The Solution
The first and most important part of the problem-solving process is to identify the ideal business solution. In this case it was decided that by building the shipments to match the production schedule while at the same time satisfying each customer’s weekly order, the majority (more than 70%) of the beer can come off the production line and go directly into the truck or rail car and bypass the expensive refrigerated warehouse.
Specifically, we concluded that the ideal solution would focus on configuring truck and rail car shipments in order to:
- Ship exactly what each customer has ordered each week
- Use as few trucks and rail cars as possible to minimize freight costs
- Store as little as possible in order to minimize the expense associated with refrigerated warehouse space
The second part of the problem-solving process is to design and build an application that supports this business solution. After working with the company’s warehouse operations, transportation department, and I/T organization to understand the problem, we developed a shipment building solution that integrated with their existing ERP system. We created the Shipment Optimizer to read the customer’s orders, production schedule, and current inventory in order to produce a set of shipments and a loading schedule which were optimized to:
- Maximize vehicle utilization by using as few vehicles as possible
- Maximize line-to-shipment loading
- Minimize dock loading time
Shipment Optimization Page 3 of 4