Continuous Moves in OTM

Integrating Inbound and Outbound

Transportation

Continuous Moves
Integrating Inbound and Outbound Transportation in OTM

Chris Starks
Deloitte Consulting LLP
March 26, 2007

Copyright 2007 Deloitte Development LLC. All rights reserved.

Agenda
Strategic Importance of Continuous Moves
Configuration of Continuous Moves within OTM
Continuous Move Scenarios
Cooperative Routing Comparison
Suggested Enhancements for Continuous Moves
Questions and Comments

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Strategic Importance of Continuous Moves

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Introduction to the Benefits of Continuous Moves

Continuous Move (CM) is an OTM function providing the opportunity to link to two or more shipments together to
get a lower cost for the total shipment series. Cost savings are driven from increasing equipment utilization and
capitalizing on backhaul opportunities. The links can be assigned manually or via automated process based on
user defined criteria to form the series of shipments called a CM Tour.
SC Integration

Continuous Moves provide a link between independently planned shipments

Links Shipments
throughout the
Supply Chain

Links inbound and outbound transportation

Connects shipments across multiple business units
Can link to 3rd party shipments to create a CM Tour loop

Cost Modification

Updates
Shipment Cost
Information
Visibility

Provides
Reporting for
Linked
Shipments

Shipment costs are re-rated in OTM

Rates contain conditional CM rules, thereby
adjusting to modify the shipment costs
Deadhead mileage and additional CM charges can
be applied across multiple shipments in a CM Tour
CM Tour IDs applied to shipments provide reporting capabilities
Detailed deadhead mileage
Continuous move charges can be separated from
other base charges to provide CM cost savings

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Integrating Transportation with Continuous Moves

Outbound Shipments from

a distribution center to
multiple customers.

Inbound shipments from

suppliers and outbound
shipments from other
business units.

Continuous Moves link these shipments to increase utilization:

May require adding a vendors shipment to complete a CM tour
Deadhead mileage is added to link shipments between multiple locations

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We Categorize Practices Based on a Capability Model

Stage III
Advanced

Stage II
Common

Stage I
Outdated

Top 5 %
Companies

Top 5 20 %
of Companies

Middle 20 80 %
of Companies

Bottom 80 100 %
of Companies

Leading-edge
practices
based on new
or emerging
technology
or very
innovative
processes

Practices that
are widely
implemented
at leading-edge
companies
within an industry

Practices that are

widely used and adopted
across an industry

Practices which are used

but may be considered
out of date

Usage

Stage IV
World Class

Time
AS A PRACTICE BECOMES MORE WIDELY ADOPTED, IT TRANSITIONS FROM EXCELLENT
THROUGH TO A STANDARD PRACTICE; AND THEN POSSIBLY TO AN OUTDATED PRACTICE.

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Facilitators of World Class Transportation Management

1

Shared Customer-Centric TM Vision

A well articulated Transportation Management vision is

commonly shared and measured across the organization.

Integrated Inbound and Outbound

Solutions

Ability to use outbound and inbound information in the execution

of the transportation solution.

A Scaled TM System

The TM system is capable of delivering timely and optimal

solutions and reports.

Enterprise Integrated TM
Planning & Execution

The integration of TM system will allow for optimized

transportation planning, thus significantly increasing both
efficiency and customer service.

Leveraging Partnership With

Service Providers

The strategic partnering with key suppliers enables company to

maintain a competitive advantage with privileged access to
supply restricted components.

Asset Flexibility & Utilization

Selective outsourcing of transportation activities may enhance

demand flexibility and maximize assets utilization.

CONTINUOUS MOVES HELP BUSINESSES ACHIEVE THESE FACILITATORS

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OTM v5.5 CM Configuration

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Planning Parameter Settings

GC3 has several planning parameters that are used for Continuous Moves.
CM Auto Create and CM Redrive are used for automatically creating CMs from the bulk plan.
CM Max Search Distance, CM Max Search Duration and CM Mode determine the settings for CMs built
directly and via the bulk plan.
Increase the Max Search Distance or Search Duration to increase the possibility of Continuous Moves.

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Rate Offering Configuration

CM Rule Data is found on the last tab of the Rate Offering edit screen.
Multiple lanes can be entered for Continuous Move eligibility.
Exclude Region ID allows for prohibiting continuous moves in defined regions.
The Percent of Empty Cost field determines how to apply the deadhead charge to the shipments in a CM.
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Rate Record Configuration

The rate basis section of the rate sets conditional statements to qualify the rate.
The shipment containing this rate will be modified when the shipments are linked.
There are a variety of rating options for continuous moves. In the example above, the cost is $1.85 if the
shipment is not part of a continuous move and $1.50 if the shipment is the second leg of a continuous
move.
Other continuous move rates include:
- Discount percentages if shipment is in a CM
- Continuous move penalties which act like a stop-off charge for CMs
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Manual Link of Shipments

Shipments can be manually linked together using the shipment action.

