Best Practices for Transportation Network Optimization

Transportation Network Optimization (TNO) is a strategy that can help you to improve the way your company transports goods. It’s been used in various industries including shipping, trucking, and even aviation since the 1960s. But many companies are discovering its potential for optimizing their transportation network – which could save them time and money. 

In this blog post, we’ll explore what TNO is, how it works, who benefits from it, and some best practices for implementing TNO in your company.  We’ll also include resources to get started on the right foot with TNO so you can optimize your own business’ supply chain!

But what is TNO?

TNO is a way to optimize the order in which goods are produced, packaged, and shipped. Doing so can help you reduce your company’s shipping costs while also making operations more predictable for employees and customers.  

To do this, it helps you to visualize all of the possible shipping routes that could be taken to get goods from one place to another. Then, you optimize that route by making sure that the order in which those goods are shipped is based on things like: 

  • Volume of goods shipped for each product (more volume means fewer trips)
  • Weather conditions (delivering food products during summer months might not be a good idea if they’ll spoil easily)
  • When the ship leaves port (if goods are dropped off early, they might not get on the ship right away but will have to wait for the next one to leave – which can drive up costs if you’re already paying per day at your docks)

In order for TNO to work best, though, it helps if you keep your shipping routes as simple as possible. For example, don’t send products to multiple locations in the same city before they go out on a ship – that will just make it more difficult to optimize the order of those shipments.

The benefits of TNO

Implementing TNO into your supply chain can bring a lot of benefits. Some of those include:

  1. Reducing your shipping costs by making routes more efficient
  2. Reducing the amount of time it takes for goods to arrive at their destination (which is especially helpful if you’re shipping to customers) 
  3. Better logistics planning and management   
  4. Minimizing damage, theft, or loss during transportation
  5. Making operations more predictable for employees and customers 
  6. Streamlining operations   
  7. Rewarding staff for good work in the form of reduced lead times  

Having a strategic plan in place for which goods are shipped where, when, and how can also help you to streamline your supply chain – making it easier to operate. This is especially true if you’re a smaller business that doesn’t have people on staff dedicated to analyzing and optimizing your shipping routes. Then you can find out what companies are in the transportation field.

As you can see, there are a lot of benefits to implementing TNO – but some of those only come after the initial planning process is complete. To make the implementation process go smoothly, we’ve listed some best practices below:

Know your business 

Before you start with TNO, it’s important to understand your company and the goods that you transport. While shipping goods from one place to another may seem simple on the outside, there’s a lot more going on beneath the surface. For example:  Are these products bought or produced? Do they belong to other companies alongside your own and have their own shipping routes?

When it comes down to it, understanding the products that you’re delivering is key. If they’re producing in-house, do you know how long it takes for them to be made? Do those products require special packaging or transportation equipment? If so, does your company have access to that equipment or will you need to hire a third party?

Also, it’s important that you understand your company as a whole. Do you have all the equipment that you need to ship (or produce) goods? Are there any special procedures or certifications needed for certain products? Or will they just be transported using normal packaging methods and no extra precautions are necessary?

Without this knowledge, it will be hard to estimate what routes will work best or even if TNO is right for you. So, make sure you take the time to do this step. It will save a lot of headaches later on.

Know your suppliers 

It’s also helpful to know which companies (if any) are supplying goods to your company. Depending on the type of good you’re shipping and how long it takes to get from point A to B, the route that your supplier is taking could be slowing down or speeding up the whole of your supply chain.

In some cases, buying directly from a supplier might not make sense for you. One example would be if you’re a company that manufactures its own goods and then sells them to local retailers. In this case, it may be more beneficial for your company to send the finished product directly to those retailers instead of getting them from the supplier.

In other cases, there might be situations where it’s helpful for you to buy directly from your supplier (for example, if the supplier has a warehouse close to where your company is located).

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And in some cases, you might want to buy directly from the supplier. This could be because they have better prices than other distributors that you use or it could be due to quality control issues. In any case, figuring out what kind of relationship (if any) you have with your supplier can help you make better shipping decisions.

Make a plan 

A lot of logistics operations are carries out on autopilot – that’s why it’s so important for you to have a strategic vision for what needs to be done. This includes deciding where each order should go and making sure that the necessary staff is in place to make that happen.

Going back to our earlier example about producing your own goods, you might want to buy from a supplier who is close by and has a warehouse in your area instead of using a different distributor. Or maybe you have orders coming in from areas across the country and it would be easier on your staff if they could all go out in one big trip instead of multiple smaller ones.

This is the time to decide on these types of details so that your company can have a smooth process in place as quickly as possible. Keep in mind:  You don’t need to know exactly what you’ll do before you start TNO, but it’s important to know where you’re going or the system will be more confusing for your staff.

Don’t forget outsourcing 

There are a lot of variables that go into planning out a TNO route and in order to maximize profit, companies need to use as much information about their operations – historical data included – as possible. So don’t forget to factor this into the equation when deciding which routes to take.

Conclusion

Transportation Network Optimization is a strategy that can help you to improve the way your company transports goods. But many companies are discovering its potential for optimizing their transportation network – which could save them time and money. To learn more about how TNO impacts businesses today and what steps they need to take towards optimization, download our free white paper on best practices for implementing an effective Transport Network Optimization program!

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Maritna Hale

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