Route Management Software – Benefits and Savings
Welcome back to the Laceup blog. The delivery of orders is one of the most critical and challenging processes of a distribution, wholesale, or delivery company. Operational costs of the delivery routes, driver and truck tracking, and time consumed serving the routes are the most common concerns of our customers when looking for a software solution to their route delivery problems. A good Route Management software addresses all of these issues.
In this article, I will go over the concept of Route Management and how it can help you with your route problems.
What is Route Management?
There is a tendency to associate “Route Management” with “Route Optimization”. But actually, Route Management combines optimizing route efficiencies with real-time truck tracking, driver direction to minimize the distance to the destinations, and monitoring of drivers.
Route Optimization is a very powerful tool that allows you to optimize routes based on proximity, traffic, receiving hours of your customers, and truck capacity. But that is a subset of the features of Route Management.
How can Route Management help you?
We mentioned three concerns of delivery companies: Operational costs of the delivery routes, time consumed serving the routes, and driver and truck tracking. Let’s address each of these issues and how Route Management software can help.
According to the 2020 study by ATRI, the American Transportation Research Institute, on average 56% of trucking costs in the US come from driver wages and fuel. These proportions have been pretty much the same over the last 5 years. However, with the increase in fuel prices and the inflation rate expected for 2021, the absolute value and the effect of these variables will have a greater impact on the bottom line of your company.
Route Management software minimizes operational costs with a combination of Route Optimization software and integration with Route Accounting as I will explain next.
Time consumed serving the routes
With Route Optimization you can optimize routes based on proximity, traffic, receiving hours of your customers, and truck capacity. You can also have visibility of the route followed by the driver and make live suggestions on alternate routes. By optimizing the time the drivers spend driving, you will reduce labor costs, consumption of gas, and the probability of accidents. In other words, you will increase the profitability of your business while gaining complete traceability and visibility of the routes. Even more, route optimization will reduce the time spent by warehouse personnel planning the route by hand.
Driver & truck tracking
With route optimization, you minimize the time spent driving, but if you want to maximize productivity, you need to be able to track how much time the drivers spend with each customer and where they went during the day. By integrating Route Management with DSD Route Accounting software you will be able to view the movement of your trucks live on a map and the time spent in every store. The information gathered will give you the tools required to evaluate the driver’s performance. For example, the time they spent at the store must justify the size of the invoice and the time spent between stores must be compatible with the route schedule.
Savings of Route Management software
At this point, it is clear the impact that a Route Management solution will have on the efficiency and productivity of your delivery process and the profit of the organization. However, there is always the question of how much I will be saving and whether it justifies the money I will spend on the purchase and implementation of the system.
My recommendation is that you should make an ROI analysis in order to answer those questions and decide what Route Management software is best suited according to the size of your operation. As a subjective reference, most customers claim savings between 8% to 10% in transportation costs and a similar figure in the delivery process when coupled with Route Accounting. But for more objective data I will cite some conclusions made by a British study conducted by researchers from Plymouth University, Cardiff University, Hariot-Watt University, and the Sainsbury’s supermarket chain.
- “Extra distance” due to bad planning accounts for 7.82% of the total distance run.
- 2.62% of the total hours dedicated to the deliveries were “extra time”. The four causes of extra time are delays at suppliers, delays at outlets, delays due to unplanned stops, and delays due to unexpected road congestion.
- Delays within the delivery process generated 27.2 % of the extra miles that could have been avoided with Route management or Route Planning software .
You can use these figures to calculate the savings in labor, truck maintenance, and gas expenses that you can expect. This will give you the basis to estimate the ROI and select the system best suited for you.
I hope this article has been helpful. We will continue to publish information related to warehouse management and distribution practices. If you are interested in this article or want to learn more about Laceup Solutions, register to keep you updated on future articles.
If you want to know more about Route Optimization I would recommend this video.