Retail Delivery Route Optimisation Savings: Return On Investment Part One

In my last blog I looked at the example of a furniture store using Route2GO Lite to optimise a day’s deliveries. This time we are going to look at the payback, or as I like to call it WIIFM, What’s In It For Me.

The first thing to look at with any business investment is what you are trying to achieve. One furniture retailer we are talking to, told us that they currently achieve an average of 8 deliveries per truck per day and would like to achieve 10 per day. That’s great because it is easily measurable. Start with a goal in mind, but there is of course much more and I’m going to look at two levels of Return On Investment (ROI). They are tangible and intangible.In this blog I will focus on the tangible, but as you will read in the next one, intangible is equally as important if not more so. Bookmark or subscribe to this blog and come back to find out why.

Tangible

First you have your fixed overheads as far as deliveries go. The first one is your vehicle. It is difficult to get specific vehicle running costs for commercial vehicles. As it was explained to me, when you buy a car, they come off the production line in 10’s of thousand identical vehicles. In theory they should have the same lifetime costs. When you buy a truck or van, you will have a choice of gearbox, and everything that goes on the chassis. For example you could have a metal truck with a luton over the cab, it could be a flatbed, it could have cloth sides. It may have low gearing because it is designed to carry heavy loads etc.  This means that there is no list available that will tell you cost per km for commercial vehicles. I managed to get hold of a document that says that a new 3001 cc diesel car running 14,000km a year has an average cost of 98.4 cents per km over a 5 year life span. Obviously commercial vehicles will drive far more than 14,000km a year and will have great costs.

The best thing you can do is ask your accountant, they will be able to work it out very quickly. I suspect at best you’ll get no change from $1.30 per km.

Let’s back track for a second. What is route optimisation again? It is a tool which looks at all the stops you want to make on a journey and calculating the sequence that you should do them in, in order to drive the least distance in the shortest time.

Why use GeoSmart’s Route2GO and not leave it up to the driver? Because we have a full turn restriction dataset for routing. That means we take into consideration a variety of factors including main roads vs. minor roads (designed for faster traffic flow), one-way roads, no right turns, implicit turn restrictions where you may be able to legally turn but a large vehicle couldn’t safely complete the manoeuvre, roads with median strips where you can’t do a U-turn etc.

Proof? Don’t take my word for it. Give me some run sheets of completed days trips in the order they were done and we will process them and show you the difference. We did this recently for a firm with half a dozen routes. Half of them returned modest results, but the other half generated some significant savings. Consider that if you could cut as little as 20km off a day’s deliveries for one vehicle at $1.30 per km, that’s a saving of $26. Do that every day over a year and you have saved almost $10,000! Of course petrol and diesel prices aren’t coming down any time soon!

But wait there’s more: What about labour costs? Your truck or van doesn’t drive itself. It has at least one, or in the case of bulky or heavy items such as furniture two people on board who have a cost. What do those people cost you per hour? No I don’t mean what do you pay them. Employing staff includes all sorts of things. Perhaps office space, special clothing, phone, desk, mobile, Taxes, ACC Levies, training, holidays, insurance, management and of course all the ancillary costs of doing business, accounts, kitchen facilities, tea and coffee, bathrooms etc. I think you’re getting the picture.

Whatever way you measure the cost of your staff, they key is productivity and in the area of productivity, the simplest way of looking at it to start with from an ROI perspective is, if you can increase their productivity without increasing your overheads, you are making more money right? Let’s say you could have your driver be more productive by half an hour per working day. From memory, we work around 222 days a year after taking off weekends, public and annual holidays. Half an hour a day increase in productivity is almost 3 weeks over a year. I’m not going to guess that cost, but your accountant can tell you what that represents.

These are only two tangible ROI Factors, but they on their own already produce an impressive result.

What does it cost? What’s the catch. I’m glad you asked that question.

The great thing with Route2GO Lite is that it is a web application. You don’t buy it, you don’t pay a monthly fee, you only pay for what you use. When you are not using it, you pay nothing.It is volume based and the more you use it, the cheaper it is per use, but even at the lowest entry level it is very economic.

Route optimisation comes with 2 components. The first part is what we call geocoding. This is where we get the geographic coordinates of the address. That could be the driveway of a home, or it could be somewhere inside a complex, such as a school or a business park. The dearest this gets is 12.5 cents per address. You only do this the first time for each address, so if you have regular customers, this is a once of cost.

The second part is the route optimisation. You tell us the starting location and optionally the end location and our application then looks at every possible combination of the route many times until it is satisfied it has the best combination. This starts at 50 cents per location.

