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Minimizing multi-tier transportation costs with smart network routing

Oracle Transportation Management (OTM) is designed to support both shippers and logistics service providers (LSPs). In fact, OTM can be configured to manage all transportation activities in the global supply chain. It integrates transportation planning and execution, freight payment, and business process automation through a single application across all modes of transportation -- road, air, ocean, and rail shipments.

OTM's integrated option--Oracle Transportation Operational Planning--supports all transportation operations, including inbound, outbound, simple point-to-point, complex multi-modal, multi-leg, and cross-docking. It also enables us to validate a shipment through an optimized route.

Network routing is an additional enhancement in OTM version 6.3 through which the shipping cost can be reduced. It also maximizes consolidation opportunities by routing orders from different origins to destinations through a network. Network routing is a new approach to model multi-tier transportation networks. The network routing logic of OTM is a solution for different multi-leg journey problems.

When is network routing recommended?

A network is a combination of locations that represents possible routes for order transportation from a source to destination. Network routing allows multiple cross-dock facilities and also consolidation of orders when appropriate. The flow of orders through a particular network can be determined by many factors like cost of the route, time constraint of an order, equipment constraints if any, and consolidation opportunities available. Network routing can be the best solution when:

  •        The order which is being transported from a source to a destination, may require multiple shipments through intermediate locations
  •         Different choices for intermediate locations are available between a source and destination
  •         Decisions related to routing are taken at the time of planning
  •         Order volumes can impact the routing choice

In network routing the orders flow from a source to a destination via cross docks. Every region will have a representative location. Itineraries and rates need to be created for each leg in a network. An itinerary can have multiple legs and each leg can form a network. When there is a network on the itinerary leg, the network leg substitutes for the itinerary leg.

Let's take an example of orders flowing from one source region to destination via cross dock,

Source region

Xdock

Destination region

Gujarat

Nagpur

Hyderabad

Karnataka

Rajasthan

Indore

 

Within the source region, multiple locations have to be created and each location should be a part of a network leg for the network routing to work efficiently. The routing should be decided based on cost effectiveness, route availability that accounts for order routing constraints, and time constraints on orders if any. Each location will have either ship-from / ship-to / cross-dock roles.

Let's see the locations within the regions and how the network legs are formed. In the below table we can see different regions and the locations from those source / destination regions which are acting as Ship from / ship to or xdock roles and how the network will be designed.

Region ID

Location ID

Roles

Gujarat

Anand

Ship from / ship to

Surat

Ship from / ship to

Ahmedabad

Ship from / ship to, x dock

Rajasthan

Udaipur

Ship from / ship to

Bikaner

Ship from / ship to

Jaipur

Ship from / ship to, x dock

 

Nagpur

X dock

 

Indore

X dock

 

Hyderabad

X dock

Karnataka

Mysore

Ship from / ship to

Hubli

Ship from / ship to

Bengaluru

Ship from / ship to, x dock

 

The orders and their transportation legs would be similar to the below:

Order 1

From manufacturer in Anand to consumer in Mysore

Order 2

From factory in Surat to showroom in Hubli

Order 3

From warehouse in Ahmedabad to retailer in Bengaluru

Order 4

From manufacturer in Udaipur to consumer in Bengaluru

Order 5

From factory in Bikaner to showroom in Mysore

Order 6

From warehouse in Jaipur to retailer in Bengaluru

 

Thus, in the above flow of orders from source to destination region, Oracle's network routing can dynamically make an intelligent decision on when it is ideal to go directly from Ahmedabad to Bengaluru and when it should be routed via cross-dock. If a freight is already scheduled via cross-dock and to the same destination, then it would be a free ride in that case.

Let me elaborate this with the following examples:

  •      There are three orders--one is from Anand to Mysore, another from Surat to Hubli, and a third one from Ahmedabad to Bengaluru. These orders can be transported in the same route through cross- dock and the locations can be added to a single region as an efficient way of transportation planning
  •      Thus, Anand, Surat, and Ahmedabad will be configured as locations under the region of Gujarat with Ahmedabad as the cross-dock for the source location (Gujarat). And Mysore, Hubli, and Bengaluru will be under the region of Karnataka with Bengaluru as the cross-dock location for the destination (Karnataka). Similarly, for the order which should be transported from Udaipur, Bikaner and Jaipur will be the locations configured under Rajasthan region
  •       Now, for the order to flow from Gujarat to Karnataka and from Rajasthan to Karnataka; Nagpur, Indore, and Hyderabad will be taken as the three cross-dock locations
  •     So, if the itinerary leg links to a network, then OTM will use the network which has been configured for bulk planning, provided the appropriate planning parameter has also been configured

The network routing feature in OTM has many more features, which makes it the ideal option to model multiple pathways in a very simple manner. This modeling of routing also provides greater flexibility in the approach and design of networks. By making simple changes in the design of the network, any variations in operation can be accommodated as well. Thus, network routing is set to offer huge optimization benefits in OTM's routing process.

To know more, please attend our session on Network Routing at OTM SIG 2016 APAC Conference (Singapore) and we will be overwhelmed to take you through our solutions.

                                                    Written by: Julie Jose

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