October 2002 | Commentary | Supply Chain Technology

Velant's Automated Planning Solution

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Two primary goals of transportation management are reducing costs and enhancing customer service. To meet these demands and improve its transportation planning offerings, Velant, a solution provider headquartered in Atlanta, Ga., has developed a managed service that integrates advanced technology with the expertise of logistics specialists. The company's Transportation Management Center (TMC) is targeted at private and dedicated fleets, shippers, and commercial carriers.

The recent support Velant has secured to help grow its TMC is perhaps not as widely recognized (at least not yet) as its CEO, president, and founder, Dr. H. Donald Ratliff. His work as executive director of the Logistics Institute at Georgia Tech is well documented in the logistics and supply chain industries.

"Some recent good news is that Velant just announced a $10-million round of venture capital investment," says Ratliff. "It's a tough environment for companies to raise venture money, so getting support from some of the best in the industry is a real testament to our team, our solution, and our momentum with clients."

The Center of it All

"From a product and solution standpoint, we are excited about the recent launch of our TMC web portal," says Ratliff. "While powerful optimization algorithms do most of our solution's work behind the scenes, the portal is an important component of the TMC that provides a straightforward, web-based user interface for our clients. "The portal provides clients with a central location for all transportation information," he adds. "It offers an unprecedented level of visibility into their transportation operations and planning processes, as it automatically collects and maintains all logistics data for easy access and analysis."

The TMC is powered by what Velant calls its optimization engine, which concentrates on the controlled logistics management process. Optimization, in turn, depends upon several Velant offerings, such as parallel computing and clustered server environments.

"The parallel computing architecture gives us the horsepower we need to tackle complex optimization problems," says Ratliff. Unlike traditional routing software that runs on a single PC, Velant's solution leverages many powerful servers working together.

"Clustered servers provide very high computer availability," Ratliff notes. "If a problem occurs with one server, it automatically switches to another server to continue the solution process. This is particularly important for dynamic routing because it is essential that plans get generated on time.

"Our next-generation optimization algorithms are uniquely able to take advantage of a parallel computing environment, in that our optimization engine can simultaneously consider different parts of the solution space," he adds. "This results in evaluating a much greater number of possible solutions in a much shorter time period. Velant produces better answers very quickly.

Velant uses two criterion to compare potential logistics plans: First, is it an acceptable plan? Second, is it the best acceptable plan? In order to be acceptable, a plan has to satisfy all the requirements imposed by the customer. For example, all deliveries and pickups must be made at acceptable times, all loads must fit on an assigned truck, and all trip times must be within the acceptable hours of the assigned drivers.

"In choosing among acceptable plans, the criterion is generally total cost of delivery," says Ratliff. "This includes variable cost (fuel, tires, and maintenance), driver cost, and cost of equipment and overhead. The system selects the plan with the best total cost."

Planning for Success

To ensure that a fully automated planning process is successfully carried out, Velant follows a three-step approach, says Ratliff:

First, Velant defines precisely what requirements the customer wants in each plan and models these requirements so they can be handled in the optimization engine.

Then, Velant defines a rigorous set of workflows specifying when and how data is brought into the TMC, what work has to be done to verify and scrub the data, and how and when the plans are to be delivered.

Finally, the optimization engine is tuned to the particular customer's problem to provide solutions that satisfy all requirements in the time allowed.

"Once all this is in place, everything (data acquisition, optimization, solution delivery) happens automatically," says Ratliff. "There is no need for human intervention in the planning process. If there is some exception the computer cannot handle, an escalating set of alerts makes sure the issue is resolved."

Offline/Online Optimization

Optimizing complex business trade-offs with vehicle routes can be facilitated both online or offline as part of the regular optimization process, says Ratliff.

"Offline, we can do simulated planning for various time windows (one hour, two hours, etc.) around a promised delivery time and determine the cost for a variety of service levels. Based on this analysis, the client can decide what level of service it wants to provide," he says.

"Another alternative is to determine the cost in dollars for each hour the delivery is late and include this in the optimization objective function. In this case, the trade-off between the cost of transportation and the cost of being late is made inside the optimization engine each time new plans are generated." To adapt and respond to varying business demands, Velant's technology is robust enough that many changes can be handled automatically with little change in plan quality.

"Some business changes, however, require retuning the optimization engine or making changes in the underlying models," notes Ratliff. "The first step is recognizing when such changes have occurred. We accomplish this by systematic benchmarking and regularly comparing the plans generated to the benchmarks. Once these changes have been detected, we do an analysis to determine what action is required."

For more information about Velant and its Transportation Management Center visit www.velant.com.

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