Network Optimization
Why Network Optimization Matters
Network design has massive impact on profitability. A 5-10% reduction in miles driven, improved cube utilization, or better terminal placement can translate to millions in cost savings. Yet most companies lack tools and expertise to model network alternatives and quantify tradeoffs between cost and service.
With network optimization capabilities, transportation companies reduce operating costs 8-15%, improve asset utilization 12-20%, decrease empty miles significantly, enhance service levels, and build scalable networks that support growth without proportional cost increases.
Key Components
Network Design & Modeling
Model network alternatives to optimize terminal locations, routing patterns, lane densities, and service coverage. Balance cost efficiency with service requirements through scenario analysis.
Route Optimization
Design optimal routing that minimizes miles, maximizes cube utilization, reduces empty backhauls, and improves on-time performance. Dynamic optimization adjusts to real-time conditions.
Capacity Planning
Right-size network capacity by location and time period based on demand forecasts, seasonal patterns, and growth projections. Avoid over-investment and capacity constraints.
Terminal & Facility Location
Optimize placement of terminals, cross-docks, and distribution centers to minimize transportation costs while maintaining service levels. Location decisions have long-term impact.
Consolidation Opportunities
Identify shipment consolidation opportunities to improve load factors, reduce frequency while maintaining service, and lower per-unit costs. Small-shipment aggregation drives efficiency.
Performance Analytics
Track network performance metrics including cost per mile, cube utilization, empty mile percentage, on-time delivery, and asset turns. Measure optimization impact.
Key Takeaways
- • Network optimization typically delivers 8-15% operating cost reduction through better routing, consolidation, and asset utilization
- • Most carriers have 20-35% empty miles-systematic network design and backhaul matching can reduce this significantly
- • Terminal and facility location decisions have 5-10 year impact-model thoroughly before committing capital
- • Cube utilization improvements of 5-10 percentage points are achievable through better consolidation and routing
- • Network optimization requires balancing cost efficiency with service commitments-pure cost optimization often degrades service unacceptably