With the current inflation and rising fuel prices, delivery businesses have been looking for ways they can mitigate these rising costs to avoid tightened margins. One of these methods, which seems obvious but to achieve is more difficult, is to cut driving time and route distance. This method has led to the growing use of route optimisation systems.
In this article, we’re going to take a look into the host of benefits route optimisation software can bring for a delivery business looking to maximise profits. First, let’s look at how route optimisation software differs from manual or basic digital route planning, and why it is critical for delivery businesses looking to cut costs and maximise profits.
Traditionally, route planners have had to use paper-based ways to plan different delivery routes. These routes need to be recreated each week, and as the business grows, they quickly become very complicated to figure out.
Some businesses still rely on manual route plans, but more and more we’re seeing a switch toward digital route planning systems. They let planners save routes and small tweaks can be made each week to suit changing demand. Although they’re a big step ahead of manual planning, basic digital route planning still relies on geographical knowledge coupled with a fair bit of guesswork, and planners still won't have any confirmed way of knowing if the routes are the quickest and most efficient.
Good route plans will still get drivers where they need to be at the end of the day, but throughout the day, there may be various disruptions that slow them down, all of which add costs which could be avoided. The key reasons why delivery drivers need to have the best routes are down to direct and indirect service costs.
The direct costs are those that add up throughout the day when drivers aren’t getting where they need to be quick enough. These costs show through additional fuel costs, pausing driving to provide updates to customers, and in worst-case scenarios, missing deliveries completely.
The indirect costs associated with imperfect route plans are missed delivery windows. Although a lot of customers won't mind the occasional late delivery, if the route planning system doesn’t change, then these delays will always occur, and this can have a negative impact on customer loyalty. They have to prioritise their own demand, and if they don’t think you’re invested in their needs, they can easily switch suppliers in such a competitive market. Additionally, the time taken for planners to work out routes equals costs for the business, so manually planning just means surplus costs that could be reduced.
Route planning is a complex process that only gets more complicated as a delivery business grows. More routes equal more planning time when using route planning systems, and as discussed, they are based on limited knowledge and guesswork.
Route Optimisation Systems take the guesswork out of route plans while saving hours of planning time for office teams. They work by taking all of the orders for a day or week, taking note of the delivery windows for each customer’s order, and working out the most cost-effective routes for each driver to take. Over time, they learn traffic trends and they identify regular route delays so future route plans can be refined and drivers can be diverted away from heavy traffic or delays they used to experience.
Route Optimisation systems can then predict accurate ETAs which teams can pass on to customers, improving the overall delivery experience while helping them to manage their own demand more effectively.
For drivers, they can use their delivery app to guide them on their route, knowing they will reach each customer in time to meet the calculated ETA. This has a huge impact on customer service capabilities, as drivers can consistently fulfill orders as per customer requirements. Over time, this consistency doesn’t go unnoticed, and customer retention improves drastically while positive word-of-mouth does wonders for reputation.
With quicker routes, fuel costs can also be optimized so that only the necessary amount of fuel is being used each day. Often, the surplus fuel used on a route can go unnoticed by a business, but route optimization systems can highlight in just a few weeks how much can be saved if perfect routes are planned every day.
