Squeezing Cost Out of Your Delivery Operation
Kyle Scobey, Supply Chain Evangelist
Running an effective delivery operation is a challenge. Costs associated with delivery services can get out of hand if not monitored on a continuous basis. According to Insider, last mile delivery amounts to 53% of shipping costs. If you have ever tracked a package and it said “out for delivery” this is the area we are focusing on.
Many distributors are electing to carry out this process by adding their own delivery service to their operations. Customer expectations are high as companies like Amazon have established services such as Amazon Prime. This type of delivery service can involve hundreds of stops with delivery of small amounts of product. This scenario compounds the need for efficiency as now a broad range of efficiency-sapping factors are at play. Understanding those factors and ability to monitor them provides a key element in controlling these costs.
Delivery fees can contribute to a company’s revenue stream and cover costs of the delivery service. It is important to understand the costs to arrive estimate delivery fees. A solution like NetScore’s Delivery Routing application gives companies the ability to track costs over time. This level of information provides the ability to estimate delivery fees.
Driver time is a significant cost and must be managed as it controls how many deliveries go out in a shift. Route planning tool accounts for:
- Transit time from one stop to the next
- Unloading product
- Loading returns
- Acquire proof of delivery
- Communicating with the next stop
The above factors can all affect delivery time. Time stamps for each delivery can, over time provide an estimate of time needed to account for these factors. NetScore’s Delivery Routing solution timestamps each delivery stop and provides real time driver locations.
Fuel is a variable cost that can improve by use of intelligent routing solutions. The solution determines the most efficient route based on the planned stops among other factors. Integrations to solutions like Google Maps can determine potential traffic snags, road closers, and accidents that can make a route inefficient.
Truck maintenance is critical to maintaining an efficient delivery operation. Trucks breaking down while en route to a delivery can be costly. Some possible challenges due to this are:
- Unhappy customers
- Perishable product go bad
- Alternate vehicles must be pulled into service
- Product transferred from one truck to another
NetScore’s solution lets you keep track of maintenance activities, schedule preventive maintenance, and let you know when a truck needs maintenance.
Vehicle constraints such as weight capacity, load volume, and truck assets (refrigeration, lift gates) impacts the choice of appropriate truck for a route. Companies need the flexibility to assign appropriate trucks and assets to a route to optimize costs. NetScore’s Delivery Routing Solution helps build routes to optimize the vehicle capacity. It can also ensure keeping the weight well within limits to reduce fines and excessive vehicular wear and tear. Optimizing loads can be accomplished with the right delivery management software.
The right information helps make better routes which in turn reduces costs. NetScore’s Delivery Routing Solution soon will be able to integrate with other solutions to provide enhanced capabilities. Examples of this include integration your NetScore Warehouse Management Solution that allows for delivering product to the loading dock in order sequence. This allows for easier loading of trucks in reverse stop order to make unloading efficient and quick. This solution can integrate with solutions from Google for real time mapping capabilities and Google Cloud Storage. A new integration with Particle enhances features in fleet management and integrating sensor technology which all offer opportunities to remove costs.
Running a cost-effective delivery operations is a challenge. But, leveraging the right software to manage this process will provide a solid return on investment in the form of lower costs, higher customer satisfaction, and optimum performance of your delivery service team. For more information on how NetScore can take your delivery operation to the next level, please reach out to NetScore Account Executive.