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Linking Shipments Manually

OTM provides the previous cost of the shipments and the post-continuous move cost.
Once the results screen is displayed, the shipments are linked together and a CM number is assigned to
the shipment.

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Bulk Continuous Moves

Bulk Continuous Move function is found in the Process Manager section under the Shipment Bulk Plan
This process automatically links shipments together based on the rules of the domain defaulted planning
parameter.
The results screen shows the status and the number of linked shipments.

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Continuous Move Scenarios

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Backhaul Continuous Move Scenario

The Backhaul CM consists of an outbound
shipment to a customer location, a
deadhead (empty trailer) move to a vendor,
and then an inbound shipment to the original
origin. If this loop is performed by a
dedicated carrier, cost-savings result from
the realization that the return backhaul from
the vendor location is essentially a free trip
since the driver was already going to return
to the origin location.
Common strategy already in use by many
organizations.
Often executed by dedicated carriers.

C olumbus - D C

Louisville
Manufacturer

Deadhead costs are not always recorded

properly or factored into the backhaul
decision making process.

2
Lexington
C ustomer

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Configuration for Backhaul Continuous Move Scenario

Strategies
Inbound and outbound planning do not have to be
performed together for this scenario to be successful.
If both groups of shipments are assigned to a
dedicated carrier, use the Bulk Continuous Move
Process to automatically generate the CMs. It may
also be necessary to develop reports and have
someone monitor both inbound and outbound
shipments to identify opportunities.

Configuration
Outbound shipment rate:
Rate Cost 1: X per Mile of Shipment Distance
Rate Cost 2: X per Mile Return Distance
Basis: Shipment Not Part of Continuous Move
Rate Cost 3: N amount as Continuous Move Cost
Penalty
Basis: Shipment in Continuous Move
This value N represents a stop-off charge.

Best suited for dedicated carriers and private fleet

Widening order pickup / delivery windows provide
more opportunity for CMs.

Inbound shipment rate:

Rate Cost 1: Y per Mile of Shipment Distance

Rate offering CM setup:

Consider DOT hours of service regulations:

Apply Empty Miles equally across both inbound and

outbound shipments.

Target full day driver utilization.

Decrease the wait time on the vendor / customer

locations that do not allow for Drop-and-hook
opportunities

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Multi-Business Unit Continuous Move Scenario

The Multi-Business Unit CM consists of a
series of shipments throughout a
companys network. In a manufacturing
setting, a CM Tour could include shipments
starting from the source of raw materials
and ending with final delivery of finished
goods to a customer. The benefits of a
multi-business unit include increased
visibility across the businesss supply chain
and better equipment utilization for
contracted carriers.
Vertical Integration, especially via
acquisition, often results in decentralized
shipment planning.
Each business unit often only plans
outbound shipments and has limited visibility
to inbound transportation.
Continuous Moves increase cost savings for
this scenario due to increased equipment
utilization from over-the-road carriers.

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Strategies and Configuration for Multi-Business Unit Configuration

Strategies
Shipments built across the supply-chain are often
planned independently. Basic OTM shipment planning
may find it more cost effective to use several different
service providers for a set of shipments across the
network before the continuous move is created.
Therefore it is important to either centrally plan
transportation or communicate effectively across
business units to identify continuous move
opportunities.
Centralize shipment planning:
Provides visibility to continuous move opportunities

Configuration
Inbound shipment rate
Rate Cost 1: x per mile of shipment distance
Basis: shipment not part of continuous move.
Rate Cost 2: y per mile shipment distance
Basis: shipment part of continuous move.
Rate Cost 3: s continuous move cost penalty
Basis: shipment in continuous move
The value s represents one half of the typical
stop-off charge.

Outbound shipment rate:

Rate Cost 1: m per mile of shipment distance
Basis: shipment not part of continuous move.

If centralization not possible, develop reports and

custom notifications for shipment visibility between
business units

Rate Cost 2: n per mile shipment distance

Basis: shipment part of continuous move.

Coordinate inbound and outbound shipments:

Collaborate with procurement and scheduling to
develop appropriate freight mix to increase CM
opportunities

Rate Cost 3: s continuous move cost penalty

Rate Offering:
Gauge the max time after delivery setting to allow for
a reasonable window between the delivery of the
inbound shipment and the pickup of the outbound
shipment.

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Multi-Company Continuous Move Scenario

The Multi-Company CM can resemble the
Backhaul or Multi-business scenario, the
difference being that a certain shipment
legs of the CM are shipments containing a
customer, vendor or 3rd party companys
contracted freight.
2

Provides cost savings and increased

revenues.
Requires collaboration with customers,
vendors and third parties.
Beneficial for both dedicated service
providers and contract carriers.

