For shippers and distributors that operate private fleets, routing and scheduling technology can significantly improve operational cost control and asset productivity.
Routing and scheduling solutions offer the promise of route ‘optimization’ — an automated way to build that ideal mix of orders, stop sequencing and scheduling together with the shortest, most cost-efficient driving route to execute it, that will both maximize productivity for your fleet assets and maintain or improve service performance for your customers.
ROI from these technologies can come in many forms: reducing total miles traveled and wasted empty miles; reducing fuel consumption; improving service performance; right-sizing fleets through improved productivity; and dramatically reducing labor times for route planning. In our experience, automated route plans average 10-25% fewer trucks, drivers and hours. Companies typically realize 8-15% reductions in total distribution costs or 8-20% reductions in miles and hours for service fleets.
Over the years, we’ve found that the reasons organizations delay a decision about implementing route optimization fall into a few basic categories:
The manual process still works.
Most traffic departments can continue to open the door each morning and go right on doing things the old way. It may be wasteful, but they know how to get the job done, most of the time.
There are “special requirements” for what they do.
Many otherwise well-managed companies are convinced that their transportation process is entirely unique and impossible to change. This attitude can undermine priority-setting. Don’t become trapped in indecision looking for software that will “automatically find a nearby truck stop at scheduled lunch breaks” instead of recognizing that you can cut 2,000 wasted miles each day from fleet operations. Many of these special cases can be handled; don’t let them derail the entire process.
They want the ultimate ‘black-box’ routing solution.
The ‘black box’ that replaces a human completely and requires absolutely no oversight for daily load planning is an elusive goal. Companies can spend hundreds of thousands of dollars on technology and still not escape the need for an expert human to keep an eye on the process. While the black box solution is available, there are really very few businesses where it will be a good fit. So many constraints affect daily transportation execution that any fully automated system is subject to breaking if the right opportunity presents itself.
Even incremental improvement to current processes can drive significant ROI. If software to automate a 3-4 hour manual routing process will reduce the time required down to a 10-minute review of final results to scan for address entry errors, you can still save almost 20 hours in a week, or 80 man-hours a month.
What to Look for in a Solution?
What are your business needs and goals? Are you trying to reduce costs, cut the time it takes to create routes, or give better service to your customers? Are you growing and need help to handle the increased volume? Before you begin to look for a solution, make sure you have your business goals defined and agreed to by your project stakeholders.
Look for the practical application of advanced science with a potential vendor. If the routing tool can’t manage real-world constraints like avoiding certain driver and customer combinations or addressing lift gate requirements at selected locations, then you will struggle to use it on a daily basis to improve your transportation operations.
Plan on building business improvement, not just building routes.
Good routing software gives you tools to analyze and improve the way you do business. Exploring alternatives, like giving customers shorter delivery windows, or using contractors or changing the kinds of vehicles in the fleet, are all scenarios a good routing solution can support.
Are you now building routes in stages throughout the day because you need time to assemble orders, or just because it takes so long to manually build your routes? Do your drivers sequence their own routes only because your dispatcher is overworked? Do you keep the same driver on a route to build strong customer relations, or because it is the easiest way to assign jobs? As you grow or your business changes, a strong routing technology platform can help manage that change.
Routing optimization should be an ongoing ‘process’, not an event. Don’t expect to simply automate your current manual methods. As you implement a solution, you will become aware of new details about your operation and its dynamics that may become the source for your greatest performance improvements. Plan to go through several stages of improvement and change as new insight to current processes helps refine your future strategies.
Avoid IT roadblocks.
Routing software works with your customer and order data, two critical resources for your company. Don’t let that idea scare your IT department. A good routing solution is not a data repository, but rather a data appending process. Route and sequence data points are added to your order data, with a delivery time and other route-based information.
Security and data integrity issues are generally not applicable for a routing solution. Your routing optimization technology should not be storing customer and order data, only the business rules information needed to generate routes.
Effective routing solutions from experienced technology providers really work. They lower costs and improve the service levels you offer customers. They can generate practical routes that satisfy customer expectations and driver capabilities. The key to success in implementing a routing solution is to approach it as a business improvement benefit and not just a way to replace or reduce staff. This technology can improve transportation performance and private fleet resilience in today’s leaner operations.
James Stevenson is Vice President of Sales and Operations for the Appian software business unit of TMW Systems, a leading provider of logistics software solutions for the transportation industry. He has over 23 years of experience in the transportation industry and the application of logistics planning, routing and scheduling technologies. A native of Oklahoma City, James attended the University of Oklahoma, where he received a BS in Industrial Engineering with a concentration in Operations Research.