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Cutting Costs and Optimizing Truck Usage with GIS-Based Logistics
GIS Delivers for Lithuanian Bakery
Bread is big business in Lithuania. Most bread in the country is supplied by UAB Vilniaus duona, the oldest and largest bakery in Lithuania. Vilniaus duona runs three bakeries and two distribution centers from which wheat and rye breads and bakery goods are produced and delivered to 2,000 stores.
While Vilniaus duona is the most popular bread producer, with a market share of 34 percent and 2008 revenues of EUR 34.5 million, there is room for efficiency through optimization. To accomplish this, Vilniaus duona realized that optimizing delivery of its products was very important. Skyrocketing logistics costs in the last few years, from increasing fuel prices to rising costs of vehicles and other delivery assets, mean that having a clear picture of the amount spent on product delivery can contribute to a healthy bottom line.
Bringing Product Delivery into the 21st Century
The company runs up to 100 routes each day, with an average route distance of 130 kilometers. These routes have been organized manually with paper maps. Dainius Buknys, logistics manager at Vilniaus duona, explains, "Our transport manager could be seen staring at a map containing multitudes of flags, notes, Post-its, and dots. And with so many routes, you can imagine how many maps he had and how often he had to change them. The maps would wear out quickly and have to be replaced."
To optimize the routing process and ensure they have a handle on costs, managers at Vilniaus duona set out to find a delivery route solution that provides accurate information to everyone, from managers and employees to the contractors delivering products. Another requirement was to see the routes on a map, not just a spreadsheet of delivery stops.
ArcLogistics, a GIS-based software solution, was chosen after an intensive survey of available options. Vilniaus duona chose the ArcLogistics software solution because it provides realistic routes and schedules that are flexible and easy to edit.
With ArcLogistics, Vilniaus duona was soon able to solve scheduling problems that took into account several aspects of its operation, such as truck capabilities and time windows. So the company had not only replaced the paper maps but was also creating optimal routes that helped it save in several aspects of the operation while considering the big picture. The company can also change the routes manually, which further helps with scheduling, cutting fuel costs, and improving customer service.
Quick Implementation and an Easy Workflow
Implementation and training were completed in one week with no cost overruns. Adds Buknys, "As a profitable company, we didn't want a solution that would take a long time to be implemented. We wanted to move fast once our decision was made."
The workflow for the company today is straightforward. Order information is stored in a Movex business system, which is a common enterprise information technology system found in manufacturing and distribution companies in the Nordic region. During the implementation process, all client locations were geocoded and x,y coordinates imported into Movex. When routing is needed, such as creating a new route or reviewing existing routes, Movex information—including the coordinates of client locations, delivery volume, delivery time, and route number—is imported into ArcLogistics. A variety of reports can then be created directly from the software for the transportation managers.
Staff can also look at maps on-screen, simulate potential routes, and change them if necessary. For example, when looking at routes in the city of Vilnius, two were found to go to the same destination. It was an easy decision to cut one of the routes, saving time, resources, and money. In Utena, a daily route was decreased by 70 kilometers.
Vilniaus duona needs to ensure that its breads and bakery goods are fresh when delivered. The company uses six cross-dock stations—facilities that transfer goods between vehicles so a warehouse is not needed. With the ArcLogistics software solution, it discovered that a cross-dock station in Taurage could be closed while still serving the same number of customers. In another instance, logistics managers placed a new cross-dock station that eliminated 900 kilometers of travel per day.
GIS Leads to Logistics Efficiency
Vilniaus duona has new insight when negotiating with partners. Since the routes can be seen on a map, everyone is on the same page, with all the information they need to make informed decisions. Vilniaus duona knows exactly what its routes look like, how many miles it needs to cover, and how many trucks and drivers are required. Finding new transportation providers is now easier because the company knows exactly what it needs.
"The software gives us the feeling that everything is under control and there is nothing that will happen unexpectedly," says Buknys. "The managers are happy knowing this, and the employees are happy because they have tools they can use to fulfill their tasks."
Vilniaus duona has seen many benefits since implementing ArcLogistics. Total route distances have decreased 5,800 kilometers per day, or 175,000 kilometers per month—a 25 percent decrease. Thirty routes, or 25 percent of routes, were eliminated.
Just as important, the software empowers employees to find solutions. "All these changes were made because we had our new logistics software solution," says Buknys, "which is a great tool to help us look at problems quickly and find more accurate results." Vilniaus duona found that the payoff of using a GIS-based logistics package was worth the effort, and it found that out soon after implementation.
For more information, contact Dainius Buknys, head, Logistics Department, Vilniaus duona (tel.: 370-682-601-91, e-mail: Dainius.Buknys@vduona.lt).