Route optimization to minimize Fuel and Labor Costs
As a consumer delivery service, you always need to worry about delivery costs. Given the recurring nature of the deliveries, small increase in costs per delivery can add up over time and affect the company’s bottom line.
To achieve this, organizations are required to plan optimized routes that consider:
- Customer’s preferred time windows
- Minimum labor costs
- Shortest Distance Routes to save on fuel costs
You need to deliver merchandise to the customer at the times that they are open and able to receive merchandise. It may be okay to ask the customer to give different time windows when they can receive the delivery truck and receive merchandise. But depending upon the relationship with the client, sometimes you are required to honor their top-preference time window.
Labor costs can be high and vary depending upon the skill of the driver and also the times when it is considered overtime. Added to that, good drivers are hard to get. What you pay the drivers makes up to one third of the total motor carrier expense As you plan your routes you need to try and minimize the labor costs.
Fuel costs are growing high about 30 % higher than earlier year, and trucks are not fuel-efficient. Most trucks drive at least 100 miles per day and sometimes even do multi-day trips. With such a long distance to travel, saving on fuel costs is critical to stay competitive. When you examine the Fuel costs are, they follow the cost of Driver’s wages in the total average marginal cost. While driver’s wages are over 30% of total, driver’s wages are a little over one-fifth of the total. Therefore, you not only need to focus on fuel cost but also labor cost and time when optimizing the routes for delivery.
Creating such optimized routes costs time and money, and this can possibly result in merchandise waiting to be delivered while the routes are being planned out. It is a humongous task to build multiple permutations and combinations into your route planning and ensuring that the resulting route addresses the requirements of both your customers, field personnel and operations team. Cost saving is one thing that needs to be built in which goes without saying for any solution.
DispatchTrack’s self-learning route optimization algorithm allows you to control your parameters, in an easy-to-use map-based graphical user interface. This is done so that with the click of one button, thousands of stops are scheduled to hundreds of trucks in just minutes. It allows you to use different options for different customers and orders while giving the flexibility to have the same options for multiple orders or customers. The map based user interface is intuitive and allows you to easily track the order and visually understand the delivery fulfillment. You can build multiple factors into the optimization engine including the road condition, traffic, weather, constraints of customers and added to that is the learning algorithm that ensures that your route planning is going to be better as time passes and orders increase.
— Jay Steinback
Executive Vice President, Rothman Furniture
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