EFFICIENCY BEHIND THE STEERING WHEEL

Can transport activities be simply and clearly translated into costs per activity? In other words, the costs of sending goods from A to B. 

With the constantly changing distances, drop sizes and convergence of several deliveries at one delivery point, transportation involves ever changing compositions of freight. A network is able to work efficiently if there is a balance between drop duplication, distance between drops and scales of economy. However, establishing and maintaining such an efficient network can be a very complex business. TNO offers an outcome through its dynamic RESPONSE™ network optimisation model that can play a key role in galvanising the transport dynamics.

SWEET AND SOUR

To determine the pay-off, insight is necessary into the structure of the the costs and the values of the key network parameters: the pay-off of the existing network and its optimum operation. and per customer in the optimum operation of the network can be determined. In many cases the total pay-off is known but not usually what it is per customer. In 2008 we have been focusing on this last issue, working out the network synergy of the customers along with the computation. If the return is on a customer is known, we can determine whether that customer is an attractive proposition and thus how the relationship with that customer can be developed in the future. Should the same pricing agreements be retained for that customer or should the contract be terminated? Perhaps an unfavourable customer should be retained but then with a significant price hike. Account also has to be taken of the strategic proportions. Even a loss-generating customer could attractive from a strategic perspective if future growth is expected in his region. It is then a matter of putting up with the sour to get the sweet.

OPTIMISATION

The financial results of the existing strategy can thus be calculated along with the possible future financial results. Advantage can be taken of the opportunities presented by modifying the operation of the network and moving in the direction of optimising the network operation. The other option is to adjust customer agreements. The transporter can then carry out a SWOT analysis and on the basis of the potential financial results this produces, modify the strategic course. The transporter has to establish in the SWOT which transport activities he must focus on and the extent to which these are compatible with the network in which he is active. For an optimum return and management of the return, not only is a dashboard needed in the vehicle but also in the office of the transporter. By developing an instrument that enables the transporter to monitor the composition of the network, the contributions generated by the customers and market trends and developments, the transporter can stay right on top of the transport dynamics and ensure that his network is performing efficiently.