3PLs and trucking companies come in all shapes and sizes, but one challenge is common among all – the need to constantly bring in new business to keep trucks rolling and profitable.
In this rate-driven market, dedicated transportation contracts are getting harder and harder to win. But tools like route optimization software let you provide a level of “smart” your competitors can’t match, differentiating you from the pack and, ultimately, improving your close rate.
Let’s look at how truck routing software pays dividends for 3PLs far beyond the investment.
Like it or not, the Freight RFP is a fact of business.
Carriers pore through reams of data on pickup and delivery volumes, ship-to points, product dimensions and special requirements, and then translate that analysis into a (hopefully) winning cost structure. In these situations, there is a HUGE advantage for carriers with software that can create very accurate assessments of required miles, trucks and drivers – the core elements of cost.
The right routing software can factor in dozens of variables along a given route or lane (historic traffic conditions, time per drop, average road speed, etc.) to calculate routes using the least time and miles. The analysis is done in minutes, saving hours and days of number-crunching, while generating a more accurate result. Even the cleverest transportation planners are no match for the computational power of routing software – there are just too many variables.
Numerous 3PL’s, including CEVA, Martin Brower and DHL’s sales and operations teams, use Paragon’s routing software to price out bid packages across many countries. Read the full case study.
An added benefit to the development of efficient route plans is the helpful and attractive graphs and charts that can be generated within Paragon for inclusion in RFP responses. These visuals make your response stand out by helping decision-makers immediately and clearly see the value being offered.
When these bids are won, in many cases 3PL’s use Paragon to manage the daily routing process for each contract.
Have you ever won a new contract and regretted it because it wasn’t priced right?
Not all new business is good business. With advanced route optimization software, you can do a “cost to serve” analysis to ensure you price the deal to cover your costs and profit goals. Or, the analysis may support a no-bid decision, ensuring your assets are not tied up with breakeven or unprofitable accounts.
Of course, the better option is to suggest alternate routing strategies that make more sense for the customer and earn you the profit you need. Paragon’s routing software includes strategic modeling functionality that allows you to test the service and cost impact of alternate strategies. For instance, “What would happen if we avoided Monday deliveries?” If the answer suggests a lower cost for the customer and improved asset utilization for you, it could turn a bad deal into a profitable, winnable opportunity.
For-hire fleets need to run as efficiently as possible to maintain profitability. That’s always been the case, obviously. But the challenge has intensified in recent years as customers increasingly demand more frequent deliveries in tighter time windows – all while keep costs in check. Carriers that pursue route optimization without the aid of automated planning tools create inefficient, profit-draining delivery routes.
FFE, one of the largest, temperature-controlled LTL operators in the US, uses Paragon to automate what was previously a slower, inaccurate route planning process. Read the full case study. Within six months of implementation, FFE:
3PLs are often criticized for lack of continuous improvement during a long-term contract, after the initial efficiencies have been realized. The dilemma you face is that shippers want ongoing innovation, but don’t want to pay extra for engineers and freight analysts to explore the very “what if” questions that might drive costs down.
The right software solution can serve as a very budget-friendly “ON switch” for idea generation.
For example, Blakemore Logistics uses Paragon’s planning tool to model different strategies for distributing to 1,100 SPAR convenience stores across the UK. The 3PL can create multiple scenarios using its own transportation data to gain operational insights and make informed business decisions. For instance, every time a new store is opened, Blakemore must run a model to determine which of its ten distribution centers should serve the store, as well as the related impact on nearby stores.
Says Marc Deakin, Blakemore’s logistics manager: “Having the ability to model multiple scenarios using real-world data is incredibly useful. It means we can see the impact of change before committing to an investment.”
These modelling exercises are quickly executed using smart algorithms that take the place of days and days of analyst time. Those analysts can now spend that time developing new strategies to ensure routes are optimized across SPAR’s entire distribution network. Read the full case study.
Route optimization software can be a hugely flexible addition to a 3PL’s suite of tools since it can be leveraged at any point in the customer relationship:
Best of all, routing and scheduling software is an affordable investment with a rapid ROI – commonly within 3–12 months.
If you are a 3PL or carrier looking to drive value for your customers, and for your business, contact Paragon about our suite of route optimization tools.