So let’s look at a hypothetical example. We looked at a typical customer trip in the furniture delivery example. We saved a vehicle with 2 staff 20km at a total of $26 savings on a standard trip.  Lets say we also saved $40 in wages. We now have $66 in savings. The cost for Route2GO Lite was 8 geo-codes at 12.5 cents = $1 plus optimising a journey with 8 stops at 50 cents each = $4. So total cost to save $66 was $5. As I mentioned, there are no additional costs, no set up costs, no monthly license fees, its pay as you go.

But wait, there’s more ROI, plus you aren’t going to dock these guys half an hour in pay, you want them to do 2 more deliveries. Well now you have time to do that, so you can increase their productivity. You probably charge per delivery, but your fixed overheads aren’t going to change much, so you will save even more.

If you found this interesting, please bookmark this page or subscribe to this blog, because there is much more coming. The ROI on this page equals more than 1200% return, but the intangible benefits also make very interesting and exciting reading, so please come back to find out how this works. Also if you know anyone in the retail industry that does deliveries, why not email them a link to this page and share the knowledge.

If you want to give Route2GO a try and get us to compare a few of your routes for free with no obligation, contact us.

GeoSmart seeks channel partners and Systems Integrators for Route²GO Lite

We have had a route optimisation  product Route²GO for several years, but it has been at the complex end and designed for companies with a skilled IT department or systems integrators who typically work with Fleet Management companies such as Navman Wireless. This is great for the big guys who can cost justify a semi bespoke integration into their legacy systems or a new installation, but that doesn’t fit most companies in New Zealand.

We have just completed a new product called Route²GO Lite. This product can work stand-alone for people that have database skills and we are happy to offer it to companies who can deal with it, however what we are really looking for is companies who already have solutions that support people who travel in the field, mostly for business purposes of some sort. Route²GO Lite can add value to your application and of course we offer a generous income stream for software companies and channel partners who wish to add value to their products and services. It is a SAAS (Software as a Service) product and the pricing is based around usage of the services, with pricing scaled around volume usage. Please contact us to discuss how this can work for you.

Route²GO Lite has 2 components. The first component is geocoding. Geocoding is essentially generating spatial co-ordinates for each location (usually a street address, but could be anywhere, for example a jetty or a park bench for pizza delivery). Essentially a CSV file is uploaded and those addresses that don’t already have co-ordinates will have them added. The second component is identifying in which order to make the stops on a trip.

This in itself is wonderful, but software developers and systems integrators can make it far more relevant to the specific industry segment or activity, adding serious value to their products and solutions and providing a great ROI for their customers, and thereby improving client retention and increasing new sales and revenue opportunities. Future blogs will discuss more specifics about value adds. You might like to subscribe to or bookmark this blog.

Our target is to partner with companies who develop or sell and set up software solutions. Examples of the type of applications we are looking for are:

• Sales Force Automation – Sales is often about how many visits you can make in a day, especially for merchandisers and travelling sales people.
• Routine Delivery / Swap Out Services – This would also be a classic case for many repeat delivery type sales situations, for example delivery and exchange of gas bottles, water bottles etc. Also time critical runs such as medical test samples, the list goes on. Most business these days requires a degree of software to automate their operations, but they are usually focussed on business imperatives rather than the location logistics which are a major factor in the timeliness and quality of service.
• Field Service Automation – There are many aspects to the field service such as Preventative Maintenance (PM) visits where time is the difference between being competitive and profitable or not. This includes meter reading, building inspections, security system maintenance, air conditioning maintenance, an endless variety of industries.
• CRM – A lot of customer relationships are about visits.
• Retail specialist Point of Sale – There are many software applications designed for retail stores such as furniture, appliances and other large items that require delivery. They are often good at recording the sale, collecting the delivery address etc, but there are challenges around charging a fair price for the delivery, giving the customer an estimate of when to expect the delivery etc. Route²GO Lite would replace the traditional bullseye method of doing deliveries which often can’t reflect the actual driving distance.

• Taxi despatch applications. There are often situations where a taxi van has to pick up and drop off a number of people to different locations. It could be picking up elderly people to go to their hospital appointments, taking special needs children to school, picking up people to go to or from the airport. All of these situations can benefit from optimisation to reduce distance, time and stress, which all impact on the quality of the service, often with serious implications.
• Security Industry software. What’s the best order for travelling security personnel for checking business locations? This can determine how many staff are needed to meet contractual obligations and provide the best service.
• ERP and Logistics. There are many applications of all sizes from massive to small that automate the value chain in a business. Most businesses ultimately have an element that involves vehicles making several stops in one run. These solutions are designed to work together with 3rd party applications and plugins.
• Accounting Software. On a per capita basis New Zealand has a phenomenal number of different accounting packages. Most of these support export and import of data from other sources, probably all of them support CSV import and export which is where Route²GO Lite excels.

