The Architecture Of ABC

By Edward Cone  |  Posted 2002-10-10 Print this article Print

The freight company has been tracking every action its workers perform to avoid the potholes that have sidelined its competitors.

The Architecture Of ABC

Roadway picks up 50,000 to 60,000 shipments per day, which stay in its freight system for an average of four to five days. "For every one of them, 10 or 12 times during transit we recalculate where the shipment should be and where it is," says Obee. "Every time a trailer pulls up to the dock, that's 20 or 30 shipments that have to be recalculated, as we replace projections with actual data. Then we recalculate backward, with a schedule that starts with the customer's delivery requirement, and determine what's the latest each activity could occur and still let us meet that target."

The mainframe database management and transaction processing system for these calculations is Model 204 from Computer Corporation of America. While not as well known as relational database products, or even hierarchical mainframe databases like IBM's Information Management System (IMS), the Model 204 software gives Roadway high performance—on the order of 1,800 transactions per second—at a relatively low cost. Enough processing power might support the same applications with a relational database, but that's not Roadway's style. "We've never been ones to throw hardware at a problem," says Obee.

Applications such as QuikStrip, which is geared toward freight within each distribution center or breakbulk, rely on Informix databases at each location. Important information about trailer arrivals and departures is then transmitted to headquarters over a wide-area network of frame relay circuits. The master schedule of shipments and delivery guarantees is maintained on the mainframe, which runs applications to help operations managers decide whether they need to take action to speed delivery of a shipment. For example, they might assign a trailer to a two-man "sleeper team" of drivers who will take turns driving, rather than use the default pattern of single drivers who change off, pony express-style, at relay stops, or by slower but cheaper rail.

While Model 204 supports a lot of decision-support applications that help Roadway keep its costs down, it doesn't control the ABC analysis per se.

When Roadway built the data warehouse used for ABC in 1997, it decided to use data analysis tools from Business Objects to help pricing and operations analysts make calculations. Rather than tackle a custom integration of Business Objects with Model 204, Roadway built the warehouse on Oracle database software. By the time CCA came out with a version of its product for data warehousing, Roadway's decision had been made.

So where the applications running on Model 204, or locally at each terminal, help managers make cost-conscious decisions about each day's operations, the Oracle data warehouse allows analysts to sift through many days' worth of shipments and labor costs in search of patterns.

For example, the default freight-flow at Roadway is for each shipment to go through two breakbulks—one near its origin and one near its destination—plus two local terminals on each end. Roadway's analysis shows an average savings of $300 for every trailer that can be directly routed from the first breakbulk to the destination terminal. If a direct route to the customer's site can be justified, that's even better.

By improving the focus on specific shipments to specific customers, the data warehouse gained more and more credibility, says William McGinley, director of pricing systems at Roadway. "An archaic version of this didn't do well because people were always challenging the results," McGinley says. But by getting managers on every level involved in figuring out the real costs, most of those objections have gone away, he says. "Before, they might say, 'That's just an average.'" Now, the company can calculate actual costs of specific activities for particular customers, down to the dollar.

A healthy dose of human judgment of how to use that information, though, is still required. McGinley likens the picture delivered by the numbers to a police sketch.

"It may tell you what someone thinks they look like, not what they really look like," he says.

That's one reason he prefers to make reports on costs available to senior sales and operations managers, rather than individual salespeople or terminal managers. "We wouldn't want a terminal manager making the decision to dump a customer," McGinley says. A local manager might see high freight pickup costs for a particular shipper, yet lower costs elsewhere in the freight network might make up for that.

Senior Writer and author of the Know It All blog

Ed Cone has worked as a contributing editor at Wired, a staff writer at Forbes, a senior writer for Ziff Davis with Baseline and Interactive Week, and as a freelancer based in Paris and then North Carolina for a wide variety of magazines and papers including the International Herald Tribune, Texas Monthly, and Playboy. He writes an opinion column in his hometown paper, the Greensboro News & Record, and publishes the semi-popular EdCone.com weblog. He lives in North Carolina with his wife, Lisa, two kids, and a dog.

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