There are times when a single word can completely change the meaning of an expression. Just look at Greta Garbo, whose misquote, “I want to be alone,” was repeated so often (and was so off-base) that even she felt the need to clarify that what she’d actually said was, “I want to be left alone.”
Or consider what happens each time you add the word “global” to any supply chain. As any international shipper knows, that seemingly small addition comes packed with a host of extra complexities, including:
• Different currencies
• Various time zones
• Diverse infrastructures
• Multiple government agencies that may or may not touch a shipment
• Thousands of additional possible trade lanes
• Countless untested scenarios.
And often it requires an army of professionals, an iron constitution, and many extra hours to successfully navigate them. Fortunately there are several engineering techniques, such as optimization, that can help.
Optimization Re-Visited
The fact that optimization exists is not breaking news. The practice has been around since the 1940s, and over the past two decades, it’s virtually become a household name in the transportation industry.
However like Garbo herself, it’s frequently been misunderstood, which is why it’s helpful to review a few key particulars:
• Optimization is both a mathematical and technological process. It uses a combination of sophisticated systems and various mathematical models (linear, non-linear and integer), and both are highly important to its success.
• The practice is by its very nature predominantly strategic. However, its disciplines are just as applicable to tactical functions, which is why in the logistics industry you’ll frequently hear the term associated with everything from over-the-road freight and distribution center selection and network design to equipment selection and load building.
• Its end result is (as its name suggests) the optimal solution for the challenge at hand – delivered more economically, more quickly, and with a higher level of certainty than simple rule-of-thumb or manual processes.
It’s also important to note that optimization has some highly relevant operating instructions and caveats, among them:
• Just as a Formula One racecar will operate differently depending on whether it’s being operated by a teenage boy or by Danica Patrick, optimization tools won’t work as well as they should unless they’re being applied by career engineers or highly trained technical specialists – because they usually are more complicated than most people realize
• It is a decision support tool rather than a precision tool. It’s ideal for addressing the question of “Which one?” – be it a shipment, a venue or a shipping configuration. But it’s less helpful if your company wants to be 100% certain that the solution recommended is truly the best one or that it will continue to be the best one if you throw in a number of other variables. (That’s why other engineering tools such as simulation exist.)
Most significant of all, it’s essential to mention that optimization continues to evolve – and unlike some evolutions (see Joan Rivers) it’s largely evolved for the better.
Global Shipping, Meet Global Optimization
For example, until recently optimization couldn’t truly be applied to international shipments, because the number of additional variables and constraints ruled out the possibility of using the relatively simpler linear mathematical models so often used for domestic shipments. But now some engineers and IT professionals have succeeded in deploying an algorithm that bridges the global optimization divide. As a result, optimization has recently become a far more viable option for international shippers that routinely face making supply chain decisions or addressing challenges such as:
• International mode and route selection. In a typical Asia-to-U.S.shipment, companies could be choosing from all-air, air-sea, all-water to the East Coast, water to the West Coast combined with a transload, or West Coast MLB. They also might be sorting through a staggering number of carrier and route options. (For example, in the maritime segment alone, there are approximately 400 liner shipping services providing regularly scheduled sailings, according to the World Shipping Council). Now they can use optimization to rapidly and decisively filter through all of these options as well as expedited offerings such as time-definite ocean shipping.
• Global shipping load utilization. Finding the best combination of ocean container dimensions (which range from 20 to 53 feet), transport arrangements(less than containerload or full containerload) and loading scenarios (single country consolidation, multi-country consolidation or co-loading) is considerably less time-intensive using the latest optimization tools. Plus these tools can help companies plan individual containerloads that maximize cube utilization and minimize shifting while products are in transit.
• Increased risk. Optimization tools cannot fully eliminate supply chain risk, because in the real world business contingencies (such as product delays or changes in vessel schedules), political situations and natural disasters can crop up in an instant. However the better-designed ones can help companies quickly and decisively identify and implement the most appropriate Plan B to ensure that deadlines, cost parameters and other important business rules continue to be met.
• Balancing delivery timing and costs. Companies can weigh all of the above -- finding the best routes and lead times while examining each shipment’s lowest-possible cost options, grouping and building the most efficient loads, and ensuring a constant ability to respond to any supplier, carrier or market changes – against their specific business rules and make changes at any time.
A Final Word
Needless to say, optimization cannot eliminate all of the hard work, challenges and occasional sleepless nights that seem to go part-and-parcel with the decision to source or sell internationally. After all, even though it is a powerful tool, it is still just one tool in what should be a robust and diverse toolbox of many such global transportation business resources. (Others include web-based visibility systems, industry consultants, third-party logistics providers, “local” partners in each country and a strong network of consolidation centers, deconsolidation centers and warehouses.)
Nor is it a substitute for recruiting, hiring and retaining the best logistics talent – because even the most optimally designed plans or mice and men are only as good as the individuals entrusted to implement them.
However in a world where so many other elements such as rising fuel prices and the ongoing truck driver shortage often seem to be conspiring to make the typical transportation professional’s job more fraught with stress, it’s encouraging to know that there are a few things specifically designed to do just the opposite. Any way you look at it, that’s an optimal outcome.
Rajiv Saxena is vice president of global supply chain engineering for APL Logistics, an international provider of supply chain services that recently introduced ShipmentOptimizerTM , the industry’s first global shipment planning platform capable of automatically generating the best shipment plan against three concurrent objectives (cargoes arriving at final destination on the preferred date; maximizing space and load utilization; and minimizing overall transportation costs on a door-to-door basis.)
