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White PaperUsing Transportation OptimizationSoftware to Improve Supply ChainEfficiencyUltra Logistics, Inc.17-17 Route 208 North, Suite 160Fair Lawn, NJ ShipTMS.com

Using Transportation Optimization Software to Improve Supply Chain EfficiencyAccording to theOnce considered by only the largest businesses,Transportation Optimization is a strategy beingadopted in greater measure by companies of allsizes. Grappling with volatility in demand as well asincreasing transportation-related costs, businessesof all sizes are looking to supply chain managementsolutions such as emerging transportationoptimization software to help drive and maintaincompetitive advantage.National PrivateMore mature elements of supply chain management automation –28% of truckssystems (TMS) – already enjoy widespread adoption and theTruck Council,on the road inthe US arepartially empty,in spite of highfuel costs.like enterprise resource planning (ERP) systems, warehousemanagement systems (WMS) and transportation managementbusiness community is well-informed about their capabilities andefficacy.As those tools settle into years of industry-standardusage, supply chain managers are turning their attention to otherniches within the supply chain where automation technology maybe useful in unlocking additional savings and efficiency.Transportation optimization software is one such area enjoyinggreater scrutiny today.Like all emerging technologies, earlyadopters face significant risks and hurdles. However, those thatare successful gain significant advantage and blaze the leadershiptrail for others to follow.Understanding the underlying precepts behind any strategy makeit more likely to be properly, and thus successfully, applied. Thisdocument will examine the needs that prompted the rise oftransportation optimization technologies and the way successfulusers of the emerging technologies achieved their goals. 2013 UltraShipTMS All Rights Reserved 1-800-731-75122

Using Transportation Optimization Software to Improve Supply Chain EfficiencyMissed OpportunitiesTwo of the biggest missed savings opportunities in transportationmanagement involve load planning and shipment routing. Loadplanning refers to how products are packed and loaded intotrailers or containers for shipping. Shipment routing is the processof identifying the most efficient routes for freight between a givenset of delivery points. According to the National Private TruckCouncil, 28% of trucks on the road in the US are partially empty, inspite of high fuel costs. This dichotomy is caused by a number offactors, not least of which is poor transportation network visibilityand insufficient or inadequate systems for use by logisticspersonnel to address these problems.Until the recent advent of transportation optimization software,the complexity of the calculations – factoring in weights,dimensions, densities and other product variables such as leadtime, loading times, shipping hours and transit times – was a timeconsuming and difficult process to manage. For organizationsmanaging several loads a day, the process was tolerable usingmanual processes. However, for companies shipping hundreds ofloads a day, this process was overwhelmingly labor intensive tosuch a degree that many chose not to emphasize optimization as astandard practice. In addition to these complexities, load plannersand logistics personnel often lacked access to such keyinformation as transportation rates during in the planningprocess. This prevented them from seeing the financial impacttheir planning decisions had on the bottom line. As a result, mostwere saddled with planning and routing that was not as costeffective as it could have been.Moreover, transportation executives lacked effective analyticaltools and reports, rendering them unable to quantify, for buyersand sales staff, the impact of business rules and policies ontransportation and distribution costs. This handicapped anorganization’s ability to mitigate improper customer or supplierbehaviors that cost their companies money. 2013 UltraShipTMS All Rights Reserved 1-800-731-75123

