When thinking about the idea of fleet optimization, the prevailing mindset is that there is a binary state of being either optimized or not. This perspective fails to acknowledge that optimization can mean different things to different fleets, and that value can be achieved at intermediate steps between optimized or not.
Instead of aiming for an elusive state of perfection, businesses should embrace the concept of optimization as a spectrum. By identifying their desired position on this spectrum and working towards it, they can unlock opportunities for improvement and gain a competitive edge. There is no one-size-fits-all way to achieve optimal status; some fleets might benefit from simple manual planning, while others would gain the most value from decision support tools.
Understanding where you are on your optimization journey will ensure your fleet is utilized most effectively and customers are served to the best of your ability.
Levels of optimization
Thinking back, there was a time not that long ago when a route planner or dispatcher would get out a paper map and plan the day’s deliveries right before the trucks hit the road. They relied heavily on tribal knowledge about traffic, time windows and other data needed for decision making. This was better than nothing, certainly, but there was plenty of opportunity for improvement.
With the introduction of mapping software, that process got a bit easier and a bit more intelligent. Mapping software automatically calculated the distances and drive time between stops, presenting a visual route plan to interested stakeholders.
Route optimization software soon followed and further automated the process, providing feedback like an electronic copy of the plan and better ETAs. As those planners and fleets matured, they were able to take advantage of even more value provided by optimization providers via solutions like continuous planning (not batch planning), scenario creation and prescriptive suggestions for moves that could be made.
At each step in this journey, immense value was gained; time was saved, customer service was enhanced, and the organization benefited. Thinking of optimization through this lens will allow organizations to capture certain amounts of value more quickly than if they waited.
The growing importance of fleet optimization
Although many foodservice distributors aren’t doing home delivery, it does not mean they are exempt from the complexities of final-mile distribution. Last-mile delivery is one of the most challenging aspects of the supply chain, and can account for more than 50% of the total shipping cost.
Fleets must grapple with complex road networks, evolving customer expectations, increased competition, rising inventory costs and stricter government regulations. In this dynamic environment, fleet optimization is essential for businesses to stay ahead of the competition and meet the evolving demands of the market.
If the COVID-19 pandemic taught us anything, it was that the ability to be flexible and agile was just as important as planning. Being able to move between different levels of optimization quickly ensures success.
The journey of optimization
Optimization should not be thought of as a one-time event, but rather a continuous journey that varies from one business to another. It requires a comprehensive analysis of the network and the identification of key metrics to inform strategic decision-making.
As businesses grow, the volume of data increases, making effective data management and integration crucial. Clean data, which includes time windows, addresses, driver preferences, order and customer information, provides valuable insights for scaling a business and enhancing customer satisfaction.
As consumers become more aware of logistics and supply chain networks, the distinction between B2B and B2C operations is blurring. Both businesses and consumers now demand transparency and speed. To meet these emerging needs, it is essential to position your business for success. Manual data entry becomes too time-consuming and error prone as you progress through the fleet optimization spectrum. With maturation comes more complex data and analytics requirements.
Fortunately, obtaining and managing data is not only achievable, but also presents the biggest opportunity for scaling businesses to significantly reduce costs and improve performance. Clean data is the driver of optimization progression, but it is equally crucial to have an integration solution that can fully support automated data transfer. This marriage of technology and data management leads to a more optimal operation.
Route plans hold significant weight in the day-to-day business model. They affect employees (drivers) and play a vital role in providing superior customer service. However, building the perfect route can often feel like an insurmountable challenge. Last-mile issues, such as directing drivers to the wrong entrance or facing unexpected roadblocks, can ruin relationships with customers. By optimizing routing with customized location data, fleets can avoid unnecessary delays, reduce wasted mileage, and ultimately save time and money.
In a dynamic supply chain – and in particular, the cold chain – demand patterns change, geographic locations evolve, and new items are introduced into the system. Periodically conducting strategic analysis is essential for continuous improvement. It allows businesses to take a "what if?" approach to decision-making and adapt to evolving market conditions.
Paired with the evolving needs of customers, the traditional batch model of route optimization is no longer sustainable. Today's world demands an "always on" business model that supports continuous optimization.
Benefits of optimization
By progressing up the optimization ladder, food and beverage fleets can simultaneously accomplish operational milestones and improve the bottom line. Moving from a batch model to a continuous model provides operational flexibility during order placement, real-time visibility into routes for route planners and managers, and operational efficiency.
Dispatch optimization is a higher rung, enabling effective route planning, increased asset utilization, and maximizing available hours of service compliance.
Transportation spend is a critical factor in the foodservice industry, which operates on thin profit margins. Efficient planning, supported by real-time data, can shift fuel needs, identify network issues, minimize empty miles, and reduce toll costs. These optimizations, when multiplied across an entire fleet, can lead to substantial cost savings.
Additionally, optimization enhances customer service by eliminating slow and manual methods, providing up-to-date information through current technology solutions, meeting delivery time windows, offering precise ETAs and providing reliable proof of delivery methods.
Conclusion
Route optimization software can offer many benefits, even for fleets not willing or able to jump into full optimization immediately. Each fleet must weigh the benefits and cost of traversing up the steps of the ladder of optimization.
Some fleets will decide that manual planning in software will be good enough; others will decide they want to hit the top rung and automate their entire process. Make sure when researching potential software partners that they can support your fleet the entire journey, even if you don’t intend to climb all the way.
