Post on 26-Dec-2015
Transportation Synergies
ISyE 6203 Project
By: -Prashant Sundaram
Umang RaijiwalaKunal PandePuneet GoyalNishant Jain
Disclaimer: This document has been created in the framework of a student project and the Georgia Institute of Technology does not sanction its content.
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Company Background
Maker of Vertical Transport SystemsElevators & Escalators Moving walkways
Maker of Air Compressors & Compressed Air Systems.
Disclaimer: This document has been created in the framework of a student project and the Georgia Institute of Technology does not sanction its content.
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Outline
•Objective•Scenario analysis•Potential opportunities•Results•Methodology•Recommendation•Future scope•Questions
Disclaimer: This document has been created in the framework of a student project and the Georgia Institute of Technology does not sanction its content.
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Objective – Combine networks of OTIS and SULLAIR
•Determine if Otis’ transportation network is suitable to support SULLAIR volumes
• Long haul• Short haul
•FOCUS – • 3 day(+1/-1) window• 5 day(+3/-1) window • 9 day(+6/-2) window
•Combine shipments from/to 4 RDC’s for OTIS and SULLAIR shipments from Michigan City
Disclaimer: This document has been created in the framework of a student project and the Georgia Institute of Technology does not sanction its content.
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OTIS- SULLAIR OPPORTUNITY 1: Consolidate shipments of SULLAIR on OTIS trucks leaving from Woodridge, IL riding Outbound to the 3 RDC’s & Nogales, MX
Disclaimer: This document has been created in the framework of a student project and the Georgia Institute of Technology does not sanction its content.
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MANITOBA
MICHIGAN/ON
NEW YORK
OPPORTUNITY 2:OTIS trucks picking SULLAIR shipments riding Inbound to Woodridge, IL & dropping off in Michigan City, IN
MICHIGAN CITY
OTIS- SULLAIR
Disclaimer: This document has been created in the framework of a student project and the Georgia Institute of Technology does not sanction its content.
Current Scenario – Individual TL and LTL shipments are being transported
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FICTITIOUS FIGURES
After increasing scope (IL/IN)
80% INCREASE
Transportation BudgetOTIS ($)
Total Budget 15MOB Shipments from Woodridge 0.5MIB Shipments to Woodridge 0.9M
SULLAIR OB Shipments from Michigan City 0.6M
IB Shipments to Michigan City 0.4M
Transportation BudgetOTIS ($)
Total Budget 15MOB Shipments from IN/IL 0.9MIB Shipments to IN/IL 1.3M
SULLAIR OB Shipments from Michigan City 0.6MIB Shipments to Michigan City 0.4M
Disclaimer: This document has been created in the framework of a student project and the Georgia Institute of Technology does not sanction its content.
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NEW OPPORTUNITIESOPPORTUNITY 1: Consolidate shipments of SULLAIR on OTIS trucks leaving from IN/IL riding Outbound to the 3 RDC’s & Nogales, MX
OPPORTUNITY 2:OTIS trucks picking SULLAIR shipments riding Inbound to IN/ IL& dropping off in Michigan City, IN
But….• Scope restricted• Not enough synergy opportunities
So we…Increased the scope by considering shipments originating from IN/IL in OPPORTUNITY 1 (OB) & destination states to IN/IL in Opportunity 2 (IB)
Now…• Increased scope by 80%• Potential savings could go up by 5-10 % of Total transportation costs
Disclaimer: This document has been created in the framework of a student project and the Georgia Institute of Technology does not sanction its content.
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Data Filtering – Before Analysis (Irrelevant data is removed)
OTIS • 3 quarters data• + Origins and destinations US and Canada• + Truck current weight = [10,25000] lbs (because Sullair = [5,10000] lbs)
• - Trucks below 50 lbs
• - Expedited/Just-in-time deliveries
SULLAIR• + Origins and destinations US and Canada
• - Shipments with origins outside Michigan City
• - Destination ≠ Michigan city
• - Shipment weight = 0/1 lbs
• - Freight Charges < $100
Disclaimer: This document has been created in the framework of a student project and the Georgia Institute of Technology does not sanction its content.
Analysis Results - % values of SAVINGS
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3day 5day 9day0%
2%
4%
6%
8%
10%
12%
14%
16%
18%13.44%
15.82%17.98%
3 day 5 day 9 day0
100002000030000400005000060000700008000090000
100000 5.57% 6.02%6.9%
OUTBOUND(As % of total OTIS-SULLAIR IB shipments from IL/IN)
INBOUND(As % of total OTIS-SULLAIR IB shipments to IL/IN)
Disclaimer: This document has been created in the framework of a student project and the Georgia Institute of Technology does not sanction its content.
