Any time Walmart speaks about what it is doing in logistics, I’ll listen. In March, Steve Simpson, Senior Manager of Transportation Technology at Walmart, participated in a webinar on how Walmart is optimizing outbound loads through its implementation of ORTEC‘s routing and load-building solutions (ORTEC is a Logistics Viewpoints sponsor).
A couple of caveats need to be made here. Walmart is not using ORTEC across its entire transportation network; it is using this solution to support multi-stop outbound perishable loads to its grocery stores. Where possible, the routing includes backhaul stops at supplier locations.
Secondly, Walmart did not report its ROI from this specific project. Steve did say, however, that the company saved 4 million gallons of diesel fuel by driving 28 million fewer miles while carrying 65 million more cases. However, Walmart has many improvement projects going on simultaneously. While the ORTEC solution surely contributed to those results, there is no way to know the extent of that contribution.
What makes the ORTEC solution special is that the routing and load-building problems are not solved in isolation. In other words, it is possible to build fuller trailers, but if that results in trucks travelling too many miles, those trailer-building savings are illusory. Further, it is possible to build a multi-stop route that minimizes overall route mileage, but if trucks are only half full, that is also not optimal. The ORTEC system provides the optimal low cost solution by solving both problems simultaneously.
What I found oddly encouraging is that even Walmart, a company famed for its use of technology, had a few hiccups during the implementation. The most interesting was a cultural issue. Walmart has historically hammered into its associates the need to build full trucks. And Walmart has for years measured the associates on how well they have done this. Now the optimal solution may be a truck less full than the planner is comfortable with, but which nevertheless optimizes savings. Basically, if a planner adds a stop just so he can add another 100 pounds to the truck, there is a good chance that is not the optimal solution.
Secondly, in the supply chain execution area, it is very common to hear that inaccurate item, case, and pallet weight and dimensional data is a key factor in delaying projects — the “garbage in, garbage out” problem. This was also true for Walmart, something I found surprising.
In conclusion, this was quite a coup for ORTEC. It is very, very difficult for software vendors to get Walmart to speak publicly about how it is using technology to improve its supply chain. Also, Walmart has, and deserves, a reputation for having one of the best supply chains in the world.