Why is Everyone Optimizing Delivery Routes These Days?
Optimization is the latest word buzzing across all the industries and all the geographies. Ever wondered why is this keyword driving so much of business growth in recent times? A customer, whether business or individual, has multiple choices for every other product or service. In such a scenario, the cost and quality are the two major factors that influence the final purchase decision. Delivery route optimization is the most efficient and consistent method to achieve cost and quality distinction for your product.
“Have you observed the trend of optimization as a word being used in the industry so much lately? Below is a google trend analysis depicting the drastic change of the global searches for the term ‘Optimization’.
Why Optimize Delivery Routes?
Let’s consider the routes and resources that you utilize to manage your deliveries. This is a key area to focus on as it can often become a bottleneck in your network. If you over-estimate your resource and vehicle requirements, you might be left with excess resources that you would then have to worry about, which would add to the overall cost. If you underestimate your requirements, then you would have a lag in your delivery timings and you will end up making your customers or recipients of those deliveries unhappy. The underlying aspect in both scenarios is that you were unable to plan your delivery routes properly.
Perhaps you did it, but it was done a few months ago while making yearly or quarterly projections. A lot would have changed in a few months. Maybe the number of deliveries and geographic reach got extended. Maybe the fuel charges shot up. Maybe there were some new roads which got constructed or new vehicles got procured. None of these things would have been apparent while you calculated your projections. And now you stand in your warehouse with either too many resources or an imbalanced utilization across resources. There is one way you can preempt this problem in a way that minimizes your losses or even completely eliminates the waste. The solution is logistics management through automated delivery route planning and optimization. And that too in real-time!
How to Optimize Delivery Routes?
Consider the previous situation, where you have just been updated that the fuel cost has gone up 5%. This would undoubtedly push your budget upwards and bring your profit margins down. There are two things that could be done at this time.
1. Restructure your current delivery routes to the bare essentials so that at any point you have the minimum number of vehicles or delivery boys in transit, and in stock.
2. Identify the bottlenecks within your delivery network in order to figure out the best possible delivery routes, not just from time and distance point of view, but also to meet time preferences of all the customers and capacity constraints of all the vehicles and delivery boys.
Either solution would help in better managing your logistics. There are two points worth noting in the above examples.
1. The two solutions are mutually exclusive and hence can run parallel. You can have streamlined inventory with delivery route optimization. This is what, in popular culture, is referred to as a double whammy.
2. There is however still a sense of risk when the uncertainties of travel are accounted for. If you are in the business of producing ice-cream products, the quality of transport is as important as the delivery route optimization. If the delivery takes much longer than expected than the delivered product would not sustain the expected quality. You would have to optimize delivery routes while averting traffic and checking the quality of your goods in real-time.
The above objectives can be achieved with the real-time tracking information whilst delivering your goods or you can simply use the heat maps provided by LogiNext’s Mile, software and analytics tool. This would result in the minimum fuel utilization. The delivery route optimization technology available to different enterprises has really caught up to plug in these waste points as and when they creep up. You can now track your delivery units, like your trucks and delivery personnel, from a single point. Moreover, you can manage the in-transit inventory to better align the operations at the source and end locations.
Do Not Forget the Top Line While Improving the Bottom Line
Just so there is one aspect that we haven’t considered as yet, and something that almost always gets unnoticed while preparing logistics. The top line. Most managers concentrate on lowering the bottom line impact while leaving the top line to the sales and marketing departments. Efficient logistics management can result in a significant boost in sales through customer satisfaction.
With delivery route optimization, you can send accurate ETA alerts to the customers and increase predictability and visibility for them. This helps in building trust and relationship with the end customer, this also helps reduce customer queries or complaints which usually arises due to the anxiety of customers about their deliveries. If you commit to delivering your product by noon on a Monday, and you do, that would make the customer come back to you for future purchases.
Although we took a long route to get here, it is now clear that optimization is not really a buzzword as long as it is achieved with the correct processes and tools. Myntra, the largest fashion e-commerce store in India, has recently started delivery route optimization in their first-mile pickups and last mile deliveries. Recently, one of the media articles claimed that they are planning to achieve a whopping 20% of cost reduction by using enterprise software provided by one of the fastest growing software company, LogiNext.
Here is what their Senior Vice President mentioned “Deploying the latest technology is the only way forward for businesses today and we are extremely pleased to have found the best partner in LogiNext. Their expertise in the field of big data analytics and real-time tracking has significantly helped us to track the shipment, optimize routes and provide our valued customers with the precise ETA/ETD. We recommend LogiNext for anyone looking to streamline their logistics, gain better visibility of shipments and delivery personnel and cut-down the operational costs.”
With the latest wave of real-time technologies and so many disruptive startups coming in the market, an overall saving of 20% to 25% has become the new benchmark, and the hunger to optimize has become a never-ending game.