Closer Than They Appear

Still, Dedicated Logistics had some key intelligence about those markets: Despite satellite tracking in the trucks, GM dealerships never knew where a truck was or why their parts were late without having to call the distribution center. Tracking down the truck often ate up a combined 90 minutes of the dealer’s and distributor’s time. So Dedicated Logistics programmers developed software that would let dealership employees log into Dedicated’s Web site to instantly see delays. The technology helped the company win GM’s Chicago and St. Louis parts business in 2001 and 2002, respectively, beating out now-defunct Howard Delivery Service of West Virginia, which had $50 million in sales at the time, and Pennsylvania-based Penske Logistics, a $1 billion division of a joint venture between General Electric and Michigan-based transportation service company Penske.

In 1998, Dedicated Logistics saw an opportunity closer to home, at the St. Paul site of Georgia-based paperboard recycler and manufacturer Rock-Tenn Company. The carrier servicing Rock-Tenn’s St. Paul location at the time used a manual log to track the contents of its 360 trailers. Rock-Tenn employed, per shift, two “spotters”—employees whose sole task was to keep track of all the (leased) trailers and move them to the dock as needed. Not the most cost-effective way to manage a fleet.

To win Rock-Tenn’s business, Dedicated Logistics developed a database for recording each trailer’s contents and a satellite-based tracking system to find trailers easily. According to Wintz, Rock-Tenn initially expressed misgivings about purchasing a $3,000 satellite-based tracking unit; Dedicated Logistics agreed to match the previous carrier’s rates. Within a month, it showed Rock-Tenn that it had 60 trailers sitting empty every day.

“The mentality was, ‘If I let it go, I might need it tomorrow, so I’m just going to keep it over here,’” Wintz says. Dedicated Logistics convinced Rock-Tenn to ditch the empty trailers. Its tracking system had a domino effect, reducing man-hours for spotters and eliminating an extra lot that had cost Rock-Tenn $4,500 a month to rent. Within two months, the new system was saving Rock-Tenn money at a rate of about $250,000 a year. Later, Rock-Tenn hired Dedicated Logistics to manage its outbound truckload shipments from St. Paul.

But it was a failed bid for an $80 million contract that led Dedicated Logistics to develop its most daring idea.

Fill ’Em Up

In early 2004, Maplewood-based 3M challenged bidders to use their software programs to find the cheapest, most efficient routes for shipping 46,000 loads of its products across country. Such route-optimizing software is common in the so-called “truckload” (cross-country) segment of trucking; to compete on the bid, Dedicated Logistics had purchased such a package—Netwise Enterprise, from Texas-based Integrated Decision Support Corporation—to handle 3M’s problem. During the bidding process, 3M asked whether Dedicated Logistics could also apply the technology to local deliveries. That was a problem: It couldn’t.

Local delivery differs from cross-country hauling in that it operates on an hourly rather than a per-mile basis. In Dedicated’s case, customers pay for an eight-hour day for each truck and driver, whether the vehicle is delivering a full load or partial load—or is coming back empty for the next load. Customers have to guess, based on the amount of freight they have and where it’s going, how many trucks they need each day, because the factor they can never control is time. One day a 10-mile trip might take an hour; the next, it might take three because of traffic, weather, or a delay in unloading at the site. “If they guess wrong, either they pay too much or service suffers,” Wintz says. On top of those problems, there’s another: Trucks usually drive back empty to pick up the next load.

With rising fuel prices and increasing road congestion, Wintz saw a cost-saving opportunity. What if, instead of giving customers a certain number of trucks per day for them to dispatch at will, Dedicated Logistics also handled the dispatching? If the company knew where all its customers’ loads were going, it could send one truck that had just delivered a load to pick up another nearby load, instead of sending it back empty.

To test the idea, Dedicated Logistics asked Integrated Decision Support to customize its software to optimize loads for local delivery zones and time windows, shrinking them from hours to one-minute increments. “We figured we could get a truck anywhere in the Twin Cities within 30 minutes,” Wintz says.

Dedicated Logistics then purchased in-truck hardware from Chaska-based PeopleNet that is programmed to “mark out” the specific locations of each delivery site, using coordinates delivered through global positioning system (GPS) technology. Using a PeopleNet testing unit, Dedicated input the locations of its customer’s delivery sites for an entire day. PeopleNet translated the locations into GPS coordinates for pickup and delivery locations, creating a virtual one-block “geo-fence” around each.

“When a truck breaks through that geo-fence, it tells us ‘I’m arrived’ or ‘I’m departed,’” Wintz says. The geo-fences show when arrival and departure occurs, so instead of arguing about how long the delivery actually took, Dedicated Logistics and its customers can focus on what is actually causing a delay in unloading, or a longer-than-estimated time to get to the delivery site. At the end of one hypothetical day, Dedicated Logistics fed its 450 loads through the Netwise program to see how the software would have organized the routes. “The answer was dramatically different than the way the day actually ran,” Wintz says—fewer empty trucks and more efficient use of time.