If you have a software application that supports any of the industries listed above, or support these tpes of businesses please contact us to discuss how we can work with you. GeoSmart wants to help.

Route2GO Improving Productivity and Profit for New Zealand Companies

GeoSmart has just released a new version of  Route²GO as a web service, providing vehicle route optimisation for company fleets as small as one vehicle, but scalable to any size of fleet.

This new service is based on what we know of in the industry as The Travelling Salesman problem. In effect if I have x number of places to visit in a day, what is the most economic order to do them in?

Typically route optimisation involves buying an expensive piece of software that only large companies (by NZ standards) can afford, together with employing an expensive engineer to run it. GeoSmart has now released the same technology as a web service, pricing for which is transaction based. This means that it can be used by a furniture store with 1 truck, as easily as for a large company with many vehicles.

There is a small amount of work involved in order to access the web service, which can be done by web developers or anyone who understands how a web service works. It could be merged with something as simple as a spreadsheet, or tied in to a legacy application. It would work very nicely with a range of applications from CRM, Accounting Software, ERP, dispatch and more.

For technical details on how Route²GO works, please visit our Developer Pages. For examples and more information on the benefits, we have information here.

Now we are looking for NZ partners. We do not typically sell solutions to end users. We work with partners who can add this service as a value add into their solution, or perhaps even create a new niche solution. We have some partners already in this space, including companies like Gen-i and Navman Wireless, but we are also keen to find more.

Many products have a long ROI period, which makes them hard to sell, especially in today’s economy. Pricing for Route²GO is transaction based. This means that until you start using it, you pay nothing. Pricing is also scaled based on volume over a year and also the amount of detail in our output. The cheapest result is simply the order to drive the visits in, with the option of estimated driving time and distance for each stop. The next step includes turn by turn driving instructions and the full monte includes the ability to view and print out full turn by turn directions complete with route and locational maps, that can be panned and zoomed before printing or importing into an application.

What skills do you need? If you can structure a query as outlined here, then you have the requisite experience. We offer a free Developer Agreement to companies looking to partner with us. There are no costs associated in developing a solution or testing with this web service.

We are happy to meet with potential partners or clients, to discuss their needs and help them find the best solution both in the web service and the integration, but our part stops at that point as we do not compete with our channel.

Want to know more? Contact us.

What Tools Do You Need to Build a Mobile LBS Application Part 5

Route Optimisation

Time is a commodity you can’t buy more of, people are getting busier all the time. So far we have talked about being able to access and view a map, search for street addresses, Points of Interest and get driving directions to or from a location. We have looked at getting the coordinates of a location to display it on a map and we have looked at Reverse Geocoding to get the nearest street address to the location of a person or object.

The next thing is, what if you want to visit multiple locations on the same trip. You might be a merchandiser or service person with several visits to make and it doesn’t matter what order you do them in. You might be on holiday and wanting to explore the many attractions around you, or you could be visiting Open Homes.

It isn’t easy, looking at a map, to sort out what order to sort your visits into, you could get a pencil and a ruler and try to work out the route in your map book, or you could run your pen across the pages, as if completing a maze to sort out the order, but eventually you would have such a big mess that you would have to buy a new book. Of course this blog is about LBS, which typically means that we are developing applications for a mobile phone, that means that the user quite possibly doesn’t have a map book on them, or at the very least, doesn’t want to deface the book.

Here comes Route Optimisation, or as we call it at GeoSmart, Route2GO. Route Optimisation runs a very complex set of algorithms which look at every possible sequence of stops and comes up with the best order to do your visits. In its simplest form, it allows you to set your start and end points (which could be the same) and then tells you what order to make the visits in. The end result will be fewer kilometres travelled, less fuel, less time and less cost. This way of calculating is called The Travelling Salesman Problem. This concept is also great for people like the delivery truck for a furniture store. The optimised route tells the driver not only what order to do the deliveries in, but in reverse order, tells him how to load his truck so he doesn’t have to keep moving heavy objects around the truck, wasting time and energy and of course reduce carbon emissions and pollution.

There is also complex Route Optimisation. In this scenario there are all sorts of exceptions. For the purpose of this blog, we’ll keep it simple and limited to one day, because in a mobile situation, that’s probably all you would do, although of course you can do far more detailed planning in the office, for example a service manager could be planning how to meet their contractual commitments with multiple vehicles, multiple drivers, who don’t necessarily work on the same day and all sort of restrictions on the client side, such as day of the week, time of day etc. But I said I wouldn’t go into that.

