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Delivery Route Planning Software Helps Private Delivery Fleets Track the Cost to Serve Customers

Buzz terms can be annoying, but they can tell you a lot. Along with the “Uberization” of freight services, we now have the “Amazonization” of delivery schedules. (Yes, it’s honestly a thing.) That means B2B companies face pressures to bring the same speed and ETA accuracy to a B2B delivery as people have come to expect from eCommerce deliveries.

If you operate a private fleet, there’s obviously a cost to this added level of precision. You need to monitor these costs, for existing and new customers, or inflated delivery costs can swallow up your profits in a hurry.

Luckily, technology – including delivery route planning software – can help meet customer requirements while staying on top of the cost to serve each customer. Let’s look at how a route planning tool can help manage new and existing customers.

Assessing the profitability of new customers

New business is the lifeblood of any company. Nothing happens until a sale is made. Sometimes, in an effort to close a deal, over-zealous salespeople can make expensive promises, like doing twice-a-week deliveries to a remote location. Delivery route planning software can serve as a check against such sales promises.

Without software, companies work out the cost of these new deliveries by adding up a few numbers on a spreadsheet. This manual process makes it almost impossible to arrive at a true cost to serve. That’s because no Excel spreadsheet can cope with the complexity of detail involved. Exactly where are the new delivery points? When are they open to receive delivery? What is normal delivery size and how will it vary? How will these deliveries fit in with other existing deliveries?

The complexity is so vast, with so many factors involved, that the only way of knowing what the actual cost of serving a new set of delivery points will be is to model it beforehand.

Use of a routing and scheduling tool allows you to take an existing route plan and factor in the new customer drops to come up with the best plan – before a single truck leaves the dock. You can also quantify the cost impact of these changes and how that might affect margins. In this way, routing and scheduling software can help the business development or sales team make sure that new business helps both the top and the bottom lines.

Monitoring the impact of changes from existing customers

Often, the first a fleet manager hears about requests for change in a customer’s delivery schedule is when he receives instructions from the sales or marketing team. All of a sudden, he needs to arrange delivery in different amounts, on different days, or to different locations.

We see a lot of change in the food vertical, for example, where the farm-to-table trend and increased demand for fresher food mean smaller, more frequent deliveries. And then there’s Amazonization, which means the goalposts that define delivery speed and accuracy keep shifting.

Delivery route planning software helps easily measure the impact of changes on operating costs.

Say you have a delivery network that involves 50 trucks doing 20,000 miles per week with 60 driver shifts. You add in the new requirements, press a key, and see you now need 70 drivers doing 25,000 miles per week with 75 driver shifts. That will give you a clear, dollars and cents calculation of the costs involved in the changes, and clear objective data to share with customers when you discuss necessary price adjustments.

Route planning changes: Empowered by facts

When changes are proposed to create more efficient, cost-effective truck routes, resistance is not uncommon. Think about the regional depot that’s been planning its own routes for years and is now being asked to adhere to centrally planned routes.

One of the huge benefits of delivery route planning software is that it produces mathematically logical, de facto results, which takes emotion out of the process. It’s empowering for a fleet manager to say “This is the cost of taking on this new customer or new schedule. We’ve modeled it, and here it is.”

According to one Paragon route planning user, a fleet coordinator for a Midwest food company, “When we go into a district and propose a change, we now have calculations that can tell us how much we save in fuel, manpower, trucks, and we can attach a cost to that.”

Ultimately, the cost saving benefits of the software is the best ammunition against internal resistance:

  • V&V Supremo was able to take a whole day out of its weekly delivery schedule by automating route planning.
  • Using Paragon Software to monitor and model its routes helped Frozen Food Express increase sales by 9%.
  • In the UK, grocery distributor A.F. Blakemore found that automated route planning cut 620,000 miles annually from delivery routes and minimized the company’s environmental impact.

Delivery route planning will be critical as last-mile delivery takes center stage

Amazonization is here to stay. It is the start of a B2B environment in which constant change in delivery patterns is the norm. Businesses must adapt to these changes with agile, efficient, last-mile delivery operations – or risk losing market share.

Routing and scheduling software can help. It not only allows fleet managers to stay on top of these changes without losing control of costs; it also amplifies the strategic role of the transportation department and allows fleet managers to impact company success in a way they never have before.

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