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Triggers That Lead Operators to Embrace Routing Software

The global route optimization software market is growing at a near 19 percent rate (2017–2023), according to Allied Market Research.

It’s not surprising. More and more fleet operators are recognizing the advantages of automating route planning in order to both reduce fleet operating costs and create precisely timed delivery plans that improve the customer experience.

But what are the trigger points that lead businesses to begin their journey from spreadsheets and maps on a wall to advanced routing software?

We did a little historical research to determine the most common reasons that lead businesses to contact Paragon. Five triggers stood out.

Do you recognize any of these in your own organization?

1. Key routing information is in the heads of one or a few people

A large percentage of fleet operators still plan routes manually or with the most basic tools. That means all the data about what makes routes accurate and efficient is in the heads of route planners, and not a system. If those people leave, the data goes with them – a huge organizational risk.

Sometimes, it takes a trigger event for that risk to become clear.

Recently, we were contacted by a company whose senior route planner was out sick for two weeks. It took his absence to expose the company’s vulnerabilities as they scrambled to translate daily orders into logical routes. There were no established rules to guide them, and only one conclusion to draw from the experience: “We need to fix this.”

The fix, of course, is to keep this important information where it belongs – in a system rather than a single employee’s brain. Risk-averse business executives see route optimization software as a means to protect their operations while also gaining essential operational efficiencies.

2. No common rules for route planning across the organization

For distribution companies in growth mode, careful management of fleet operations can be an afterthought – even though the function represents one of their largest cost centers. Sales territories expand and new distribution centers are added, but there is no uniform approach to routing strategy and methodology. As a result, you have multiple operations acting autonomously – throughout a region or even nationwide.

Eventually, the boss starts asking questions like, “Why are our fleet costs 15 percent higher here than our other locations?”

And guess what? There’s no way to answer the question, because there’s no visibility of data and methodologies across the organization.

That’s disconcerting to business leaders, and that’s why we get a call. Example: We met recently with a building supply company with 200 nationwide locations. The company builds loads daily at each location using a white board. That model wasn’t a strategic choice; it just happened over time. Eventually, they recognized the need for a common system and approach, organization-wide.

Distribution businesses may choose a decentralized model in order to move faster and maintain a more entrepreneurial spirit at each location. But in areas such as fleet operations, lack of process consistency and control leads to inefficiencies that can have a crippling impact on the bottom line.

3. Fleet operations can’t scale with sales growth

As businesses add locations, they begin to recognize that planning routes using spreadsheets or rudimentary route planning tools just won’t cut it. Plans that once took three hours now take eight or 10 to construct, due to the added complexity.

But this realization comes at different times for different organizations.

Businesses with foresight get to this point quickly. Others are slow to recognize the signs, assuming that a 15 percent increase in customer shipments automatically equates to 15 percent more trucks and drivers. Without careful, system-aided analysis to validate the resource requirements, companies may add more trucks and drivers than they actually need. It’s only when profitability takes a noticeable dip that these businesses recognize the urgent need to change.

Once route planning is automated, highly complex decisions that might otherwise paralyze an organization’s progress become manageable. For instance:

  • A window manufacturer that expanded from Virginia to a new DC in Florida used routing software to determine how to split the customer base by facility to minimize delivery costs.
  • A global food distributor uses routing software to drive post-acquisition decisions, such as whether to keep or consolidate DCs.
  • A national retailer uses the business modeling module of its route optimization software to determine the optimal location for a new DC to support store expansion in a region.

You can manage growth, or be managed by it. Most companies prefer the former.

4. Unhappiness with current routing software

This trigger point manifests in different ways.

In some cases, companies have simply outgrown their software and are looking for a tool with more advanced functionality.

In other cases, there is frustration that the company’s so-called advanced routing software cannot automate more complex rules without workarounds. For instance, a restaurant franchiser might want his four locations to be on the same delivery route and delivered in sequence. When the system can’t be configured to automatically manage these and other such routing rules, it becomes a frustration point.

In still other cases, company dissatisfaction with its route optimization software provider comes down to a simple issue of service. Businesses want to work with knowledgeable consultants who take the time to understand the business to ensure that the software supports existing processes. Many businesses simply don’t want to adapt long-standing processes that work just fine in order to conform to a software’s limitations.

5. Inability to gauge fleet efficiency

One of New York City’s most famous Mayors, Ed Koch, was known for the catchphrase “How am I doing?” – his constant query to constituents as he toured the city. In most cases, he got a thumbs up.

Fleet operators often find themselves asking the exact same question about their fleet’s performance – but have absolutely no clue about the answer.

For route planners and dispatchers at many distribution companies, each day represents a dizzying ride on the same hamster wheel. When it’s a struggle just to get orders out the door, there’s little time to ask: “Are we doing this right?”, “Are my drivers following the established routes?”, How does our performance stack up against best practice?”, “Are we spending more than we should?”

Business leaders eventually must make the sobering admission that they have little to no visibility of what amounts to the core function of the business – distribution. That’s ultimately what leads them to seek out a better routing solution – a desire to gain control of distribution operations.

Take notice of the symptoms

Those are some of the top trigger points that prompt fleet operators to explore the advantages of automating and improving delivery route planning with advanced routing software. Do any of these triggers feel familiar?

Businesses that choose to automate typically see a 10–30 percent reduction in fleet operating costs linked to route optimization software. That’s a pretty good reason to take notice of the symptoms of poor performance and act quickly.

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