Mastering logistics

complexity:
taking control with technology
 If logistics is the art of nding the most ecient way of
moving goods to meet service requirements, the need
for a sophisticated approach to logistics optimisation
has never been more critical. By taking advantage of all
the benets of the latest technology solutions,
organisations now have the opportunity to improve
operational eciency and gain competitive edge.

This whitepaper explains how technology can turn complexity into opportunity and
outlines the types of benets that can be expected.

The model for road transport and distribution has changed radically, and continues to do so. There was a time
when road distribution was either local delivery from local producers, or the nal mile delivery of goods that had
been transported longer distances by rail or road trunking rst. The typical journey was either point to point - a full
load from a manufacturer or distributor to a factory, wholesaler or distributor or a regular circuit of collections
and drops. An experienced transport manager, or even the driver, could plan a reasonably ecient set of routes
that was achievable and practical.

But the requirements that transport
operations face today are much more
complex. The expectations of both
businesses and consumers have evolved
beyond recognition:
As a result, delivery schedules need to cope with pick-ups from
multiple sources and delivery to multiple destinations. These
may be in combinations that vary signicantly round by round
and trip by trip, or involve both unloading deliveries, and picking
up back loads simultaneously.

Factories and other businesses increasingly
operate to lean and just-in-time principles.
Organisations require smaller
consignments more frequently often
within very tight time windows and to
strict schedules.
Consumers expect to have orders delivered
at their convenience, rather than visiting
the shops themselves.
The sheer variety of goods on oer, their
places of origin, and their channels to
market have increased manifold.
Added to this, rules and regulations have been introduced
aecting everything from driver hours and conditions to
environmental performance and restrictions on permitted times
for deliveries. And in many areas all this has as its background an
ever more congested road network, which makes performance
less predictable.
With these increased levels of complexity it is no longer feasible to
expect even the most skilled and experienced planners to devise
eective routes and schedules manually. Instead an organisation
must look to technology to help manage the complexities of the
transport operation but also to expand and dierentiate in the
increasingly competitive markets it operates in.

...it is no longer feasible to expect even the most

skilled and experienced planners to devise eective
routes and schedules manually.

2 Mastering logistics complexity: taking control with technology

 Learning to love complexity
All this complexity is not of itself a bad thing to be fought against
it is inevitable in meeting the demands of consumers and
businesses. The transport industry has shown and continues to
show its ability to embrace complexity and to use methods and
technologies to turn complexity into advantage.

Transport has become logistics. 3PLs introduced new ways of

managing distribution and new levels of professionalism. Facilities
like distribution centres and methods such as cross-docking and
hub and spoke have been introduced. Logistics networks have
become more complex, with integrated operations combining
...transport and eets and movements to minimise eet sizes, mileage and empty
distribution from a cost running. If you are using a 3PL for any part of your operation, you
will already by beneting from these developments.
centre or overhead to
being a dierentiator Competition in logistics has helped change transport and
distribution from a cost centre or overhead to being a dierentiator
and a source of and a source of competitive advantage. Many logistics operators
have invested not just in facilities and assets but also in IT such as
competitive advantage. telematics and tracking to manage complexity.

Today an operation can have access to the technology that allows

it to not only maximise existing assets but also to introduce
further complexities, condent that these can be mastered to
drive eciency and save money.

So what can a transport operation expect to achieve?

Mastering logistics complexity: taking control with technology 3

 1. The ability to plan better
While our desire for eciency has seen 60%
Reduce overall costs
complexity advancing relentlessly, the over-riding Increase protability
objectives of cost-ecient operational excellence 40%
Reduce carbon emissions
have not changed. Recent customer research Reduce planning time
20%
carried out by Paragon found reducing overall Improve accuracy of planning
costs to be by far the biggest objective for 2016. Integrate with tracking systems
0%

Early route optimisation systems were limited to planning radial deliveries from a single
depot. But as logistics infrastructures have become more sophisticated, so too have the
planning systems needed to optimise them. Major advancements have seen the
addition of functionality including:

multi-tripping street-level routing

overnight runs
weekly scheduling
routes combining deliveries
collections and transfers
central planning of multi-depot operations
full integrated eets optimisation, with
its increased back-loading and reduced
empty running.

