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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

Free AA Traffic on your Navman MY30 at Dick Smith if You are Quick

This isn’t really what this blog is usually about, but this is such a great deal, that I thought I’d share it with you.

This month, i.e. right now, we have supported a Navman promotion with Dick Smith Electronics. The deal is (while stocks last) that you can buy a Navman MY30 for $266 and they will include a free Lifetime License for AA Traffic. AA Traffic is normally a $129 add on, so this is an awesome deal.

This is a great opportunity to try out AA Real Time Traffic on a nav unit. This is one of the best ways to get AA Traffic. You don’t have to look at a web site like Roadwatch or AA Maps before you go. You don’t have to subscribe to a TXT or Email Alert service. You don’t even have to know where you are going before you get into your car.

People have often said, I know my way around, so I don’t need car navigation. They may well be right, but they don’t know what may be happening on the road ahead.  Does it matter, not if you don’t mind spending hours detouring around an incident or waiting until a road reopens. This week we had a stock truck and trailer roll on State Highway One by Puhoi. AA Traffic started sending out alerts at around 6:30 AM, so traffic heading north who were using AA Traffic didn’t get stuck. Here’s the thing. That road, the main road between Auckland and Northland, didn’t reopen for almost 6 hours! What is 6 hours of your work day worth to you?

This was a bad one, but there are always incidents, roadworks, slips, floods, wandering stock and all manner of issues on our roads. At the time I am writing this blog, we have 479 current incidents and 478 upcoming incidents such as ramp closures, sporting events etc. Here’s a classic situation for you. You go to an evening concert in Auckland City and you’re heading home to the North Shore. You get to Fanshawe St to get on the motorway to cross the Auckland Harbour Bridge and the on-ramp is closed for maintenance, which they deliberately do at night to reduce inconvenience to motorists, but it has to be done. Do you know how to get to an alternative on-ramp? Your car nav does and would have told you when you first got in your car, so you wouldn’t have even tried that entrance.

Smart people who know their way around New Zealand but spend a lot of time on the road will be buying car navigation to be able to access real time traffic so they can avoid accidents and incidents. This deal is only for limited stock, so you need to get to your local Dick Smith Electronics store quick-smart.  The deal is for a Navman MY30 at $266 and AA Traffic (usually $129) is only while stocks last. Great Mother’s Day gift, or for yourself.

Not convinced? If you lost a few hours on 4th of May when SH1 closed by Puhoi, how much was that time worth to your company? Less than $266? How often can you buy a business tool that gives you ROI that quickly? What if you were heading to the airport to catch a plane for a day trip to Wellington or for an overseas business trip or holiday. I’m sure it happened to some people.

Sometimes these incidents are an irritation, sometimes they are major.  With AA Traffic on your car navigation unit, they can very often be avoided entirely.

May 5, 2010 Posted by | AA Maps, AA Traffic, Auckland, car navigation, driving, driving directions, geosmart, location based services, map tools, maps, navman, new zealand, new zealand maps, real time traffic, satnav, Traffic, Uncategorized | , , , , , , , , , , , , , , , , , , , , , , , | Leave a comment

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.

April 15, 2010 Posted by | Delivery, Uncategorized | , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , | Leave a comment