Transportation Synergies ISyE 6203 Project By: - Prashant Sundaram Umang Raijiwala Kunal Pande...

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.


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Outline

•Objective•Scenario analysis•Potential opportunities•Results•Methodology•Recommendation•Future scope•Questions


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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


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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


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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


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


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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


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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


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)


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


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Division into Zones


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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


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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


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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


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Division into Zones


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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


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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


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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.

Transportation Synergies ISyE 6203 Project By: - Prashant Sundaram Umang Raijiwala Kunal Pande...

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