Implementing route planning and scheduling software that improves fleet routing operations saves you money, and keeps saving you money.
Most companies focus on the immediate ROI of buying this technology, which is typically within a year and can be as fast as three months. But it’s easy to under-estimate, or even ignore, the value of the softer and less obvious benefits that continue to impact your bottom line over a long period.
When calculating ROI on an investment in route planning and scheduling software that optimizes fleet routing, the math will focus on things like:
ROI measures are typically compared against a 3–5 year amortization schedule for paying off the software. But it’s important to understand the lifetime value of the software. The savings related to the points above keep repeating, year after year.
It’s comparable to a home investment to improve overall home insulation. Naturally, you want to see savings in your heating and air-conditioning bill over the first few years that effectively pay off the cost of the work. But you keep getting lower bills long after. Similarly, software that optimizes fleet routing is the gift that keeps giving, with initial savings repeated for many years.
Route planning and scheduling software delivers many other benefits to fleet routing operations that may not necessarily be factored into an ROI calculation. Here are a few:
While it may not be what prompted you to buy route planning and scheduling software, the intelligence gleaned from the system can inform major business decisions that could generate six- and seven-figure savings. These strategic business decisions often go well beyond the scope of “fleet management.”
For instance, fleet route optimization allows you to play out the potential consequences of changes to your delivery network before pulling the trigger (and spending the money) to enact them. These include changing the DC from which you serve a customer or region, or trying out ideas about consolidating delivery days in a region.
Route planning and scheduling software can also give dollars-and-cents answers to questions like: “How much will it cost to take on this potential new business?” or “What happens if I build or buy a new warehouse in this location or that location?”
Here’s an example: After using Paragon Software Systems’ software for 15 years, UK supermarket giant, TESCO, used it to conduct an efficiency study to see if they were servicing stores from the right DCs. With Paragon support staff’s help, TESCO rejigged its distribution network to make more sense, driving out more than $2 million in costs.
Most companies amortize a purchase such as this over 3-5 years. But there is a significant lifetime value to owning the software. You may not be able to whip out a calculator and determine this value now, but it’s very real.
The savings made in the first year of implementing software to improve your fleet routing operations are just the beginning.
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