This is the first in a two-part series on yard management systems. Next week, we’ll address the technology behind the yard management system.
The vast yards around distribution centers and warehouses often have the reputation of being inefficient and relying too heavily on manual labor. But the best-performing operations realize the significance of solid yard management to company profitability.
Yard management systems can:
- Increase load flow and throughput
- Better manage labor and asset utilization
- Enhance yard security and accountability
- Improve carrier scheduling and appointment processes
- Increase inbound and outbound load visibility
- Reduce detention and demurrage charges
Yet identifying the savings and justifying the project can be tricky. For starters, let’s take a look at costs. There are two types of yard operations costs: direct and indirect.
Direct costs include:
- yard jockey (operator of the yard tractor) wages
- yard check wages
- yard truck maintenance
- Detention/demurrage fee
- Non-use fees
- Spoilage and expiration of perishable product
- Direct two-way communication wages.
Concerning the yard jockey wages, you should know how the yard jockey spends his or her day. You need to know what percentage of the time the yard jockey is idle, traveling for a trailer move, hooking or un-hooking from a trailer (referred to as Skilled Moves), or searching for a trailer.
Indirect costs are items in the line of: lost sales, warehouse waiting time, and excess inventory investment. Knowing these elements will give you a complete cost picture for your yard operations.
Two of the biggest direct cost components with the largest potential for savings are yard jockey efficiency and excess accessorial charges. If you can reduce yard jockey headcount, there are significant savings to be gained in labor and maintenance dollars. Decreasing the number of yard jockeys could even save capital expenditures by retiring a yard truck without a replacement. Yard management systems tend to improve search time and idle time allocation of the yard jockey by having an accurate yard location for the trailer and queuing up work to present to the jockey.
These costs come primarily from detention/demurrage, redelivery fees, and non-usage fees. While it is probably unreasonable to assume you’ll eliminate these charges completely, it is fair to say you’ll make a substantial impact by avoiding many of the occurrences. With YMS, you gain visibility into things like the length of time a trailer has been on-lot without a change in status. Some applications allow for emailed alerts, which notify key personnel of events like a trailer that has been on the lot for “x” number of hours without being unloaded. This allows you to work older trailers first, reducing the cost for detention/demurrage significantly.
A robust YMS application can also help avoid the excess charges of re-delivery and non-usage fees. The dock scheduling component helps identify loads and load characteristics, which assists the warehouse in directing the trailer to the appropriate dock door. This allows you to avoid redelivery fees that some carriers may impose for moving a trailer from one dock door to another due to warehouse error.
“Next trailer determination” algorithms also help support trailer rotation rules, like selecting the oldest empty trailer on the yard for loading in order to avoid non-use fees. If you identify direct costs such as these that can be reasonably reduced or eliminated, you’ll be able to calculate fair potential savings.
There are other potential cost-lowering benefits that should not be ignored. A robust YMS supports a configurable or easily-modified event model. Some of the better applications allow customers to define business rules based on trailer or appointment events.
For example, retailers may want to withhold final allocations for inbound purchase orders until the last minute. Yet to facilitate cross-dock opportunities, the allocation plan must be sent to the warehouse prior to receiving. In this example, a customizable event model in the YMS could unlock significant indirect savings. By having the YMS application notify your ERP that the trailer has checked into the yard, the allocation plan could be recalculated based upon the latest inventory position in the stores and sent to the warehouse system for processing later in your information flow model—thus contributing to a better deployment of inventory.
Mike Pujda is project manager for Raleigh, NC-based supply chain services consultancy Tompkins Associates.