The functionality available today should reect and complement any existing business
operation rather than forcing an operator to change the way they do business before
implementing the software.

The outcome is that the route planning software bought today will be capable of scaling
up to optimise route schedules for even the most complex of supply chains. From
transport oces in small regional operations to some of the worlds leading grocery
retailers, all have achieved signicant cost reductions by taking advantage of what is
now standard functionality in route optimisation software.

For most companies considering routing and scheduling software, the pressure from
customers and stakeholders across the business is to do more for less. Cost reduction is
still the major driver.

Whether moving from manual to automated for the rst time, or looking to invest in a
more robust system, the principle is the same. More intelligent routing and scheduling
means that routes can be structured more eciently, with lower total mileage, better
vehicle ll and improved driver/vehicle utilisation, all of which means lower costs.

But the benets need to outweigh any perceived negative impact on the transport
operation. Implementing new software systems can be highly disruptive and may involve
a continuous series of upgrades to achieve the operational nirvana rst anticipated.

4 Mastering logistics complexity: taking control with technology

 2. Making the most of drivers
Drivers are a vital asset. While it is possible to hire in an extra truck at
short notice the same is not true of experienced sta. Achieving the
greatest productivity from the available pool of drivers is clearly vital,
but managing drivers is not just about maximising the team available.

Not only do most countries now have quite strict, and increasingly
enforced, legislation concerning driver hours and rest periods, but in
many countries there is a growing shortage of qualied goods drivers.

Recruiting drivers is challenging given the hassle of congestion,

roadworks, delays at border crossings or factory gates, and often
unsocial hours. To retain good drivers, routes and schedules need to
be fair, reecting realistic and achievable targets; they need to allow
for rest periods, regulations and the days work content.

...managing drivers is not just about

maximising the team available.

Any transport business needs to maximise driver activity in terms of

number of drops or miles driven, but also create a full and fair day plan
that reects likely congestion, the reality of delivery windows and the time
taken for ancillary tasks. In addition to respecting the driver regulations, it
will be positive for driver retention, and retaining good, permanent drivers
is a must for operational stability and reliability.

So how do todays route optimisation systems cope with the diversity of

driver-related regulations and constraints?

Fortunately for todays operators, driver hours legislation in one form or

another has been present in the UK for a long time, so the most advanced
route optimisation systems from the UK have long since implemented
these types of constraints into their algorithms. While dierent countries
may have dierent rules, these will be mere data changes for todays
advanced software systems. Equally, factors such as congestion are not new,
and these are well catered for by the leading systems all of which enable
realistic route planning with full and predictable workloads for drivers.

Mastering logistics complexity: taking control with technology 5

 3. Managing all available resources
Trucks, tractors and trailers are an equally important part of an operation.
Expensive to buy and operate, this is an area of an operation that routing
and scheduling can signicantly impact by improving return on investment
whether vehicles are leased or hired.

As mandatory safety and environmental features, enhanced telematics and

the like increase, so do vehicle-related costs. Resource management
optimisation is not a simple exercise. Vehicles may be multi-shifted, trailers
exchanged during the route of a tractor and drivers may be only trained
and licenced to use particular types of vehicle. Furthermore, only particular
trailers or rigids may be suitable for particular trips because, for example,
they require temperature control or because of contamination risks
between successive cargos.

As a business evolves, the combination of vehicles and drivers

may become more complicated. For example, it may want to
schedule dierent resource types against dierent time frames.
A driver can only work a certain number of hours per day, while
a tractor unit can, apart from maintenance, work 24/7.
...turn the seemingly
Meanwhile, the availability of a trailer, or a rigid truck depends impossibly complex
on depot loading and unloading times.
into a door to the
Whereas the early routing systems were limited to optimising often substantial cost
single-shifted vehicle operations, todays more sophisticated
scheduling systems can arrange for one tractor to be driven by a savings that result.
succession of drivers, hauling several dierent trailers, in a 24-hour
period. This technique of resource managed planning enables
the optimisation of multi-shifted schedules with drivers, tractors
and trailers swapping throughout the schedule. This not only
enables such operations to be planned eciently, but also allows
a transport business to turn the seemingly impossibly complex
into a door to the often substantial cost savings that result.

