OR/MS Today - August 2001|
Third Party Logistics Provider puts transportation planning package through its paces
By Mark Peterken
The Council of Logistics Management has adopted this definition of logistics:
Logistics is that part of the supply chain process that plans, implements, and controls the efficient, effective flow and storage of goods, services, and related information from the point of origin to the point of consumption in order to meet customers' requirements.
This review of TransPro, a product of CAPS Logistics, Inc., is written from the perspective of a Third Party Logistics (3PL) Provider.
Third Party Logistics Providers allow companies to outsource all or part of their supply chain to an outside entity. They offer services in facilities management (leasing, manning, operating), transportation management (managing outbound and inbound freight through the use of commercial carriers, dedicated fleets, etc.) and consulting (supply chain decision evaluation). It is estimated that the U.S. 3PL services market will reach $85 billion by 2002 [Delaney and Wilson, 2000].
Our company is five years old. Our business plan called for a proprietary transportation management system (TMS) to handle order management, and required the capability to "bolt-on" commercial packages (optimization packages, warehouse management systems, messaging systems, etc.). Each of our clients has different requirements from an operational perspective (costs per mile, per lb/cwt, per hour), reporting perspective (cost per gallon, cost per pallet, cost per linear foot) and invoicing perspective (fixed and variable costs, pure fixed costs, pure variable costs, shared savings, etc.). We must accommodate each client's need to be able to adapt to their requirements quickly and easily.
What is TransPro?
TransPro is one of a suite of products offered by CAPS Logistics, Inc. We also utilize Supply Chain Designer (supply chain planning) and RoutePro (routing and scheduling for dedicated fleets). CAPS releases major revisions of its suite every one to two years, and we are currently running version 7.1. As described by CAPS Logistics, "TransPro is a software package that optimizes planning & operational transportation decisions involving freight consolidation, mode/carrier selection, and pooling."
At a minimum, TransPro requires three input files:
How do we use TransPro?
We use TransPro in two roles. The first is as an analytical tool, responding to requests for the outsourcing of freight management. Companies will traditionally look for a cost and savings estimate resulting from 3PL management of their freight flows. We gather historical information that allows us to create an environment within TransPro that reflects the requirements of the project (e.g., opening/closing times, delivery windows, product requirements, vehicle capacities). Once the "environment" is created, historical orders are fed through the model and the results analyzed. In conjunction with our operational personnel, we then fine-tune the model (change parameters) to reflect how we want to operate the project. Once this is completed, pricing is attached and a response submitted.
We also use TransPro in an operational mode. Several times a day, live orders from our clients are imported, validated, routed and exported to our Order Management Center, where they are tendered to carriers.
Before routes can be generated in TransPro, the environment must be created. These are termed "Systems." Each of our clients has their own individual System that is opened prior to optimization. It contains the location of the order file and its structure, the carriers and rate structures to be used, the operational parameters, and the export file locations and structure. In the dynamic environment where we are routing across multiple clients we may open and close a System six or seven times a day. So our needs are for an easily customizable tool that can effectively model across different industries and accurately reflect their idiosyncrasies, yet is robust enough to be used in an operational mode, often at remote locations.
We run TransPro on PCs with a minimum of 500 MHz and 256MB of RAM. Though it will run on less powerful machines, it takes a significantly longer time to optimize. TransPro runs on a Windows platform.
TransPro allows the operator to choose different optimization algorithms depending on the problem, and we have seen significant savings through matching the correct algorithm to the individual project. There are four routing algorithms available:
As part of a System set-up, tariffs can be loaded reflecting contract rates and for analytical purposes average tariffs can be entered. TransPro also allows for the creation of custom tariffs, which aids in the benchmarking process.
Receiving/shipping windows can be set by site or order to reflect when an order can be picked up and delivered, forcing actions to occur within these windows.
Vehicles are created within the System and can have up to three quantity fields for capacity (e.g., weight/cube/linear feet). This ensures the shipping of low weight/high cube product such as feathers can be mixed with high weight low cube (liquids) and stay within the overall capacity of the vehicle.
TransPro's "Mateability" function further constrains how orders are shipped. For instance, we could ensure certain groups of product could only go on certain vehicles (liquid products on tankers, frozen foods on reefers, urban customers on smaller vehicles).
Ease of Use
TransPro provides two menus (Administrator and Dispatcher) that can be configured to restrict access to portions of the tool. This allows pre-configuration at corporate and the ability to "lock down" the settings before sending out to the field. The user interface is a familiar Windows-based one with pull-down menus and drag-and-drop capabilities, as shown in Figures 1, 2 and 3. The open architecture allows access to all data tables and the ODBC functionality allows import and export of data from spreadsheets and databases.
Figure 1. TransPro-generated routes.
Within the program, CAPS has their own proprietary language, called MODL, which is similar to Visual Basic. MODL allows us to hook into the core program at various stages to perform modifications (e.g., modification of the output file structure to fit our own TMS requirements). Applications can be scripted with MODL or Visual Basic.
Figure 2. System Properties menu allows access to a wide range of variables that can be modified to reflect reality.
Documentation is in the form of an interactive help file coupled with online (www.caps.com) and telephone support. The CAPS Logistics suite of products contains sophisticated modeling tools with a large number of parameters that must be configured prior to operating. This complexity gives their products flexibility. I recommend attending their training courses that are held throughout the year.
Figure 3. Route Details provides optimizer with information on pickup and delivery times, miles, hours and cost.
For the 3PL market, where new demands are being placed on the Engineering and Operations department daily, you need a package that is extremely flexible. Our industry will not accept pushbacks on customer demands. We are currently optimizing almost $90 million annually of freight movements through TransPro and generating from 9 percent to 15 percent savings for our clients. These models are a necessity in operations with high volume freight movements. It is for this reason that we picked TransPro and continue to work with CAPS Logistics and their other product offerings.
Mark Peterken is the Senior VP-Logistics Engineering for NFI Interactive Logistics, a $120 million Third Party Logistics Provider based in Cherry Hill, N.J. Prior to this he was with Menlo Logistics as a Senior Logistics Analyst. He earned a degree in Transportation from Aston University in Birmingham, United Kingdom, where he worked for The British Oxygen Company in various operational and analytical roles before moving to the United States in 1990.
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