick simulation, users can tell their customers how much space is left in the container, and what products can be added to fill it. Soft Truck offers a 20-day software trial.

ShipperPlus Loadbuilder

For shippers who have to push a box out the door, ShipperPlus Loadbuilder can help. Generally, shippers can justify the purchase in two to four months with the cost savings the software provides. ShipperPlus provides the ability to look at an order from an individual cost standpoint, and not only tell the user where a shipment is, but when it will arrive. Prophesy also offers help with dispatching—allowing shippers to track and reroute shipments at will.

LOADDESIGNER

Ortec's software solution comes with TMS-Connect and Connect For R/3, which guarantees compatibility with current IT systems. LOADDESIGNER also supports eight different languages, and more are available upon request. The software's mobility allows users to e-mail loading graphics and bring the load instructions to the dock via mobile or stationary monitors. Ortec offers customized solutions depending on industry; unique features for the automobile, beverage, chemical, and paper industries are included.

LoadPlanner

Optimum Logistics' LoadPlanner is a rules-based solution. That means it is more than capable of handling an array of constraints and business rules that shippers may struggle with daily. LoadPlanner takes these restrictions and applies them to the shipper's load. Optimum Logistics offers free, unlimited access to LoadPlanner through its Web server for business and educational needs. A free evaluation copy of the solution is also available on the Web site.

Cube-IQ

The optional addition of more complex features makes Cube-IQ stand out. Shippers can go beyond what is normally offered and add the ability for the software to handle Unit Load Devices, or ULDs, which are used on airlines. Roll loading and sofa loading are also options that can be tacked on to the base version of Cube-IQ. The solution can be up and running in a few days, and can be configured to work with any system that can create XML data.

Advanced Loading System

The Advanced Loading System can help maximize cubic volume utilization for road, rail, ocean, or air shipments. While the solution ensures shippers get the most out of each load, it also makes sure trucks pass at the scales. The software computes legal axle weights along with defined priority loading rules and stacking limits. The Advanced Loading System also operates online, so shippers can access the diagrams and information the solution provides whenever needed.

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