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Route Optimisation for Retail Deliveries Return On Investment Part Two

In my previous blog I talked about the immediate dollar benefits of reordering your retail furniture deliveries so that you would drive the least distance, saving both time and money. I gave examples of actual returns using GeoSmart’s Route2GO Lite application which is designed for anyone to use. In other words, you don’t need to be a computer geek to be able to use it. You need to understand your business.

I gave the example of getting up to 1200% ROI on a single run and this is genuinely achievable. But there are so many more benefits to be had. Lets have a look at some of these.

First if you combine the knowledge of how long it is going to take to get from the shop or warehouse to each customer, you will be able to work out how much work the vehicle can do in the trip or in a day. This has a number of benefits. Firstly it provides clarity for sales people and the sales counter of what deliveries can be achieved in a day. Imagine if a customer came into your shop wanting to buy a bedroom suite as they have guests coming in the weekend. If you can’t guarantee delivery, your store loses the sale. That being the case, the sales person loses commission, your competitor gets your sale and the would be customer will be telling people not to visit your store, even if you have great product for a great price.

In the optimised example below, we have identified not only the driving time for each job, but based on experience, how long the driver would typically be on site unloading the truck and carrying the product into the customer’s home or premises. This is of course very important when planning the entire day.

The next thing that is really important for consumers is some sort of certainty as to when the truck will arrive with their treasured new purchase. They want the experience to be gratifying and they don’t want to be waiting around in the morning for someone who isn’t going to arrive in the afternoon.

Now you can actually provide some clarity. you wouldn’t of course tell Mrs Smith that her new bed will arrive at 9:43 AM, but it would be fair to say it should arrive between 9:30 and 10:30 or perhaps 11AM allowing you to under promise and over deliver. She may have had to take time off from work to be home for the delivery. We always hear complaints about delivery people who don’t turn up when promised and the flush of excitement can quickly turn into anger and frustration.

Deliver as promised and you don’t just have a happy customer today, you have a customer advocate who will be back at your store next time she is open to buy furniture and will be recommending you to her friends. People don’t buy furniture every day, but they may do so dozens of times during the lifetime of your business. There are loads of stories showing that people favour service ahead of price, so these repeat customers will also possibly be very profitable customers who will haggle less and make a decision more quickly because they like and trust your business.

Of course the delivery people will be much happier too. Who wants to deliver to a customer who is telling them off for not arriving on time. They are just doing their job, probably what they have been told to do. They don’t need to have their day soured by unnecessarily unhappy customers.

Because we know the order we are going to do the deliveries in, we can also produce a document that tells us how to load the truck in reverse order.

Lets face it, furniture is heavy and it makes a lot of sense to handle each item once onto the truck and once getting it off. There’s no benefit in having to move things around every time the truck stops, its inefficient, hard work and wastes time.

A list like this makes life easy for the truck driver and also for the warehouse staff, ensuring that all items get on the truck in the correct order. All it actually is, is the delivery list in reverse order. That’s what this is ultimately what this is about. It’s not rocket science, yet we do need a computer to work out the optimisation because the driver doesn’t know every one way street, no right turn, median strips where the truck can’t do a U-turn.

So now we have paid a few dollars to use this application on the web. We can see that we have enough resource to do some more deliveries if we get some more sales, which will inspire confidence in the sales staff. You get happy loyal customers who will come back and spend more with you and tell their friends to do the same. You can provide a better service than your competitors and your staff will be happy in their work knowing that their day will be less complicated and they will have happy customers.

The best part is you don’t have to take our word for it. Give us a few of your old runs in the order that you did them in and we will optimise them for you for free to prove our point. No cost, no risk, no obligation. You have nothing to lose and everything to gain. Why not contact us now?

October 1, 2010 Posted by | Delivery, driving, Freight, Furniture Delivery, geosmart, location based services, map tools, maps, Marketing, new zealand, Retail Profit, Return On Delivery, ROI, route optimisation, Route2GO, Sales, Uncategorized | , , , , , , , , , , , , , , , , , , , , , , , , , , | Leave a comment

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.

September 28, 2010 Posted by | Delivery, driving, Freight, Furniture Delivery, geosmart, GIS, location based services, map tools, Marketing, new zealand, new zealand maps, Return On Delivery, route optimisation, Route2GO, Sales, software, Uncategorized | , , , , , , , , , , , , , , , , , , , | Leave a comment

GeoSmart is at Trafinz

commGeoSmart is at the Trafinz conference this week in Wellington this week. Over the last year it has been developing real time traffic solutions including AA Traffic. AA Traffic was developed for the NZ Automobile Association to assist motorists in identifying traffic incidents ranging from road works through to accidents and road closures resultant from a wide range of causes including in recent days earthquakes and flood damage.

As part of the data collection and applications developed in this area, GeoSmart has been collecting real time vehicle traffic flow data throughout New Zealand on all roads from State Highways to connector roads. In addition to viewing this to assist us in our real time traffic services, we are also storing this data so that it can be used historically.

We already have around 4 months of historic traffic flow data that can be used by traffic engineers, consultants, councils and other authorities for analysis, planning and forecasting. It can be delivered in a variety of ways. For example if someone is working on a project for a specific road segment or network, we can make available data for that location by time of day, day of week to enhance the quality and quantity of the information being analysed. that information could be provided as a CSV file or for overlay in a web mapping or GIS environment.

Feedback so far from attendees at the conference has been very favorable and we are now looking at ways of working with organisations who will find this information of value.

We are also working with Fleet Management companies who are interested in the potential to allow their clients to not only see their vehicles on a map, but to also be able to see real time incidents and traffic flow on the same map. This would enable dispatchers and fleet controllers to make decisions based on real time and historical data on routes to use. This can have value to all sorts of road users from emergency services through to transport and distribution companies, meter readers, field service companies, to name a few.

An example of the use of this data is in the September issue of Metro Magazine’s feature on ‘The Best Places to Live in Auckland’ for which we calculated commuter morning drive times into the city from around 50 suburbs.

GeoSmart already has API’s, Web Services and applications available in the field 0f route optimisation. Companies using this technology have enjoyed significant ROI by being able to reduce travel distance and time, which also has the byproduct of reducing CO2 emissions. This means being able to provide a better service to their customers, while also increasing productivity and profitability. In the future we anticipate being able to add real time traffic into the equation for real time route optimisation.

GeoSmart is now planning meetings with traffic engineers, local and regional Government and other organisations to discuss how the real time and historic traffic flow data may be used and welcomes the opportunity to meet with any interested parties to discuss mutual opportunities.

September 7, 2010 Posted by | AA Traffic, driving, Freight, geosmart, GIS, gps, location based services, map tools, maps, new zealand, new zealand maps, real time traffic, route optimisation, Traffic, Uncategorized, web maps | , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , | Leave a comment

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.

November 30, 2009 Posted by | AA Maps, car navigation, Delivery, driving, driving directions, Freight, geosmart, GIS, gps, lbs, location based services, map tools, maps, navman, new zealand, new zealand maps, optmisation, route optimisation, Uncategorized, web maps | , , , , , , , , , , , , , , , , , , , , , , , | Leave a comment

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.

June 16, 2008 Posted by | car navigation, cartography, Delivery, driving, Freight, gps, maps, new zealand, petrol, Sales | , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , | Leave a comment