6 Mastering logistics complexity: taking control with technology

 4. Dealing with legal requirements simply
The road transport industry in many countries has come under increasing regulation in
recent years, ranging from driver hours to emission standards, as well as restrictions on
where and when certain vehicles can operate. This has introduced further complications
to the routing and scheduling equation, especially in urban logistics.

For example, in Europe the introduction of the Euro 6 standard makes it imperative to
optimise the use of compliant vehicles. Some vehicles may need special equipment to
comply with these regulations. Euro 6 standard vehicles are also increasingly in demand
in China.

Many urban areas, from London to New York and Shanghai, operate combinations of
congestion charges and outright bans on deliveries in peak day-time periods. To confuse
matters further, suburban areas may also have bans on night-time deliveries, placing yet
more restrictions on the route schedules.

The London Lorry Control Scheme, and its equivalent in other cities, dictates which roads
may or may not be used during night time hours to counter noise pollution, especially
during the early morning which previously was a peak period for supermarket deliveries.

This area of time-related truck routing constraints is not just a headache for logistics
operators, but also for route optimisation systems, and has been for the past decade.
Why? Because it increases to almost innite dimensions the number of potential
journeys that have to be calculated, making the quest for an optimal manual solution in
a reasonably short time frame impossible.

If a transport operation regularly plans deliveries in dense urban areas then trying to do
this eciently in terms of planning time and use of drivers and trucks will be a
familiar challenge.

Route optimisation software can now manage the extra dimension of time-related
restrictions. This latest development in routing and scheduling software enables
planners to build compliant routes. This will cut the time spent on manual planning,
minimising the impact of schemes like the London Lorry Control Scheme and major
public events on routing and scheduling and lowering the risk of incurring penalty nes.

About Paragon Route Control

Paragon Route Control is standard functionality in the latest version of Paragons
routing and scheduling software. It enables planners to build compliant routes
based on time-related rules, providing a standard way to manage legitimate
deviations including local authority HGV restrictions, road closures caused by
major public events or health and safety requirements.

Mastering logistics complexity: taking control with technology 7

 5. Combining choice, convenience and
protability
For operations making business-to-consumer (B2C) deliveries, or
thinking about doing so, the need to use technology to maximise
resource eciency has never been greater. The expectations for
eective B2C delivery, to homes, or to other drop points, within
ever more tightly dened time-slots, increase relentlessly as
consumers demand ever greater convenience.

But there is another complexity to overlay here. Endemic in todays

B2C world is the customers demand for choice. That is, choice not
just about when to receive delivery, but also where. It could be
their home, their oce, a pick-up point or a store as per the now
prevalent click and collect service. And as for the when
same-day delivery with one-hour time slots are fast becoming the
norm with retailers like Argos leading the charge in the run-up to
Christmas 2015 with their new FastTrack service.

...it is possible to achieve the best

of both worlds ecient logistics
and superb customer service.

So how does transport optimisation dovetail with such extreme

customer service requirements?
While early home delivery transport planning was always done as a batch process,
todays advanced home delivery fullment systems have route optimisation
embedded within the order-taking process. This enables the optimised route
schedules to be built up in real-time as orders come in, and crucially, it allows the
customer to be oered narrow time windows that can denitely be routed eciently
with other deliveries. This means that while the consumer is online placing their
order, they can be oered a choice of time windows there and then, which the
delivery company can be condent of fullling eciently.

When this is combined with customer self-service online or via SMS, and the ability to
proactively update the customer throughout the order fullment process, it is possible
to achieve the best of both worlds ecient logistics and superb customer service.

8 Mastering logistics complexity: taking control with technology

 6. Managing the future
So far this whitepaper has covered the types of challenges that a business can expect to manage by moving
to a comprehensive routing and scheduling system. But what of the future?

As big cities get more congested, central government and local authorities are keen to identify new ways of
cutting down on the number of vehicles converging in these densely populated, urban areas. For example,
in London and Singapore vehicle entry fees have been introduced, while elsewhere authorities are
suggesting deliveries should be consolidated. This involves bringing loads into out-of-town centres where
they can be combined to make the most ecient use of resources, and the least environmental impact,
for example by sharing trailers, regardless of the identities of the shipper and recipient.
Understandably there is some commercial resistance to this idea.

