Trusting Technology - Logistics Optimization

Today, numerous software solutions exist to model and optimize a company’s distribution or transportation network – more than the hand can count! Often called decision support software or logistics optimization tools, demand for these solutions has grown as supply chains have become more complex, stretching further across the globe, and being viewed as a competitive advantage.

This wasn’t always the case. Back when I started in logistics in the early 90’s there were only a handful of solutions available in the market and in some cases Third Partly Logistics (3PLs) developed their own solutions in-house. Tackling a transportation network design effort for an inbound JIT automotive plant often involved an Excel spreadsheet and a road atlas.

This worked well for relatively simple and domestic supply chains which could be completed in a short period of time with few calculations. As complexity grows, more variables need to be considered as well as large amounts of data. Manual efforts to complete these calculations are too time consuming creating the need for technology to assist in the effort. The key word here is assist.

Technology alone is not a silver bullet that creates the optimal solution 100% of the time. As I began to use optimization software to conduct complex logistics network designs I found that the technology was useful for providing direction and starting point. The work does not end once the output was completed. Rarely would I get a solution that did not need to be modified or adjusted in some manner.

Your experience and knowledge plays a key role in completing the exercise and truly developing the optimal solution by reviewing the output to make sure it makes sense. Given the amount of variables, calculations and not to mention the accuracy of the data used can create less than optimal solutions. A thorough review of the output can uncover sub-optimal areas of a total solution such as trucks going out of route 300 miles to pickup 50 lbs of freight or locating a warehouse in an area that has very poor transportation infrastructure.

Logistics optimization technology is not a stand alone solution by any means. It must be used in combination or support of the logistician’s expertise to create a truly optimal solution, hence the term support in decision support system.

-Matt Herdus, Senior Manager, Global Supply Chain & Operations