Transportation Guru Vehicle Route Optimization

We enable companies to: LLamasoft Overview We are: The global leader in supply chain design technology & solution services Focused 100% on supply chain modeling & scenario analysis Headquartered in Ann Arbor, MI with support centers around the world We enable companies to: Optimize their end-to-end supply chain operations Reduce corporate risk and identify major cost savings Perform continuous what-if analysis

Automotive / Industrial Manufacturing Sample Customers Automotive / Industrial Manufacturing Consumer Goods Defense Hi-Tech / Electronics Food Beverage Life Sciences Grocery Logistics Apparel Manufacturing Petroleum Public Health Retail Chemical

Technology

Supply Chain Guru A Complete Supply Chain Design Platform An Intuitive User Interface for complete control of Supply Chain Modeling and Design Activity A Supply Chain Intelligence Database with reference data, and pre-configured data connectors A Design Engine containing multiple integrated solvers, operations research algorithms, and simulation engines Network Optimization Vehicle Route Optimization Inventory Optimization Enterprise Simulation

Four Components of a Comprehensive Design Solution Network Validation Customer Service Operational Metrics Safety Stock Service vs. Inventory Replenishment Frequency Inventory Optimization Simulation Network Optimization Vehicle Route Optimization Optimal Transportation Routes Inbound shipment consolidation Outbound shipment consolidation Facility Locations Customer Assignments Mode Selection

Transportation Guru Creating Multi-Stop Vehicle Routes Vehicle route optimization (VRO) that creates multi-stop vehicle routes Uses optimization to design routes for: Inbound Consolidation Outbound Consolidation Periodic Shipment Balancing Continuous Moves Backhaul Continuous Moves Interleaved Shipments* Asset Planning* Fully integrated within Supply Chain Guru Transportation Optimization Determine optimal multi-stop routes using detailed cost models -Inbound Consolidation: Consolidation of goods from multiple suppliers to warehouse -Outbound Consolidation: Consolidation of deliveries from distribution centers to retail stores -Periodic Shipment Balancing: Regular balanced deliveries across a fixed weekly schedule -Continuous Moves Backhaul: Take advantage of empty miles by optimizing pickups after last delivery is made on outbound route -Continuous Moves Interleaved Shipments: Interleaved pick-ups and drop-offs within cohesive routes -Asset Planning: Balance optimizing fleet size while finding good routes * Coming soon!

Network Optimization vs. Vehicle Route Optimization Determine optimal multi-stop routes using detailed cost models Network Optimization Uses point-to-point lanes and simplified cost models

Network Optimization vs. Vehicle Route Optimization Design supply chain network using point-to-point lanes and simplified cost models Vehicle Route Optimization Determine optimal routes for inbound and outbound shipment consolidation

Mission of Transportation Guru Technically sound vehicle routing program Extensive what-if scenario capabilities Extension of network design into much needed analyses within the same model structure Single software platform integrating multiple components of network and transportation system design What it is A Transportation Management System (TMS) What it is not

Transportation Design Questions How should I consolidate shipments to build multi-stop routes? Should we ship direct from the vendor or go through the DC? How much savings will I see if I optimize my baseline existing routes? Are there backhaul opportunities? How do my routes change with low, average, and high volume shipment levels throughout the year? Are there network synergies? Opportunities to consolidate transportation systems among business units? How do route costs compare to LTL and parcel costs? Should we consider a 3PL in addition to our private fleet? How do I balance my shipments across a weekly schedule? What is my allocated route cost by shipment? How do I balance my facility costs versus transportation costs? How do I balance my drivers workloads?

Transportation Guru Data Flows Inputs (Required) Outputs Route Summary Sites Stop Details Shipments Vehicle Route Planning Delivered Shipments Transportation Assets Segments Asset Availability Invalid Shipments Rate Unroutable Shipments Inputs (Optional) Business Hours Transit Override Relationship Constraints * Valid Schedules * Periodic VRP Only

Example VRP Parameters and Constraints Shipments Delivery and pickup time windows Priority Fixed and variable loading/unloading time Business hours Road distance & transit time calculations via PC*Miler, ESRI, Bing Assets Capacity: Weight, Cube, Units Second compartment capacity DOT Hours of Service Max stops, distance, time, waiting time per route Max distance between stops Round trip or one-way Rates Per distance, stop charges, fuel surcharges, min charge, discounts, driver hourly, service unit cost Step functions: banded mileage, first stop free Location based rates: origin, last destination, farthest destination Compare LTL/Parcel rates – SMC3 RateWare XL, FedEx, UPS integration Relationship Constraints Prevent products from shipping together Force products on certain assets Prevent assets at certain locations Prevent certain shipments being combined Force certain assets with lift gate to locations

Transportation Guru Software Demonstration

Algorithm Overviews

Standard Inbound or Outbound Consolidation of pickups or deliveries for multiple suppliers or customers into cohesive routes What can the Standard VRP solve? Identify shipment consolidation opportunities to reduce transportation costs by creating multi-stop vehicle routes What are the benefits? Utilizing Standard VRP Optimization There are many ways to apply standard VRP optimization technology. Here are just a few examples: Instead of running LTL lanes, multi-stop vehicle routes can be run to reduce overall costs Optimize existing baseline routes to identify better shipment consolidation and route sequences Create high, average, and low volume routes to address seasonality shipment volume shifts Adjust transportation constraints to identify how route structure changes Determine how Department of Transportation (DOT) regulation changes affect route structure  

