If your company’s transportation team is still manually planning the routes your delivery vehicles are taking, chances are your routing operations are way, way less efficient than they could be.
Delivery fleet operations eat up a huge chunk of operating costs, and are critically important to overall customer service, but – particularly in a manual route planning environment – it can be hard to determine if a poorly run operation is draining your company’s profits. Here are 6 tell-tale signs to determine if route planning is a problem in your operation.
Your transportation department has always been a cost center, but are costs spiraling out of control? In a manual route planning environment, business growth often triggers knee-jerk requests for new vehicles or more people. In our experience, this can inflate total fleet costs far faster than business growth, threatening to drain profits out of the company. Improving the planning process to reduce the number of planners, trucks, miles and drivers can save a substantial amount in overall fleet costs.
Since every business is different, there’s no hard and fast guide about how many drivers, trucks or planners you should have to fulfill delivery commitments. A food supplier delivering to 300 delis in Chicago first thing in the morning will have very different requirements than a company collecting hazardous waste across the country, visiting each customer once a month. However, every company can get important indicators of improvements (or declines) by monitoring transport costs over time, and measuring how they’re changing.
Performance figures are harder to come by in a manual routing situation, but monitoring them is critical to your business. Most transportation departments that are still routing manually, however, are not able to easily produce reports that allow senior executives to assess the operation in terms of both performance and costs. This is a real problem for such a huge cost center.
Even a simple question such as: “How many of our deliveries were late last week?” can be hard to answer.
Key metrics to ascertain include:
You have a right to dig in and ask your delivery department for these answers. Frankly, if you can’t get even the most basic information about your fleet operations, that’s a massive red flag.
If this is happening it could indicate that route planning is taking too long. You may view your current timetable for processing orders/planning routes/picking products/loading trucks as an unchangeable reality of business. But with a more automated approach, it’s something you can change – and may need to change if customers are complaining.
Lengthy route planning cycles can create operational inefficiencies. Are you paying for a graveyard shift at the warehouse, for example, when you don’t really need to? Worse yet, customers and potential customers might choose to buy from a competitor who offers order cut-off times that are two hours later.
Don’t let the tail wag the dog. A slow route planning process should not dictate your customer service levels.
Are driver shifts lasting longer than planned because of unplanned delays? Are drivers complaining that the planner is favoring other drivers? Is emotion or favoritism creeping into the route allocation process? These are just some of the things that can happen when routes are planned manually.
With the driver shortage biting ever-harder, drivers are being offered higher salaries and large signing bonuses to move. There’s no question you want an operation that gives drivers the fair, predictable, workable shifts they seek and keeps drivers happy. If your current operation is undermining this goal, it requires a careful look.
For delivery route planning, many businesses continue to rely on one or a couple of key individuals with vast knowledge of customer needs and the peculiarities of individual delivery destinations. The problem is that, when they leave, all that knowledge leaves with them. This is a huge risk that businesses ignore – often until it’s too late. It might be time to start transferring all that information into an automated system where it can be accessed by everyone.
Can you get a clear answer to the question: “How much would it cost if we agree to deliver to an existing customer four times a week instead of two?” Or, “How much would it cost to take on this piece of new business?”
If you plan routes manually, these are probably not answers you can get, since information on delivery cost-per-drop and other “cost-to-serve” type data is either sketchy or non-existent. That makes it very difficult to know if a piece of business that initially looks attractive will never be profitable. The assumption is that any new business is good business (just ask your sales team!), but often that’s not the case.
Advanced route optimization technology, which cuts the time required to plan routes from hours to minutes, can also allow you to spend time playing out all manner of what-if scenarios. You can use it to dig deep into how delivery costs impact profitability.
If you find that one or more of the above signs are true for your company, then it probably makes sense to do a deeper dive to explore ways to improve the efficiency of your routing and dispatching function.
Most likely, every other operational function in your business is systemized – accounting, payroll, warehouse management, order management. If route planning isn’t, there’s likely a significant upside in terms of both improved delivery performance and reduced costs.
Our team of experienced support consultants can take basic data from your company to perform a diagnosis of your route planning operations, and model the savings and performance improvements you could gain from automating your delivery route operations. Contact us today to find out more.
