Stock Turnover

Over the last few decades, logistics has gained in importance, especially for the industrialized nations. Due to increasing globalization, companies in many kinds of industries are under immense pressure to lower costs in order to remain competitive. Economizing on wage and production costs cannot be done quickly and easily. However, unused potential and synergies are lying dormant in logistics and these can contribute towards cost-cutting. We have already considered several of these aspects in our previous blogs OPTANO Logistics – Part 1 and OPTANO Logistics – Part 2. Further potential in logistics can be found in so-called “delivery profiles”.

 Delivery profiles
–  optimizing schedules and collection frequencies

Delivery profiles can be organized within various logistic concepts. Here, we want to focus on creating and optimizing delivery profiles within the consolidation concept which is a typical supply concept for the automotive industry in particular (see also OPTANO Logistics –  Part 1). This concept means that suppliers first collect deliveries within a certain regional area in what are known as  pre-leg stages. These deliveries are then consolidated and distributed to the various production sites during the main leg stage. Consolidation is efficient because trucks can be used to their full capacity, discounts on transport rates can be taken advantage of and cost-optimized order quantities and frequencies together with inventory costs can be taken into consideration.

Various pricing systems are used to calculate the (costs of) transportation. These offer discounts for transportation which utilizes capacity as best as possible. Therefore, consolidating deliveries is advantageous. This can be done in two ways: on the one hand, a supplier’s deliveries of different parts can be coordinated so capacity is increased during the pre-leg stage. On the other hand, various suppliers’ deliveries can be coordinated to yield as much capacity as possible during the main leg stage. Delivery profiles are one way of using these synergy effects.

Delivery profiles determine on which weekday deliveries should be made and the frequency determines the recurrence of the profile. By changing the delivery call-offs based on delivery profiles, which ensure that schedules and pick-up frequencies are optimally configured, efficient pre and main leg stages can be designed and the desired synergy effects can be made use of.

Table – Example of a delivery profile

Delivery profiles with OPTANO

Creating and selecting delivery profiles is a complex task. This often involves material movement which consists of several hundred items which must be evaluated in detail. Furthermore, consolidating this flow of materials is mostly done across several suppliers and sites. Even more complex is how to determine optimum delivery profiles with the following influential factors:

  • Different freight rates with stages, weight and volume restrictions
  • A detailed inspection of the truck load: weight, volume and stacking heights (always taking the load carrier into account)
  • The impact on warehouse and goods-in quantities.

OPTANO uses mathematical optimization methods to determine cost-effective delivery profiles which can then simply be included in the delivery call-offs. Optimizing delivery profiles has the following advantages:

  • End-to-end optimization of the entire supply chain (pre-leg and main leg stages)
  • Increase in the utilization of vehicle capacity by reducing the number of part shipments
  • Lowering transport costs by taking advantage of discounts on transport rates
  • Lowering logistics costs by balancing transport and warehouse costs.
  • Reducing CO² emissions by ensuring that truck capacity is utilized better
  • Relieving the burden on goods-in by having fewer trucks which are utilized at higher capacity

In addition, delivery profiles produce uncomplicated results: They can be deployed directly in many  ERP systems – in SAP, for instance – which are easy for logistics providers, dispatchers and forwarding agents to follow. ERP systems do support freight planners but not when it comes to choosing the right delivery profile. And this is precisely what OPTANO’s mathematical optimization technology can do. Also, with what-if scenarios, the impact on delivery quantities, freight costs and  inventory when making changes to delivery profiles can be tested in OPTANO in advance and various delivery profiles can be compared with one another.

Do you want to learn more about delivery profiles in OPTANO?
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