Using Transportation Optimization Software to Improve Supply Chain EfficiencyAll these factors together resulted in an unacceptably highfrequency of underweight loads, out of route miles, latepickups/deliveries, wasted transport costs and reducedprofitability.Automation Technologies to the RescueToday, innovative, strategic-minded companies are overcomingthese challenges using software known as transportationoptimization systems to automate their daily shipment schedules.These applications quickly and efficiently build and routeoptimized loads for greater cost effectiveness, adding significantsavings and improved on-time performance.Best-in-class optimization tools fully integrate with EnterpriseResource Planning (ERP) ordering systems and TMS(Transportation Management Systems), processing anywherefrom a dozen to many thousands of shipments– inbound oroutbound – in a single pass, consolidating the loads, routes anddeliveries for significant savings. Whether moving freight bytruck, train, plane, ship or rail, today’s leading optimizationsolutions are highly configurable and flexible enough to meet theneeds of any business. Successfully implemented optimizationsoftware can deliver anywhere from 10 to 20 percent savings onshipping costs and logistics staff time.So what is involved in the successful implementation of suchtechnologies? How can an organization avoid the failedimplementations which characteristically plague early adopters ofdisruptive technologies such as this?Documenting ProceduresImplementation of a transportation optimization tool should beginwith a comprehensive knowledge transfer process. Organizationsshould seek a provider with ample expertise in both logistics andIT to effectively complete the task of mapping out existingtransportation processes and procedures via collaboration withtheir own team of logistics professionals. During this process, theprovider and the company’s logistics team should query thecompany’s transportation and logistics staff to extract the tribalknowledge they possess outside of any standardized processes. 2013 UltraShipTMS All Rights Reserved 1-800-731-75124

Using Transportation Optimization Software to Improve Supply Chain EfficiencyThis should include detailed review of shipment histories, whichhelps all parties better understand the scope and extent of theentire supply chain. The output of this knowledge transfer servesto uncover undocumented business processes the optimizer willhave to address.Next, the cross-functional group should map company locations,customers, vendors, products and the unique shipping rules foreach. These rules would be programmed into the optimizer. Bybuilding company-specific processes into the system, informationthat may exist only in the minds of legacy users is captured,validated and, if proven effective, codified in the tool. Thisprovides continuity of business rules and best practices that canbe adhered to across the entire organization.Integration and ConfigurationWith the knowledge transfer portion of the implementationcomplete, best-in-class optimization software moves toward theintegration and configuration process. Companies shouldperform due diligence to ensure any selected provider maintainssufficient expertise to ensure seamless integration with ERP ororder management systems and Transportation ManagementSystems (TMS).A truly flexible and configurable optimization tool must be able toadapt to the unique requirements of any company’s business.There are an endless number of permutations that anoptimization tool may be called on to accommodate. For example,two producers of a very similar product may have very differentlocations, customer requirements and storage capacity in theirwarehouses requiring different pickup frequencies. Optimizersallow all of these variables to be built into the system, ensuringestablished standards are followed; no matter who is coordinatingthe shipping that day. The best optimization system is one that isfully flexible and expandable, allowing for the addition of as manyconstraints and filters as needed as business grows and changes. 2013 UltraShipTMS All Rights Reserved 1-800-731-75125

Using Transportation Optimization Software to Improve Supply Chain EfficiencyEven the most robust optimizer will be of little use if it is notseamlessly integrated with the TMS systems being used by mostcompanies today. The optimization tool must provide cleanorders to the TMS either through EDI or direct export, which canbe quickly sent to carriers to reserve trucks ahead of thecompetition. Fully integrated with a TMS, an optimizer worksquickly and efficiently, reducing the need to rebuild loads androutes, increasing lead-time. Other benefits of integrating anoptimizer into transportation management processes include: Reduced shipping costs and environmental impactMaximized truck utilizationOptimized mode selection, minimizing less-thantruckload shipmentsReduced transit times and improved efficiencies vialonger lead timesImproved order processing efficiencyReduced carrier-missed deliveries, idle times anddetention costsThe LoadFusion Optimizer from UltraShipTMSBuilt by the transportation and IT experts behind the acclaimedUltraShipTMS solution, LoadFusion not only helps improveshipping efficiency and reduce transportation costs, but it is alsoa powerful business tool that helps organizations with costmodeling and strategic business decisions. The optimizationengine is offered as a standalone product or integrated as part ofa complete UltraShipTMS solution.LoadFusion is a proprietary optimization engine applyingloading and routing algorithms to build and route shipmentsmore quickly and efficiently. LoadFusion imports orders fromexisting ERP or order management systems, geo-coding thepickup and delivery points for the orders and clusteringdeliveries according to pre-set criteria. LoadFusion then buildsloads, routes and stops with the fewest miles practical andallowable, efficiently comparing transportation modes and ratesin near real-time. 2013 UltraShipTMS All Rights Reserved 1-800-731-75126