The encyclopedia · Strategy & Leadership · Strategic decision · 1988
North American Van Lines' LOADMAP priced and routed trucks together, +$2.5M/yr
LOADMAP combined real-time loads with forecasts of future demand, so NAVL priced, solicited and assigned truckloads as one decision — up $2.5M a year.
North American Van Lines
the move
North American Van Lines' truckload division faces the classic spot-market problem: thousands of loads a week, drivers scattered across the country, and no way to know tomorrow's demand when assigning today's trucks.
LOADMAP combined real-time information about available drivers and loads with an elaborate forecast of future loads and truck activity, then solved a network model to assign drivers to loads for maximum profit and service. It let managers see the economics of the whole operation, not just the next move.
The model integrated load evaluation, pricing, marketing and load solicitation with assignment — one decision system instead of sequential guesses. NAVL estimated the gains at $2.5 million a year in added profit, with a higher level of service.
why it works
- Forecasting tomorrow's loads stopped myopic, profit-destroying moves.
- Pricing and solicitation were tied to the same economics as dispatch.
- One model exposed the true cost of accepting a load today.
- Service improved along with profit, not at its expense.
what transfers
Price and dispatch from the same model: when today's assignment changes which loads you can take tomorrow, real-time data and a forward forecast belong in one optimization, not two departments.
what came after
The Interfaces paper documented LOADMAP as a new framework for pricing and operations in truckload trucking, with NAVL's division adopting the integrated approach as its operating model. The $2.5 million annual estimate came from the project team's analysis of the model in operation.
references
- Maximizing Profits for North American Van Lines' Truckload Division: A New Framework for Pricing and Operations
- Maximizing Profits for North American Van Lines' Truckload Division
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