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Seamless Time Horizons: Annual Procurement and Daily Dispatching

Transport planning happens on two different time horizons: annual procurement and daily dispatching. Breaking the divide between them requires the right tools.

Roland Berger recently published the results of a survey on the state of supply chains. As part of the study, they asked more than 200 supply chain and operations executives to judge their supply chains on a multitude of different factors. A critical result of the study is that half of the executives interviewed do not believe their supply chains are ready to meet future business requirements.

They offered companies the typical remedies to improve the state of their supply chain planning processes: collaborative planning, better and more integrated tools, and big data forecasting. However, they also offered one critical success factor that other advisors neglect: Seamless Time Horizons. That has special relevance for transport decisions.

Seamless Time Horizons

The basic idea of Seamless Time Horizons is to break the divide between different planning timescales: typically, long-term strategic planning is done differently, using different goals and by different people than short-term operational planning. These differ regarding situational awareness of the decision maker and the nature of their outputs. In transport, the classic divide is between annual procurement and daily dispatching.

Annual procurement is done as a single significant event, by staff with a broad perspective and dedicated analytical tools. It ends with a decision about how other decisions will be made. Typical outcomes here are carrier contract awards and planned cost budgets.

Compared to that, dispatching is done hourly, with unique shipments, and ends with contracting a carrier for the job, at a price that may be based off pre-agreed rates, or may not.

It is easy to see that value is lost when procurement and dispatching are not aligned. Procurement assumes a specific follow-through from dispatching while dispatching needs to react to the particularities of the carrier situation on the day.

Combining Different Planning Perspectives

What is needed is a planning tool that helps the dispatcher to keep strategic goals in focus while dealing with the specificities of each job.

The easiest solution is to embrace automation in dispatching: but this is wrong. Supply chain managers have already experimented with systems that executed rule-trees for carrier selection and communication. However, such systems are brittle and sub-optimal, as they cannot foresee the range of conditions the real world can throw at the dispatching process (see our prior discussion on this issue).

Instead, the innovation comes from greater flexibility towards goal achievement in dispatching. Dispatchers need to be able to weigh different alternatives with respect to strategic goals, and they need tools to help them do it.

Likewise, managers need a controlling tool that cuts through the complexities of operational transport planning and gives them a view of the effectiveness of their dispatching staff to make decisions consistent with the companies strategic goals.

Having these two interconnected features in place allows companies to better follow through on strategic decisions, and to reach their goals quicker and more precisely.