There are several ways in which consolidation could be employed.

There is a local approach for example bringing goods from a
peripheral base into all the shops in a major retail mall,
with a single vehicle eet working for all the retailers.
Alternatively, vehicles used for home delivery
during the daytime and early evening might be
repurposed for night-time deliveries to shops.

A core benet of consolidation planning is to reduce empty running

by the introduction of backloads beyond those of conventional
returns, cages and packaging to the depot. This means picking up
other loads for varying destinations on a plausible route. That
would require easy partnering commercially, and integration
systemically, between many partners from retailers and suppliers
to transport and logistics companies.

Where consolidation involves merging similar city-bound delivery

operations, via out-of-town consolidation centres, there are
substantial nancial and environmental benets to be had.
Increased drop density yields greater productivity, reduced overall
eet size, reduced overall mileage, and less harmful emissions.

Mastering logistics complexity: taking control with technology 9

 Another set of rules? More complexity to manage?
Once the consolidation network has been decided, the result is just
another logistics operation to plan and optimise. These are
generally no more complex than some of the dedicated operations
already developed by the 3PLs and other complexity leaders
and equally can be managed and optimised by todays technology.
The diculty in this case is not the technology required to drive it,
but the level of cooperation needed by the dierent parties
involved to make it work in practice.

Choosing a routing and scheduling software provider with a

proven track record in evolving to respond to industry and
customer needs will ensure that transport businesses can take
such changes in their stride.

While it is important to anticipate every legislative change, most

are debated for years before they are implemented. Paragon
customers have cited managing legislation as one of their biggest
issues. Choosing a routing and scheduling software provider with a
proven track record in evolving to respond to industry and
customer needs will ensure that transport businesses can take such
changes in their stride.

10 Mastering logistics complexity: taking control with technology

 7. Conclusion
As discussed in this whitepaper, transport and logistics operations are
intrinsically complex in order to meet the needs of their customers and
end-users. But where until recently this was an obstacle to ecient operation,
now there is the ability to master complexity and turn it to competitive
advantage. It is not only possible to reduce costs and improve the eciencies of
operations, but also cut the time, eort and cost of planning while making it
ever more responsive to customer needs. By mastering complexity, companies
can achieve the holy grail of reduced cost and improved customer service.

The transport oce is no longer a silo, a cabin at the end of the yard. And it is
no longer just a cost centre or an overhead. By making the best use of new
technology, the transport oce can be a real service dierentiator supporting
and driving the business strategy.

The logistics future is complex, but organisations can make complexity their
servant, not their master.

Do you want to be a master of complexity?

Wherever you are on your logistics journey, it is likely that there are still
further savings and eciencies that you can benet from. To discuss how
technology can help you master the complexity of your operation, why not
get in touch with Paragon today. Talk to one of our experienced logistics
software professionals on +44 (0)1306 732600 or send us an email at
info@paragonrouting.com

Mastering logistics complexity: taking control with technology 11

About Paragon
Paragon Software Systems is a market leader in transport optimisation with over 3,400 routing and
scheduling systems installed in more than 1,100 client sites in 59 countries. Paragon helps companies
reduce transport costs by up to 20% through more ecient deployment of vehicles and drivers.
Headquartered in Dorking, UK and with oces in Dallas, Texas and Shanghai, Paragon is a respected
pioneer in routing and scheduling with over 30 years of know-how.

Paragon is employed by transport operations ranging from just 10 vehicles at a single site to hundreds
of vehicles operating from several sites. The system is used for routing and scheduling optimisation;
managing transport resources; strategic planning; scheduling home deliveries continuously as orders
are being conrmed; and managing the execution of the transport plan in real time using vehicle
tracking technology.

Paragon assists many leading companies with their logistics including ASDA, Royal Mail Group, Harrods,
Sainsbury's, AB Agri, CEVA Logistics, Wincanton, DHL, Norbert Dentressangle, The Linde Group, Fuller's,
John Lewis, Tesco, Martin Brower, Raleigh and many others.

www.paragonrouting.com
Copyright 2016 Paragon Software Systems plc. All rights reserved. All trademarks and registered
trademarks are the property of their respective owners. Paragon is a registered trademark of
Paragon Software Systems plc.