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Route Optimisation Is Simple and Accessible

I’ve blogged about route optimisation many times recently. One recent blog talked about Fleet Management, our new BIonaMAP application and some other wonderful concepts, as ideas on how to save your business money and time and thereby increasing productivity and productivity.

I would like to break this down a little bit because there is a misconception out there that all of this technology requires spending lots of money and installing expensive equipment in your company vehicles. Let me break it down for you. There are some wonderful solutions out there, many of which are offered by our valued partners and they all have a purpose and fulfil business needs. Some business problems are complex and require complex solutions and some are simple and provide very quick return on investment.

So here is a simple problem. You have one or more vehicles which need to go out on the road and do several jobs. They may be regular runs, or they may be different each day. Let’s make it even simpler. Let’s break it down to one vehicle. You may have lots of vehicles, but let’s just look at one of them.

Here we have a merchandiser, who has to visit a number of supermarkets. One person has to visit 9 grocery stores, checking their stocks, managing the shelf placement, demonstrating new products, taking orders. As do many field sales people in New Zealand and Australia, their territory comprises of urban calls and calls out in the country and they spend a lot of their time driving.

The problem is that you can only fit so much time in a working day. You can have a pretty good idea of what order to do the jobs in, probably the order you always do them in. The other problem is that the price of petrol is going up, prices are coming down and your budget is going up. You need to get smarter.

Our Route2GO Lite application is a simple web service. There is no software to be installed, no set up fees and as Software as a Service you only pay for what you use. In this case person, who is a great sales person, spent 28 1/2 hours in the car, dead  time between calls in order to make those essential visits. Route2GO worked out how she could do the same visits but spending only 22 hours in the car. Now she can either fit in more calls in the same amount of time or spend more time with each client enhancing the relationship, doing product knowledge training with their staff and increasing the average sales she generates from those clients, which reduces the pressure on her and her sales manager to get the results the company needs.

We also cut over 400km in driving distance from this sales trip. At even $1 per km that’s a lot of money going back to the bottom line.

So what do you need in order to achieve a result like this? A PC with a web browser. An account with GeoSmart and a little time. For this run which included 9 clients and returning to base with a pile of orders, the total cost to GeoSmart would have been $6.25. No hidden surprises, that’s it. This includes the fee for geocoding (generating coordinates for calculating the route) and the optimisation from the office, to the 9 stores and back to the office. Oh and the cost of a piece of paper if you want to print off the above map and route.

It really is that simple. If you want to know more, why not contact us? We’ll even do a couple of runs for you for free, preferably ones you have already done previously so you can get a genuine comparison as to whether it will work for you. This was a dramatic example, in some cases it might only save you a little, but if we could help you visit one or two more customers in a trip without increasing your fixed overheads, every trip, hat would that add up to over a year?

We have more information about route optimisation in our blogs, so why not have a scroll through and see if you can find an example that’s relevant to your business. In an upcoming blog I will explain in simple terms what route optimisation actually is and why we can do it better than you can drawing pictures on a map. The key point of this exercise is that you can achieve dramatic results without putting in any money upfront and without having to buy any technology you don’t already have. Route2GO is available for New Zealand and Australia.

February 13, 2012 Posted by | Auckland, Australia, Australia Maps, Business Tools, Distribution, driving, Freight, geosmart, location based services, Mapping Applications, new zealand, new zealand maps, Retail, route optimisation, Route2GO, SaaS, Sales, sales territory, territory management | , , , , , , , , , , , , , , | 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

How Furniture Shops can Save Time and Money on Deliveries with Route2GO Lite

Do you have delivery vehicles? How would you like to be able to do more deliveries in a day just by being a bit smarter? It’s expensive running a truck, especially in the city where traffic congestion is a given most days of the week. In the furniture business you may have a plan of which areas you will deliver to on certain days of the week. That’s a plan, but if a customer says he will only buy that expensive lounge suite if you deliver it tomorrow, do you walk away from the business? Times are better than I thought if you can do that.

In this industry and today’s economy a furniture store or chain needs to be smart, deliver on its promises and be competitive.

So what does your vehicle truly cost you to operate. Your accountant should be able to give you information on the total cost of ownership for your trucks or vans per annum. This includes depreciation, maintenance, petrol and oil, road user charges if applicable, insurance, tyres and other consumables and of course petrol. You will know the distance the vehicle has driven over the 1 year period, so can come up with a per km cost for this vehicle. So now divide the total cost of the vehicle for one year by the kilometres driven and you have your per km rate. This is important because you can’t calculate your return on investment on a service without knowing what your initial costs are. This of course doesn’t include the costs of the driver and possibly second staff person required in the truck because much furniture is to bulky or heavy for one person to manage.

A key problem with furniture delivery is that no two days are the same. This means that you can’t just plan a route out and repeat it. Each day you need to prepare a new run sheet and rely on someone to put it into an appropriate order. Sounds easy and obviously this is what people are doing every day. The problem is that, even with a printed road map, you may not know about one way streets, no right turns, dual carriageways where you can’t do a U-Turn and so on. We are currently working through some recent daily run sheets for a medium sized furniture retailer. The very first run sheet we processed through Route2GO, the optimised route was half of the distance of the route they did. It cut down their driving time for the day’s work by about an hour, meaning they could have easily done two more deliveries in the same amount of time.

So what skills do you need to be able to use Route2GO Lite? The minimum is the ability to correctly spell the street names you are going to and to follow the instructions in our user manual. You enter the addresses you are going to and we tell you what order to do them in.It can be as simple as that. If you have someone on staff that has basic spreadsheet skills, you can do so much more.

You can load the truck in reverse order so you’re not wasting time re-handling the furniture on the truck each time you stop. You can do much more and we’re going to tell you more about it in this blog. You can also get some more information on our web site. Best thing you can do is talk to us about your business. you can contact Luigi Cappel on phone 09 9668 768, or email luigi.cappel@geosmart.co.nz. Send us a job sheet for a run you have already done and let us check it for you. We’ll tell you whether we think we could have suggested a better route. Want to try it for yourself, we can set you up with a free trial so you can see how it works for your business.

Subscribe to this blog if this is of interest because I am going to come back and provide more information about how this can help your business grow. You don’t have to be a rocket scientist, you just have to have the desire to increase productivity and profit and provide a competitive level of service that will have your customers coming back for more and recommending you to their friends. Now check out where the tangible ROI comes from.

Finally remember that the companies who are best prepared in tough times are going to profit the most when the economy picks up. We want to help you. You understand the furniture trade, we understand New Zealand roads and how best to get around them.

September 21, 2010 Posted by | Route2GO, Uncategorized | , , , , , , , , , , , , , , , , , , , | 2 Comments