Periodic Vehicle Route Optimization Scheduling optimization on top of standard VRP to identify how frequent and when to deliver or pickup on multi-stop routes What can the Periodic VRP solve? Determine schedule for multi-stop vehicle routes to minimize costs while adhering to scheduling requirements What are the benefits? Utilizing Periodic VRP Optimization There are many ways to apply periodic VRP optimization technology. Here are just a few examples: Identify frequency of deliveries or pickups balancing contract requirements and transportation costs Determine delivery or pickup schedule for all locations while considering transportation system constraints Balance shipment schedule throughout the week  

Continuous Moves Backhaul Optimization Identify the most efficient inbound pick-ups following the last delivery of an outbound route What can the Backhaul VRP solve? Reduce the overall drive time required and generate significant cost savings What are the benefits? Utilizing Backhaul Optimization There are many ways to apply backhaul optimization technology. Here are just a few examples: Retailers can pick-up returns from stores following deliveries and bring them back to the DC Following deliveries to retail stores, trucks can pick up materials from suppliers and bring to warehouse 3PL or carriers can make deliveries and then fulfill pick-up requests on the way back Direct store delivery trucks can pick up empties or expired goods following store deliveries  

Continuous Moves Interleaved Shipments Optimization Interleaved pick-ups and drop-offs within cohesive routes What can the Continuous Moves Interleaved VRP solve? Create multi-stop routes that include pickups and deliveries interleaved throughout route to minimize costs What are the benefits? Utilizing Continuous Moves Interleaved VRP Optimization There are many ways to apply Interleaved VRP optimization technology. Here are just a few examples: Retailers can create routes that move product between stores Warehouses can transition inventory to other facilities with inter-facility routes New product and returns can be considered on one route 3PL’s can consider delivery and pickup requests during a single route  

Asset Planning Optimization Balance optimizing fleet size while finding good routes What can the Asset Planning VRP solve? Ability to identify efficient multi-stop vehicle routes while minimizing asset utilization What are the benefits? Utilizing Asset Planning VRP Optimization There are many ways to apply Asset Planning VRP optimization technology. Here are just a few examples: Determine optimal private fleet size Utilize optimization parameter to identify how many assets are needed to run optimal routes Minimize private fleet and 3PL carrier assets Consider which 3PL carriers to use in addition to private fleet  

Transportation Guru Use Cases

Transportation Guru Customer Use Cases LTL vs. Truckload Shipping 3PL vs. Dedicated Route composition by asset Asset Planning – Coming Soon! Shipment consolidation Delivery network synergies  Combine business units Weekly scheduling Load balance across week Baseline vs. Optimized Routes Direct vs. DC Shipping Optimized routes for low, avg, and high volume seasonality Backhaul optimization Continuous Moves (simultaneous pickups and drop-offs ) – Coming soon! Route Optimization Load Balancing Asset Analysis Load Consolidation

Last Mile Delivery Company Identify new DC locations using a Greenfield Analysis Run Network Optimization to identify optimal sourcing Run Transportation Guru to find efficient routes to 45K end customers for 45k individual shipments Goal Identified 37 key strategic distribution center locations Resulted in efficient multi-stop vehicle routes Found balance in minimizing facility costs and transportation costs Results

Large Petroleum Company Identify new location to hire field service rep to service oil pipelines Reassign oil pipeline servicing locations to each service rep Balance workload of reps and minimize overtime pay Goal Identified three new locations to hire service reps and service routes Utilize step functions to minimize overtime hours Balanced servicing location assignments among reps while maintaining balanced workload Results

>$20B Large U.S. Grocery Wholesaler Model DOT hours, prevent comingling of competitor loads, etc. Analyze seasonality variances in demand week profiles Model existing baseline route structure vs. optimized scenario Goal Peak demand better addressed using carriers than dedicated fleet Optimizing routes results in significant savings & reduced empty miles Went to market with optimized transportation network structure Results

Tanzania Medicine Delivery Model specialized asset requirements for rainy vs dry season Identify load consolidation and multi-stop vehicle routes Utilize viable road network to model routes in remote areas of Tanzania Goal Identified consolidated vehicle routes that address seasonality variability Client used results from model to actually run routes Results

Connect, Transform, Publish Data Data Cloud Cloud Model Model Local Local Corporate Corporate General comment – I think it’s okay to think about what a typical flow might look like and not necessarily represent all things that can be done at each step of the process. SAP Data Sources SAP APO (Automated Planning and Optimization) SAP DP (Demand Planning) SAP ERP (Enterprise Resource Planning) SAP BW (Business Warehouse) HANA HANA ERP/BW/APO ERP/BW/APO

TMS—LLamasoft Integration Revised Business Rules/Design “What if we add a new DC?” LLamasoft Transportation Guru TMS “What-if?” Shipment Transactions “What if we change carriers?” Rate Data Master Data “What if we extend delivery windows?”