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  • Utilization versus Cost

    I've been told that when OTM is planning a shipment it looks at both equipment utilization and cost, but that it looks at equipment utilization first. Can anyone confirm if this is true?

    If so, then I'm also wondering if anyone can provide some recommendations on how to configure OTM to look at price over utilization, if this can even feasibly be done.

    In our situation we have many equipment groups and it is well within the realm of reason that one service provider's piece of equipment (small) may have a higher freight cost than another service provider's piece of equipment (not so small) and we need the least cost solution to be chosen, not the best equipment utilization.

  • #2
    Re: Utilization versus Cost

    Hi,

    If you want OTM to look at price over utilization, then 2 approaches can be used

    • Rate preference for a given lane and service provider
    • In itinerary leg, use "No equipment" as equipment assignment type. But this have one drawback also i.e. shipment will not have any equipment type & related utilization data.
    Nipun Lakhotia
    Manager, EY

    Comment


    • #3
      Re: Utilization versus Cost

      Nipun,

      Thanks for the input. I have already discussed rate preference with the team, before sending out this question, it's definitely not the desired/favored approach, but we are aware that it might be our best option. Since the rates are heavily dependent on equipment constraints the itinerary leg approach probably won't be an option either.

      I guess we'll have to go the rate preference route, thanks again.

      Comment


      • #4
        Re: Utilization versus Cost

        After analyzing the requirement again, it seems that service provider1 will never be used for shipment making - if order weight if suitable for small equipment , then OTM will use service provider2 since rate preference is used. Also if order weight/volume is suitable for large equipment, then anyways OTM will use service provider2.

        Then what is use of configuring rates for service provider 1?
        Nipun Lakhotia
        Manager, EY

        Comment


        • #5
          Re: Utilization versus Cost

          The rates are related to 2-axle, 3-axle, 4-axle and 5-axle trailers, and at certain times during the year, a certain axle configuration is required over another, even if the rate is higher/lower for another piece of equipment. That's why rate preference, and more specifically, a rate preference with effective/expiration dates, will need to be utilized.

          Comment


          • #6
            Re: Utilization versus Cost

            Hi - part of the first steps in the bulk planning process is for OTM to look at all of the available equipment groups based on the available itineraries. Based on this selection, it looks to create different options about how to fit your ship units in to all of the possible equipment groups. From there, it moves in to looking at the possible rates for each of those different options and the associated cost of each option. I don't think it is a fair statement to say that OTM prefers utilization over cost.

            If you have a larger but cheaper equipment group available, I think OTM should figure that out for you. It should be a very simple test to try. That is the best way to verify one way or another. Let me know what you find out.

            Comment


            • #7
              Re: Utilization versus Cost

              Hi Bmj,

              I tested the above scenario in my test instance and results were not in line with the expectations..
              • Planning engine does not look at the possible rates for each of those different equipment options and the associated cost of each option.
              • Instead, OTM planning engine first optimize on equipment for the given leg and then rate shipment based on all rates available for that particular equipment only.

              Thus, it is resulting in shipment being rated by expensive service provider (provided it offer smaller equipment group i.e. higher utilization).

              <<log details attached>>

              Please test this scenario at your end and confirm.
              Attached Files
              Nipun Lakhotia
              Manager, EY

              Comment


              • #8
                Re: Utilization versus Cost

                Hi,

                1. On your single leg itinerary PRACTICE.TEST_AB_1, are you using equipment group profiles or Multi-Modal Equipment Sets ?

                2. From the log files, it looks like as if there is only one valid equipment group to put your order in on that itinerary. Assuming you are using Equipment group profiles on the itinerary leg, how many equipment groups are in that equipment group profile ?

                3. Also, what version of OTM are you using and are you familiar with some of the container optimization planning parameters ?

                Let me know.

