Traditionally, most private fleet operating businesses have viewed the private fleet as a separately managed entity that was typically focused on outbound distribution. In some cases, the fleet would have static backhauls for inbound goods. For-hire carriers were typically managed by a different team. We are seeing an increasing trend in customer interest in solutions that integrate the planning and execution functions of both private fleet and for-hire carrier operations.
Integrating the planning and execution of private fleet and for-hire raises some interesting challenges. While the objective is usually to provide the lowest cost of delivery, the requirements for pricing, planning, and executing private fleet and for-hire assets, however, usually involve a very different information and business process. Unifying the data and business processes for effective control without becoming overwhelmed by complexity can be a significant issue. Before examining how to address these challenges, it is important to first look at the various considerations companies must take into account.
Assets vs. Agreements
To effectively manage private fleet operations, managers must consider such elements as asset utilization, driver and vehicle availability, driver skills, driver performance management and pay considerations. They must also take into account compliance issues, such as hours of service, vehicle inspections and fuel tax reporting. These are all significant factors in the planning and execution process. Having access to the detailed information and procedures for managing the people and assets required to operate the fleet is the basis for the successful optimization and execution of fleet-based deliveries.
For purchased transportation, the asset management considerations are typically not a significant concern, with the possible exception of specialty transport. The primary basis for optimizing and executing for-hire transport activities is ensuring that suppliers on the transport lanes meet contract conditions. These include pricing agreements, coverage areas, equipment types (but not necessarily quantities) and in some cases, volume agreements. Having a set of reliable carriers on a lane ensures availability when volumes spike or in cases where a carrier is short of equipment and has to turn down a tendered load.
Planning and Execution
While the general basis of modeling private fleet and for-hire carriers may boil down to assets versus agreements, things get much more interesting when looking at the planning and execution requirements. Planning for fleet operations requires a strong handle on the details that drive resource utilization, stop assignments, and route scheduling. To accurately create multi-stop routes within and across days, it is essential to accurately calculate pre-trip, during-trip, and post-trip stop service times, detailed mapping, restrictions, driver skills, precise pickup and delivery time windows, and dozens of other factors.
A similar level of detailed control is also needed for dynamic dispatch and tracking. Near real-time updates on truck position, route and stop status (en route, arrived, departed, etc.) initiated by either the driver and/or geo-fence penetration, must feed back into the scheduling engine. The scheduling engine must then understand these events and be able to intelligently update the route’s current schedule status. It must also predict the future stop schedule and provide warnings based on the downstream impacts of route schedule changes. Decision support provided by the scheduling engine must also be aware of the current status of the route in order to properly advise on how to insert new jobs into a route’s existing stop plan.
For purchased or for-hire transport, multi-stop routing is only one of the planning options. Shipment consolidation, pooling, continuous moves and mode selection based on disparate carrier pricing agreements must be considered. The planning activities are typically subject to a delivery day to be followed up with a specific appointment time. The shipper planning the route for the for-hire carrier is not concerned with the truck’s point of origin or destination after their load is completed, or managing the driver’s hours. In other words, the shipper only needs to provide feasible plans that adhere to the contract, since the rest of the details are the burden of the carrier.
Executing loads with for-hire carriers entails message-based load tendering in a variety of forms, including network-based communications, web portals, fax machines, emails and phone calls. Adding the option of a private fleet into the mix of for-hire carrier pricing, modes, and equipment options provides an entirely new dimension to the analysis of which option to use when and where.
Successfully Combining Private Fleet and For-Hire
The details of how to plan and execute across private fleet and for-hire operations is complex and requires the combined capabilities of both a fully-featured route planning and dispatch solution and a transportation management system. These traditionally distinct systems must also be combined in a way that provides excellent usability, flexible business processes, and the ability to address the ebbs and flows between order management systems, carriers and fleets.
When uniting private fleet and for-hire planning and execution, customers should consider route planning and dispatch solutions that share the same technology platform as their transportation management solutions. This approach enables these solutions to be deployed together and accessed via a single sign-on and an integrated navigation plan. These solutions must support workflows that allow freight to be analyzed against both private fleet and for-hire functions at the same time. Business rules also should be incorporated that allow operators to override standard cost metrics to define how and when a private fleet option must be used. The platform should also support the movement of freight back and forth across the private fleet and for-hire options as daily plans evolve.
Without this advanced level of integration, it is very difficult to take totally disparate routing and transport solutions and arrive at a cohesive and useable solution. By combining private fleet and for-hire planning and execution in this manner, customers are able to achieve improved operational results.
Ken Wood is Senior Vice President, Product Strategy, Transportation and Mobile Resource Management at Descartes Systems Group. Ken is responsible for defining all product strategy for the Descartes transportation management and mobile resource management suite of solutions. Ken brings to Descartes over 14 years of experience in supply chain management software including transportation management, routing and scheduling, and supply chain planning and redesign. During his career, Ken has worked with leading supply chain software providers such as CAPS Logistics, i2, and Centricity in consulting and product management roles.