The Indispensable Role of Management Science in Centralizing Freight Operations at Reynolds Metals Company

Abstract

In October 1988, the Reynolds Metals Company centralized interstate truckload freight operations. Reynolds' over-200 plants, warehouses, and suppliers no longer dispatch their own shipments to some 200 van and flatbed carriers of their choosing. Instead, they communicate daily shipments to central dispatch at the company's headquarters in Richmond, Virginia. There shipments are assigned to one of 14 premium-quality carriers through a comprehensive automated dispatching system. The Reynolds management sciences department built mixed integer programming and simulation models of central dispatch operations that transportation used to select and deploy carriers. To support daily freight operations, it built on-line dispatching models to help dispatchers route freight by the best service alternative at the lowest cost. Central dispatch has improved on-time delivery of shipments and reduced annual freight costs by over $7 million.