Charlotte
DC

1
Atlanta
Factory

Port of Charleston

Port of Savannah

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Strategies and Configuration for Multi-Company Continuous Moves

Strategies
Collaborate with customers, vendors and freight
brokers for shipment opportunities:

Configuration
Requires entering the external companys order
information into OTM to build the shipment:

Do not violate confidentiality agreements by sharing

over-the-road carrier rates.

Create external company orders using order

templates or integration.
Use Involved Parties to signify that this is a dummy
shipment only for continuous moves

Identify loops and backhauls within your service area.

Use freight brokers if collaboration with vendors or
customers is not possible.

Consider DOT hours of service regulations:

rd

Strive for 3 party freight that helps maximize a

drivers daily utilization.

Apply specific rate records to only be used for 3rd

party freight.

3rd Party / vendor / customers freight rate:

Rate Cost 1: Apply nominal per mile shipment
distance cost.
Rates purpose is only to allow for shipment
creation.

Focus on Core Competencies

Do not become an over-the-road trucking company.
Equipment availability to is the top priority.

Actual Rate:

Avoid hazardous materials if driver and equipment

not licensed for it.

Use most effective strategy from backhaul or multibusiness unit scenario

Do not sacrifice service to your own company for

brokered or contracted freight.
Consider equipment capacity when accepting 3rd
party freight.

Provide CM penalty for stop-off charges.

Rate Offering:
Apply Empty Miles based on the contractual
agreement with the 3rd party shipper.

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Considerations and Strategies across all CM Scenarios

Centralize routing operations
Shipment
Planning

Service Provider
Diversity

Pickup and
Delivery Dates

Take ownership of shipment planning:

Optimal service provider selection relies

on visibility to multiple shipments
planned at varying times.

Collaborate with vendors to identify

backhauls and shipment loops.

Design continuous move scenarios in

accordance to the structure of your
service providers

Consider possible CM opportunities

when determining long term strategy for
service providers

Work with procurement and sales to

increase order lead times where
possible

Communicate with customers and

suppliers:

Transportation cost savings can often

justify increasing order lead times

Develop reports to track costs

associated with CMs
CM Reporting

If possible, convert pre-paid suppliers to

collect.

Records deadhead distances

Visibility to Continuous Move penalties

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Provide incentives to modify delivery

window to allow for CMs.

Use CM data to assist in carrier contract

negotiations.
Beneficial for proving equipment
utilization for over-the-road carriers.

Cooperative Routing Comparison

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Cooperative Routing
Cooperative Routing (CR) is a new module available in version 5.5 that helps identify backhaul loops and
shipment series by analyzing a businesss historical shipment data. OTM uses this data to create Cooperative
Route Template, which identify lanes that can be linked together. The execution piece of Cooperative Routing
can assign orders to these routes automatically.
Comparative Analysis

Continuous Move

Cooperative Routing w/ Execution

Backhaul Allows for CM opportunities for postbulk plan multistop outbound and
inbound shipments.

More effective for consistent origindestination pairs and single pickup/single

delivery shipments.

Multi-Business Unit Requires centralized planning or

significant communication across the
organization.

Assigns orders directly to the appropriate

service provider and shipment leg.

Multi-Company Effective for linking with multiple 3rd

party shipments, especially freight
brokerage, where historical data is
often not available.
Overall Best practice for dynamic supply chain
with inconsistent order data and
forecasting.
Can be used in conjunction with
Cooperative Routing
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Limited by the availability of non-company

data, but can be successful if customer /
supplier shipment info is available.
Best practice for vertically integrated
supply chain businesses and those with
consistent shipment forecasts.
Excellent at identifying CM opportunities.

Continuous Move Enhancements

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Possible Enhancements to Continuous Moves

Optimization

Analyze CMs in
Shipment
Optimization

Issue: Shipment bulk plan does not consider CMs when optimizing solution
Would allow OTM to consider CM possibilities when
building original shipments.
CM Auto Create is a post-optimization process

Ease-of-Use

Issue: Cannot trigger CM bulk plan from shipment results screen

Add Bulk CM to
Shipment Actions

Would provide user more control of CM Auto

Create process
Removes Saved Query modification and Process
Manager trigger.

Flexibility

Add Planning
Parameter Set in
Bulk CM

Issue: Bulk CM uses the domain defaulted planning parameter set

Would allow for varying CM parameters for different
shipment regions or business units.
Similar to the shipment bulk plan parameter selection
capabilities

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Questions and Comments

Contact Info:

Chris Starks
Deloitte Consulting LLP
cstarks@deloitte.com
(704) 887-1593

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