"He also said that Walmart's vast transportation network, including some 6500 dedicated trucks and an amazing 56,000 trailers, covering almost every area of the country, could reduce total transportation costs because its network density and buying power may result in lower costs, especially in terms of using vendor freight to reduce empty miles travelled, or produce better consolidations. He noted, for example, that Walmart has about 12 consolidation DCs that combine less-than-truckload shipments from vendors into full truckload shipments to its stores. "
This is a great example of how optimization can help firms. When you have an almost unlimited number choices, optimization technology helps you sort through the possibilities. This is especially true with transportation optimization. We have previously discussed how deceptively difficult routing problems are (click here and here for more information).
With Inbound logistics, the optimization is even more difficult. For example, you may need to find routes that pick up from multiple vendors and make drop-offs at multiple distribution centers. Most routing optimization focuses on outbound routes from a depot to stores. A nice advantage of IBM's Transportation Analyst is that engine is based on the Constraint Programming engine that gives you the ability to model inbound logistics and find great solutions that you otherwise would not find.
We often find that when we compare the results of an optimization run to the current plans, the optimization can find solutions that meet all the business rules and time constraints (which are not always met in the existing routes) and reduces the cost.