                Comment


                • #9
                  Re: Utilization versus Cost

                  Hi,

                  1. We are using equipment group profiles (with 2 valid equipment groups - 43ft & 53ft) in single leg
                  itinerary
                  2. OTM 5.5 CU04
                  3. We are using default planning parameter set.
                  Nipun Lakhotia
                  Manager, EY

                  Comment


                  • #10
                    Re: Utilization versus Cost

                    OK, so the smaller equipment (43FT) is cheaper than the larger (53FT) equipment ?

                    Take a screen shot and post it here on what you have under the following:

                    Transportation Planning and Execution > Power Data > Planning > Logic Configuration > Container Optimization Default.

                    Comment


                    • #11
                      Re: Utilization versus Cost

                      1.Planning engine is selecting the smaller equipment set i.e 43ft trailers. Even though rate offering associated with 43ft trailer is expensive than that associated with 53ft trailer, system is still selecting the expensive option.

                      Scenario
                      Servprov1 - 53ft trailer - $120 per shipment
                      Servprov2 - 43ft trailer - $250 per shipment

                      planning engine is rating shipment using servprov2.


                      2. There is no entry for container optimization default under Logic configuration. Only Multistop default exist under it.
                      Nipun Lakhotia
                      Manager, EY

                      Comment


                      • #12
                        Re: Utilization versus Cost

                        Hi,

                        I am on a 5.5 CU5 box so maybe the change to the container optimization configuration was done between CU4 and CU5 (I thought it was CU3). Two suggestions:

                        1. Check in the on-line help for container optimization - that should tell you where you can configure the parameters that are being used for container optimization. I can't remember off the top of my head where that is done prior to the version I am looking at.

                        2. Look at the material that was presented at the OTM SIG last year around advanced planning. There is some excellent material in there relating to the changes that were done in container optimization and the alternatives that you have there.

                        I suspect you just need to set up your container optimization parameters to suit your needs in this scenario where the larger equipment is cheaper (specifically the ability to include cost in that optimization).

                        Comment


                        • #13
                          Re: Utilization versus Cost

                          Thanks for the suggestions.
                          I will keep you updated on future development on this issue
                          Nipun Lakhotia
                          Manager, EY

                          Comment


                          • #14
                            Re: Utilization versus Cost

                            I changed some of the parameters in the Container Optimization Set but was still getting the same result. Still choosing a higher cost/higher utilization equipment over a lower cost/lower utilization equipment.

                            The specific changes I made:

                            Container Optimization Objectives
                            Maximize Container Utilization...........set to 'FALSE'
                            Optimize Cost............set to 'TRUE'

                            This configuration resulted in the same less than optimal cost result.

                            Then I went into Paramter Sets and copied the Public DEFAULT parameter set. I ended up in the Shipment Planning section where I found a setting for "Rate All Equipment Groups in Shipment Building". The default value on this is set to 'false'. I re-set it to 'true' and finally got the desired outcome!!!

                            I reset the Container Optimization Objectives to the system defaults:
                            Maximize Container Utilization.........set back to 'TRUE'
                            Optimize Cost..........set back to 'FALSE'

                            After doing this I replanned the shipment and still got the desired outcome. So.....if you change the "Rate All Equipment Groups in Shipment Building" to 'True' in the Planning Parameter set (subset Shipment Planning) you'll get the desired result.

                            Finally!!!!

                            Comment


                            • #15
                              Re: Utilization versus Cost

                              Hi there,

                              I'm reading this thread with a lot of interest. I've got two order releases which I have successfully bulk planned and OTM chose to build two direct shipments instead of multi-leg shipments (one TL shipment followed by two individual LTL shipments).

                              The aggregated cost of the multi-leg shipments is cheaper than the total cost of the two direct shipments.

                              Can anyone suggest which planning parameter I should be looking at to ensure that OTM always optimises based on cost? I tried changing the parameter BUILD DIRECT SHIPMENT OPTION FOR BULK PLAN = 1. NOT BUILD DIRECT SHIPMENT and OTM successfully built the multi-leg shipment. However, planning other orders that are supposed to multi-stop failed.

                              Any feedback is greatly appreciated.

                              Thank you very much.

                              Cheers,
                              Simon.

                              Comment

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