Imagine you are in Queenstown on holiday and you are using one of the Proximity Based Marketing examples, we outlined for the Location Innovation Awards, where you want to visit multiple attractions. Some services like the Bungy Jump are a bit of a drive and others are close by, so you have logistical situations as to how to fit the most experiences into a day. But in order to do the jet boat ride and the Earnslaw cruise, there are time constraints and you have to be at certain places at certain times.

Imagine you are house hunting and a number of the properties you want to look at have Open Homes, which are on at different times.

Complex Route Optimisation would let you specify the times you have to be at certain places and also lets you set the amount of time you want to spend at each one. For Open Homes you might plan, say 15 minutes at each property, but the tourist activities have different times. The jet boat ride might be 45 minutes and the Earnslaw cruise an hour and a half. This tool would allow people to really get the most out of their day and at the same time drive the least distance, least time and cost for travel.

These web services are available as web services and can work very well on a mobile if the application is designed properly. Of course you could also use them on a web site and then have the results sent to the computer as SMS or perhaps a link that open the mobiles browser.

An application that provided these services would use a number of the tools we have previously discussed.

• You need to identify and geocode the locations to confirm where they are and enable the optimisation.
• You will want to be able to view the locations on a map to verify what is happening, both for confidence and comprehension.
• You will need to use the Points Of Interest Web Service to look up street addresses and a database (either your own, a custom one such as seen at Bayleys or Professionals Real Estate.  or subscribing to some of the Point of Interest (POI) categories that GeoSmart offers which cover everything from geographical and historical to cafes, restaurants, attractions etc. You can see loyts of examples on AA Maps.
• The Directions API would be used once you had established the order of the locations you are visiting and can provide turn by turn driving directions on your mobile from a to b to c and so on.

Just as an aside, the GeoSmart POI database contains additional contact information including phone numbers, email, web site etc, where appropriate. This means that you can also provide links in the mobile application so that people could add information to the contact list in the phone, or the ability to directly call the number from the application, without having to memorise, or copy and save the number.

So now you have used a number of GeoSmart tools (web services and API’s) to create your mobile LBS application. GeoSmart has many more tools available and we don’t stop. Our guys are constantly coming up with new tools and applications. If you haven’t found everything you need to develop your application or concept on the Developer Page, leave a comment or question, or contact us by email at info@geosmart.co.nz.

This was the last blog in this series, but there are many more interesting concepts and stories to tell you about, so please keep coming back, bookmark the main blog page or subscribe using your favourite RSS Feeder. And please feel free to comment, it would be great to share your comments and ideas.

The Travelling Salesman Problem

GeoSmart now has a solution available for people wanting to know which order to visit their clients in, so that they can keep time and travel costs to a minimum. This is a form of Route Optimisation known as the Travelling Salesman Problem. GeoSmart also offers complex Route Optimisation under the banner of Route2GO, but that is another story.

With the price of petrol now permanently above NZ$2 a litre and time at a premium, this tool can easily assist people in making the most of their travel.  It could be a delivery truck working out the order of their deliveries and in reverse order how to load the truck. It could be a sales person working out the best way to make their sales calls.

In the illustration you can see that we set the first and last addresses as fixed. In other words we are defining where we start and finish for the day, they don’t have to be the same, the last one could be a motel yo are staying at for the night and the first one might be your home or office. You could just fix the start point and be flexible on the end point and then go to the AA Maps website to decide where to stay for the night and even make the booking before you leave.

In the illustration, the sales person guessed an order in which to do the calls, but the optimised route cut 34km from the route and at the (adjustable) per km rate resulted in savings of $10 on the trip.

This tool doesn’t just have to be used for a set of destinations. It could also be used as a trip/price calculator. For example one of our new clients is putting this tool (slightly modified so that you can’t edit the price per km which only he can do on his site) so that people can get their own quote on a delivery job without having to ring the company.

Many companies pay staff or contractors on the basis of an agreed distance, it could be for commuting, or for visiting clients, patients etc. This tool can calculate the ‘fastest’ route between clients and will deliver a consistent result that can reduce arguments and deliver an equitable result.

There are other standard features to this tool, for example click on any of the letters denoting locations and the map will instantly zoom to that location so you can see it better. The maps are dynamic and do of course have full pan and zoom functionality.

This optimisation is possible because GeoSmart has a full turn restriction database for New Zealand so when it calculates these directions it knows all about one-way streets, dual carriageways, no right turn, no left turn etc. This is in fact the same database used by te leading car navigation brands including TomTom, Navman, Siemens VDO, BMW, Ford, Honda,Horizon and Nav N Go.

If you have a route optimisation problem, please send us an email to info@geosmart .co.nz or follow the directions on our Contact Page.