Or consider what happens each time you add the word “global” to any supply chain. As any international shipper knows, that seemingly small addition comes packed with a host of extra complexities, including:
• Different currencies
• Various time zones
• Diverse infrastructures
• Multiple government agencies that may or may not touch a shipment
• Thousands of additional possible trade lanes
• Countless untested scenarios.
And often it requires an army of professionals, an iron constitution, and many extra hours to successfully navigate them. Fortunately there are several engineering techniques, such as optimization, that can help.
Optimization Re-Visited
The fact that optimization exists is not breaking news. The practice has been around since the 1940s, and over the past two decades, it’s virtually become a household name in the transportation industry.
However like Garbo herself, it’s frequently been misunderstood, which is why it’s helpful to review a few key particulars:
• Optimization is both a mathematical and technological process. It uses a combination of sophisticated systems and various mathematical models (linear, non-linear and integer), and both are highly important to its success.
• The practice is by its very nature predominantly strategic. However, its disciplines are just as applicable to tactical functions, which is why in the logistics industry you’ll frequently hear the term associated with everything from over-the-road freight and distribution center selection and network design to equipment selection and load building.
• Its end result is (as its name suggests) the optimal solution for the challenge at hand – delivered more economically, more quickly, and with a higher level of certainty than simple rule-of-thumb or manual processes.
It’s also important to note that optimization has some highly relevant operating instructions and caveats, among them:
• Just as a Formula One racecar will operate differently depending on whether it’s being operated by a teenage boy or by Danica Patrick, optimization tools won’t work as well as they should unless they’re being applied by career engineers or highly trained technical specialists – because they usually are more complicated than most people realize
• It is a decision support tool rather than a precision tool. It’s ideal for addressing the question of “Which one?” – be it a shipment, a venue or a shipping configuration. But it’s less helpful if your company wants to be 100% certain that the solution recommended is truly the best one or that it will continue to be the best one if you throw in a number of other variables. (That’s why other engineering tools such as simulation exist.)
Most significant of all, it’s essential to mention that optimization continues to evolve – and unlike some evolutions (see Joan Rivers) it’s largely evolved for the better.
Global Shipping, Meet Global Optimization
For example, until recently optimization couldn’t truly be applied to international shipments, because the number of additional variables and constraints ruled out the possibility of using the relatively simpler linear mathematical models so often used for domestic shipments. But now some engineers and IT professionals have succeeded in deploying an algorithm that bridges the global optimization divide. As a result, optimization has recently become a far more viable option for international shippers that routinely face making supply chain decisions or addressing challenges such as:
• International mode and route selection. In a typical Asia-to-U.S.shipment, companies could be choosing from all-air, air-sea, all-water to the East Coast, water to the West Coast combined with a transload, or West Coast MLB. They also might be sorting through a staggering number of carrier and route options. (For example, in the maritime segment alone, there are approximately 400 liner shipping services providing regularly scheduled sailings, according to the World Shipping Council). Now they can use optimization to rapidly and decisively filter through all of these options as well as expedited offerings such as time-definite ocean shipping.
• Global shipping load utilization. Finding the best combination of ocean container dimensions (which range from 20 to 53 feet), transport arrangements(less than containerload or full containerload) and loading scenarios (single country consolidation, multi-country consolidation or co-loading) is considerably less time-intensive using the latest optimization tools. Plus these tools can help companies plan individual containerloads that maximize cube utilization and minimize shifting while products are in transit.
• Increased risk. Optimization tools cannot fully eliminate supply chain risk, because in the real world business contingencies (such as product delays or changes in vessel schedules), political situations and natural disasters can crop up in an instant. However the better-designed ones can help companies quickly and decisively identify and implement the most appropriate Plan B to ensure that deadlines, cost parameters and other important business rules continue to be met.
• Balancing delivery timing and costs. Companies can weigh all of the above -- finding the best routes and lead times while examining each shipment’s lowest-possible cost options, grouping and building the most efficient loads, and ensuring a constant ability to respond to any supplier, carrier or market changes – against their specific business rules and make changes at any time.
A Final Word
Needless to say, optimization cannot eliminate all of the hard work, challenges and occasional sleepless nights that seem to go part-and-parcel with the decision to source or sell internationally. After all, even though it is a powerful tool, it is still just one tool in what should be a robust and diverse toolbox of many such global transportation business resources. (Others include web-based visibility systems, industry consultants, third-party logistics providers, “local” partners in each country and a strong network of consolidation centers, deconsolidation centers and warehouses.)
Nor is it a substitute for recruiting, hiring and retaining the best logistics talent – because even the most optimally designed plans or mice and men are only as good as the individuals entrusted to implement them.
However in a world where so many other elements such as rising fuel prices and the ongoing truck driver shortage often seem to be conspiring to make the typical transportation professional’s job more fraught with stress, it’s encouraging to know that there are a few things specifically designed to do just the opposite. Any way you look at it, that’s an optimal outcome.
Rajiv Saxena is vice president of global supply chain engineering for APL Logistics, an international provider of supply chain services that recently introduced ShipmentOptimizerTM , the industry’s first global shipment planning platform capable of automatically generating the best shipment plan against three concurrent objectives (cargoes arriving at final destination on the preferred date; maximizing space and load utilization; and minimizing overall transportation costs on a door-to-door basis.)