Scenario 1 – Linehaul shipments from IN/IL to the 4 RDC’s
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OTIS :• 5th Feb shipment from Lombard, IL to Dallas, TX• Shipment weight 200 lbs
SULLAIR:3 shipments• 5th Feb : Michigan City to Humble, TX (210 lbs)• 5th Feb : Michigan City to Denison, TX (810 lbs)•6th Feb : Michigan City to Denison, TX (2100 lb)
Possible Synergies - ? Yes
Disclaimer: This document has been created in the framework of a student project and the Georgia Institute of Technology does not sanction its content.
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Division into Zones
Disclaimer: This document has been created in the framework of a student project and the Georgia Institute of Technology does not sanction its content.
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e.g. 5 day Window
OTIS Ship Date + Travel Time -1 <= SULLAIR Ship Date <= OTIS Ship Date + Travel Time +3
SULLAIR destinations <~ 250 miles to 3 RDCs & Nogales, AZ
Multiple SULLAIR LTL shipments combined with single OTIS LTL Shipment
Disclaimer: This document has been created in the framework of a student project and the Georgia Institute of Technology does not sanction its content.
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Data Filtering – During Analysis
• Integrity Check:Freight weight (OTIS+SULLAIR) ≤ 35,000 lbs
• SULLAIR Ship Date=OTIS Ship Date[+1,-1], [+3,-1],[+6,-2]
• Preference to min. distance to SULLAIR pick-up• E.g.- OTIS shipments from VA should not pick up SULLAIR
shipments in NC• Integrity Check that multiple SULLAIR shipments on OTIS
< 30000 lbs• SULLAIR freight worth more than $100
Disclaimer: This document has been created in the framework of a student project and the Georgia Institute of Technology does not sanction its content.
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Scenario 2 – Shipments originating from US, Canada, Mexico to IN & IL
OTIS Shipment – Supplier in Battleboro,NCShipping to Woodridge,ILOn 3rd February
SULLAIR Shipment – 3 suppliers in Fayette, NCBlack Mountain, NC & Mebane, NC to Michigan City, INon 3rd & 4th Feb
Distance between Battleboro & SULLAIR Suppliers~60-90miles
Possible Synergies ??Maybe
Disclaimer: This document has been created in the framework of a student project and the Georgia Institute of Technology does not sanction its content.
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Division into Zones
Disclaimer: This document has been created in the framework of a student project and the Georgia Institute of Technology does not sanction its content.
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Referencing OTIS & SULLAIR shipments for Inbound Shipments to IL/IN
Key Points: •SHIPPER STATE: Origin State(NC) – 1 to Destination State(IN) – 4 states on the way -3 (KY),2 (VA) Eg. : OTIS shipments from VA(2) should not pick up SULLAIR shipments in NC(3)
•SULAIR shipments have REFERENCES to unique OTIS shipments which can pick them•TRAVEL TIME taken into consideration.•All Locations Geo Coded
Disclaimer: This document has been created in the framework of a student project and the Georgia Institute of Technology does not sanction its content.
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COST CALCULATIONS FOR IBThe Next Logical Question…ASSUMPTIONS MADE:
• Stoppage charges on a ROUTE: $50• Rates of TL’s & LTL’s on basis of $/mile: $1/mile• Distance between 2 places on basis of: ACOS(COS(RADIANS(90-Lat1)) *COS(RADIANS(90-Lat2)) +SIN(RADIANS(90-Lat1)) *SIN(RADIANS(90-Lat2)) *COS(RADIANS(Long1-Long2))) *3959
COST CALCULATIONS:Old Cost: = Freight Charges paid by OTIS + SULLAIR
New Cost: = [Miles driven by OTIS truck to pick up SULLAIR shipment*$1] + [Old freight charge of OTIS shipment to destination or Miles driven from OTIS Origin to Destination * $1 (whichever is lesser)]+ [Miles driven from SULLAIR destination – OTIS destination * $1]
Savings:= Old Cost – New Cost
•Discarded Routes which had potential losses
Disclaimer: This document has been created in the framework of a student project and the Georgia Institute of Technology does not sanction its content.
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RECOMMENDATIONS
Incorporate real time information from both companies Club supplier shipments going to the RDCs/job site from IN/IL with SULLAIR ShipmentsIncrease flexibility of SULLAIR delivery method Use 3 day windows for optimal savings
3 day 5 day 9 day0
100002000030000400005000060000700008000090000
100000 5.57% 6.02%6.9%
3day 5day 9day0%2%4%6%8%
10%12%14%16%18% 13.44%
15.82%17.98%
Outbound Inbound
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Thank you!Questions and comments.