The encyclopedia · Strategy & Leadership · Operational decision · 1990–1992
Yellow Freight's SYSNET re-plans load routing across 630 terminals
Yellow Freight centralized load planning with interactive optimization, saving $7.3M/yr and improving transit times.
Yellow Freight System
the move
Yellow Freight grew from a regional carrier into one of the largest less-than-truckload motor carriers, handling over 15 million shipments a year across a network of 630 terminals.
As it grew, terminal managers in the field lacked the information to coordinate their activities around the network, so loads were planned locally and against local incentives.
The company and Princeton built SYSNET, a large-scale interactive optimization system for routing shipments and designing the network, which let managers evaluate and implement strategies that contradicted decades of standard practice.
why it works
- Interactive optimization lets planners explore what-if options instead of simply accepting one result.
- Routing and network design were solved together, exposing trade-offs local planners could not see.
- The model could identify savings from consolidation, emptying and terminal relocation.
- Central control replaced a decentralized process driven by local terminal incentives.
what transfers
A network full of locally optimal decisions is worse than one central plan; give planners a model they can interrogate, not a mandate.
what came after
SYSNET produced substantial cost savings and better planning responsiveness, with the Interfaces paper estimating more than $7.3 million a year directly attributable to it. Yellow Freight also used the network model in 1990 to find over $10 million in savings from relocating terminals and break-bulking, while transit times and service reliability improved for its 300,000 regular shippers.
references
- Interactive Optimization Improves Service and Performance for Yellow Freight System
- Interactive optimization improves service and performance for Yellow Freight System
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