The optimization of logistics processes has always been at the heart of any industrial company’s decisions. Not only because it involves a significant volume of expense, but also because it has a major impact on the entire business. Transport optimization is one of the main factors to take into account logistics costs. With the right methods, transportation costs can be reduced and performance improved. However, analyzing and planning routes according to the needs, either internal or external, has been a challenge for the business in order to obtain this optimization.
Now, thanks to the emergence of cloud technologies and the development of artificial intelligence this can be solved at a speed never experienced before. The Logistic Optimizer a solution recently developed by LafargeHolcim is a good proof of this.
Rubén Martínez, Logistic Expert at IT EMEA, shares with us in this post how the company is responding to this business need through the Logistic optimizer solution.
Logistic Optimizer, answering the challenges of today’s business
One of the main challenges the business faces today is the high costs of logistics in our operations. These costs are mainly derived from transportation management – fuel consumption and the number of kilometres the trucks travel empty.
The logistic optimizer responds to this challenge by providing a solution that allows the business to optimize transportation cost for inbound and outbound loads through Artificial intelligence-based route optimization and better carrier capacity utilization. The solution, developed in the cloud and with the newest architecture concepts (microservices, containers) uses existing data and applies Machine Learning for predictive models for optimizing truck utilization via dynamic scheduling leveraging. This results in a reduction of logistic costs through timing and resource optimization.
Bringing value to the whole ecosystem
Let’s say that in this whole ecosystem there are three main actors who will see value coming from the implementation of this solution: the logistics managers, the supplier and the customer.
The logistics team will have a tool able to automate manual processes, offer route planning scenarios using the least number of trucks and empty kilometres and, therefore, reduce costs. This will allow them to dedicate time to attend special demands, exceptional cases or last-minute calls, as well as to create valuable proposals that help to improve the global performance of this area.
On the other hand, the suppliers will be able to have greater availability of their fleet, either to attend new orders or to attend other customers. This means a growth opportunity for these companies since with the same number of trucks, they will be able to attend more requests.
And finally, our customers will enjoy greater predictability when planning their activity and, if possible, a greater guarantee of delivery satisfaction.
New technologies and agile methodologies, key enablers
I have to say that almost 10 years ago we were already exploring this type of solution. We assessed a solution that was able to evaluate all possible scenarios based on the different information we had, and thus help in the decision-making process. The algorithms and theoretical developments already existed, but the calculation capacity of the machines was very limited and therefore impossible to implement then.
Today, Cloud technology, accompanied by the development of AI using Machine Learning algorithms, has made it possible and has been crucial for Logistic Optimizers to become a reality.
These new technologies have allowed an exponential reduction in calculation times. I will give an example. Previously, to calculate the logistics optimal solution of a country like Spain it took between two and three days. Today, thanks to the Logistic Optimizer, the calculation time is approximately 7 minutes.
On top of technology, new ways of working have also been capital.
The agile methodologies have allowed us to greatly streamline development time addressing real and precise problems. Through the sprint iterations, we improved not only the next delivery but also the way of working. Besides, involving all actors from very early stages allows us to ensure that what is delivered is what the customer wants. At the end of the process, the product was already known by everyone involved.
Logistic Optimizer is one of LafargeHolcim IT EMEA’s innovative solutions that is supporting the business in the digitalization journey. And it is only the beginning.