There’s a monster in our midst. It was hatched somewhere in the boardrooms of Amazon; now it’s coming for your business.
Terrifyingly high expectations of delivery performance are spreading fast from the B2C to the B2B space. Your business buyers are Amazon customers at home and have been conditioned to expect fast, precisely timed deliveries – for free.
To some, this sounds like commercial utopia, where everyone gets everything they want exactly when they want it. But, for your delivery fleet operations, it’s a potential nightmare that threatens to suck your profits dry.
Last-mile delivery costs in the B2C sector have ballooned to between 28% and a whopping 55% of the total cost of goods. A similar trend is inevitable in the B2B space as Amazon-style service raises the bar on delivery expectations.
Chances are you are already feeling the monster’s hot breath on your neck. Customers previously happy with a four-hour delivery window, once a week, are suddenly demanding more frequent replenishment and much, much tighter delivery times. Deliver just a little late to Target, you get fined. Deliver early to Walmart, and there’s a penalty.
It’s the way the whole world is going. Inventory has become a dirty word. Faster, smaller, more frequent deliveries are becoming the norm. There’s no putting this monster back in the cage. The challenge for private fleet owners is taming the beast that is delivery route planning without sacrificing a huge chunk of profit.
It’s here that businesses are failing to avail themselves of the weapons to hand.
Despite the availability of technology to optimize delivery route planning, the process at many businesses remains stuck in the past. A route planner examines paper orders, arranges delivery stops from first to last after eyeballing a map, and hands over stacks of orders to drivers to deliver in sequence.
In this environment, a busier and more demanding delivery schedule triggers knee-jerk requests for more trucks, and more drivers to operate them, even when they may not be needed. Sadly, throwing money at the problem is like using garlic against an onslaught of werewolves. An increase in truck volumes doesn’t just mean more drivers; it also means higher fuel, maintenance and insurance costs.
In our experience across hundreds of private fleet evaluations, inefficient delivery route planning can inflate total fleet costs 10%–30%. According to the American Transportation Research Institute, the fully burdened cost of a truck mile is $1.59. For a 50-vehicle private delivery fleet, where each vehicle drives 50,000 miles/year, a 20% efficiency loss means nearly $800,000 in lost profit annually.
How can you know if runaway costs are a problem for your own fleet? The answer is in your P&L, but likely well hidden. The best horror flicks have taught us that the scariest monsters are the ones we suspect are there, but can’t see.
To solve this mystery you’ll need to summon your ancient super-powers and venture down to your transportation department, where route planners are processing customer orders and divvying them up among drivers. Here you might find monsters of your own making, with costs spiraling scarily out of control.
The reason is that, even when aided by spreadsheets, one human brain is no match for the complexity inherent in any good-sized, multi-stop delivery operation. It’s this complexity that the monster feeds on. Even operations with as few as ten trucks delivering twice a week to 20 customers generate more possible permutations than episodes of The Twilight Zone.
Add in other variables – tighter delivery windows, different delivery requirements at each site, driver Hours of Service restrictions – and it’s a horror show. You’re bleeding time, fuel and profits. And you’re likely making at least some of your customers want to scream.
The solution is route optimization software, which enables lightning-fast assessment of the petrifying number of variables that impact route efficiency – from route options, to historic traffic conditions, to actual unloading times by location. Result: better delivery route planning in minutes, not hours.
Assuming a 10%–30% cost reduction, the ROI timeframe on this technological investment is typically measured in months, not years. It’s hard to imagine another part of your business where costs could be so radically reduced and actually work better as a result. Benefits include reduced planning staff requirements, smaller capital expenditure on trucks, lower fuel costs, and the ability to take on more work without increasing trucks and drivers.
When it comes to delivery schedules, the days of being able to rely on “Joe the Route Planner” to come up with the most efficient route plans are gone. Every single company responsible for daily, scheduled deliveries needs to avail themselves, right now, of the fantastic weapons made possible by modern technology. With route optimization software, you’re bringing a light saber to a fight with zombies. Without it, you’re more vulnerable than Buffy the Vampire Slayer without her magical abilities.
In this scary new world of Amazon-fueled delivery expectations, your delivery route planning capability is either part of your competitive advantage, or the reason your business will sink into the swamp. It’s time to use technology to tame the monster, and turn delivery operations from a profit suck into a competitive advantage.
Interested in finding out if your organization needs help? Read 6 Tell-Tale Signs That Your Delivery Route Planning Operations Are a Mess or get in touch with our team who will be happy to help.
