Faced with plummeting sales and rising costs in a recession last year, distributors looked to reduce their fuel costs, use less equipment and slash labor costs to remain profitable. Although a route optimization solution is not a ticket to profitability, it can help distributors realize operational efficiency.
“For companies, the old adage is you can either increase sales or reduce costs,” says Michael Brown, marketing director for bMobile Technology, Eagle, Idaho. “Those are the two areas that impact the company. Obviously, when the economy is down, I think people trend to ‘How do we save a dollar while we’re trying to wait for the economy to pick up?’”
Increasingly, distributors are turning to route optimization to reduce costs, Brown says. Last year, bMobile recorded its best sales year, says Chris Macaw, bMobile’s president. “For the reason, you have to go back to the premise, which is when times are tough, people start to work smarter, not harder,” he says. “That’s what route optimization allows you to do.”
A route optimization solution allows distributors to increase the amount of data they have and better inform cost-cutting decisions, says Cyndi Brandt, marketing manager at UPS Logistics, Towson, Md. Data from height and weight restrictions to commercial road restrictions and historical rush hour data to driver behavior all contribute to finding efficiency in distribution, she says.
“Everyone wants the fabulous benefits of being able to reduce their miles, reduce carbon emissions and reduce overtime,” Brandt says. “Once you start to hold drivers accountable, these are results that are inevitable.”
With the rise of mobile technology, several tiers of route optimization now exist. The standard solution allows distributors to enter data into a software program and receive an optimized route in return. Mobile technology has given rise to real-time data streaming directly to drivers, whether it’s through a data terminal installed in the truck or directly to a cell phone, though mobile remains a smaller segment. The growing amount of data also is helping spur new developments in predictive technology, Brandt says.
In its Roadnet Transportation Suite, UPS Logistics offers MobileCast, a tool that allows companies to track where drivers are – and if they’re staying on route – through a GPS-enabled cell phone or a ruggedized handheld.
The MobileCast system uses three components: MobileCast Server, MobileCast Client Software and cellular data networks. On the MobileCast server, dispatchers can add, remove or resequence stops and transmit messages to drivers. Through the MobileCast Client Software, companies can monitor progress, driver directions and pre- and post-trip inspections. All information is transmitted over the cellular data network.
Distributors can use low-end cell phones, smart phones or ruggedized handhelds with the MobileCast software. This type of monitoring increases driver accountability and allows distributors to track trucks and alert customers of a delivery delay because of traffic or an accident, Brandt says.
Previously, expensive ruggedized handheld computers provided by major manufacturers were the industry standard in mobile technology, but today’s hardware is more diverse with tablet computers, pocket PCs and smart phones, Brown says. As the mobile technology has evolved, it also has become cheaper, breaking down a barrier to entry that once existed for smaller companies.
“The smaller folks are certainly coming into the market now because of the lower cost of purchase,” bMobile’s Macaw says. bMobile offers a data exchange (DEX) solution for the Microsoft Pocket PC platform and is developing one for the Droid that allows distributors to tap directly into the customer’s computer system and eliminate paper exchanges, cutting down on time spent at the site and optimizing a driver’s time.
Xata, Eden Prairie, Minn., integrates with route optimization and planning software providers to transmit information to drivers through cellular and satellite communication, says Eric Witty, a business analyst at Xata.
“Once you get into the actual routing or optimization of routes, you’re starting to see more real-time or dynamic technology used, like in-vehicle navigation, but also integrating things like weather and traffic,” he says.
Although the use of wireless technology is expanding among distributors, traditional, front-end route optimization solutions also have become more popular in the downturn economy as distributors look for efficiency.
The spike in fuel costs during the last several years was “like a warning shot across their bow” for distributors, bMobile’s Macaw says, because it signaled a greater shift in the economy that would force distributors to turn to solutions to help cut costs.
“As it came back down, the need was not as immediate as it was before, but more and more people are asking now about route optimization,” Macaw says. “They now know that this is the future. They’re going to have to plan for [fuel] prices to go back up to over $4 a gallon.”
Within bMobile’s Route Manager software suite, the company offers Route Mizer route-planning software that uses Microsoft MapPoint. The software accounts for several factors, including construction, the time of day when a delivery needs to be made and optimal delivery time before giving an optimal route. Drivers also can plug cost factors into the software and can access mileage, labor, fuel and maintenance factors via a handheld mobile device.
To illustrate the savings that can be obtained through Route Mizer, Macaw cited a small company that implemented the software and reduced its number of routes from eight to five. A larger company with 26 routes used the software to save $1,100 in one day, he says.
Beverage distributors operating on a presale platform can enter presale information into the system, and based on volume, bMobile’s Route Manager can produce a plan to organize cargo onto specific trucks and routes each day, Macaw says.
At UPS Logistics, the Roadnet Transportation Suite uses software to monitor distribution from strategic planning to delivery, Brandt says. The suite combines Territory Planner, MobileCast and Fleet Loader.
“RoadNet is the daily planning tool,” Brandt says. “It takes today’s orders and creates routes for tomorrow.”
Territory Planner lets the user look at historical information and make a plan to grow or shrink distribution based on the data, Brandt says. It also allows distributors to divide their customer bases into territories and then routes within the territories, she says.
“A lot of our beverage companies use Territory Planner to create static routes because they want that very high level one-to-one customer relationship,” Brandt says.
Fleet Loader is a vehicle-loading tool to help load bay trucks or create pallets for bulk trucks specifically for the beverage industry, Brandt says. It takes all of a distributor’s SKUs and allocates them efficiently among pallets and trucks.
“With Fleet Loader specifically, we’re trying to help people save time, whether it’s in the warehouse or with the customer,” Brandt says. “If you use a driver-friendly loading strategy, obviously you’re going to save time when you’re unloading at the different venues. If it’s warehouse friendly, you’re going to be more efficient in the warehouse.”
New Government Safety Regulations
With the implementation of the Federal Motor Carrier Safety Administration’s Comprehensive Safety Analysis, distributors will be under more strict government regulations to ensure the health and wellness of both drivers and vehicles, Brandt says.
The federal initiative seeks to reduce commercial motor vehicle-related crashes, injuries and fatalities through a new enforcement and compliance model that changes the rating system for large commercial vehicle carrier’s compliance with safety rules.
“In a nutshell, it’s moving the fleets and how the government scores them, in regard to safety, into a new system,” Xata’s Witty says. “…There’s a good chance that they might have been OK in the old system, but in the new system there may be things they need to address.”
Part of that regulation includes stricter monitoring of driver service hours, Witty says, making it more important than ever for distributors to get the most out of drivers while they are on the road. “I think that’s where optimization helps – using your resources most efficiently to optimize the hours they can work,” he says.
The CSA 2010 regulation requires carriers to monitor large amounts of data on driver and vehicle well-being, which will be time-intensive and require training, Brandt says.
“It’s going to be tough for folks to be able to do that and be proactive if they don’t have routing systems,” she says. “There’s a lot of data they want folks to manage and a lot of training. You have to really train your drivers to understand how important it is.”BI
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June 11, 2010