Learn how to reduce costs of your wholesale construction materials delivery by using route optimization software to increase efficiency.
How Delivery Management Software Cuts Costs and Saves Money
Learn how delivery management software cuts costs of last-mile logistics and hlps you to save up to 50% of your operating delivery costs.
In this article, we’ll show you seven proven ways delivery management software cuts costs and saves you money.
In fact, you will see how this tool can cut the cost of running a delivery or field service by as much as 50%.
With more money in the bank, it’s a near-instant return on investment. And a big boost to your bottom line.
So, without any more delay, here’s how you can cut costs with delivery management software:
7 Ways Delivery Management Software Cuts Costs
- Improve decision making and agility
- Measure and analyze KPIs
- Reduce fuel consumption
- Right-size the delivery fleet
- Regularly maintain vehicles
- Make better use of space
- Streamlines the ordering process.
1. Improve decision making and agility
Speed is the key to managing a modern field service operation or delivery.
But as you grow, it becomes difficult to scale.
Many struggle to maintain a fast service, and that’s when costs skyrocket.
What many fail to understand is that operational speed is the direct result of fast and efficient decision making.
It’s what enables you to build an agile delivery operation and effectively react to the reality of day-to-day operations.
And the only way to adopt this strategy is to deploy delivery management software.
Delivery management software makes it possible to achieve an agile transformation of your organization.
By streamlining the decision-making process, this type of solution helps you to achieve all five dimensions of agility: alertness, accessibility, decisiveness, speed, and flexibility.
At the same time, an agile transformation touches every aspect of your operation, including structure, processes, people, and technology.
That’s why 37% of companies have already started this process, according to McKinsey.
Leveraging delivery management software gives you access to a feature-rich environment that works in real-time.
This means that not only do you have complete visibility and control over the entire operation, but you can also make split-second decisions to make the best call depending on the situation.
And when you can make rapid decisions to fix problems and modify activities, you maximize the speed and efficiency of the entire operation.
And the greater the speed and efficiency, the more profit you make, and the less money you lose.
2. Measure and analyze KPIs
Taking steps to optimize operations isn’t an easy task.
Even when you uncover a process where you are losing money, it doesn’t mean your efforts will bring about the desired results.
It’s necessary to monitor these activities and track their effects on the bottom line.
The secret is to measure key metrics in delivery logistics.
Calculating key performance indicators (or KPIs) works in two ways.
First, it helps you take a quantifiable approach to gauge the performance of your delivery and identify strengths and weaknesses in your operations.
At the same time, KPIs let you stay on top of optimization efforts once you put them into action.
In turn, the data can help you follow up on their progress, and see whether they are making an actual impact or if you need to take a different approach to get rid of operational waste.
Calculating and analyzing KPIs is the main activity by which all others will measure up to.
But measuring KPIs is difficult. It’s virtually impossible to do it without the use of technology.
So, if you want to track key metrics in delivery logistics to measure for success, you need to include delivery management software into your system.
Delivery management platforms are an end-to-end solution to delivery logistics.
This enables you to plan, manage, and operate all your tasks in one place.
Since you use a single digital system to control everything, it can automatically store information about the performance of activities.
And you can use delivery management software to track many different KPIs:
- Number of deliveries
- Average time per delivery
- The average cost per delivery
- On-time delivery
- Order accuracy
- Time in transit to distance
- Vehicle capacity vs. available capacity
- And more
Having access to these metrics allows you to review the current state of affairs and benchmark them against your efforts.
Once you can accurately monitor performance based on numbers and math, optimization is simple.
All you have to do is track, evaluate, optimize, test, and repeat.
In doing so, you will continually cut costs by constantly driving the efficiency of your operations forward.
3. Reduce fuel consumption
For many delivery and field services, fuel is a big concern.
In fact, fuel consumption can account for more than 30% of operating expenses (Opex) for most businesses that operate fleets.
But at the same time, controlling these costs isn’t easy.
On the one hand, the continuous rise of global oil prices means the price of fuel is only going to go up.
On the other, the dynamic nature of delivery means planning the fuel budget is nothing short of a complex variable.
Nonetheless, conserving fuel and keeping fuel costs down is a priority which many companies struggle with and lack the proper solution to handle.
For example, some companies are downsizing vehicles or converting them to more fuel-efficient models, like hybrids and NGVs (natural gas vehicles).
Others are buying up fuel in bulk when the price is right.
While these tactics improve fuel efficiency, the resources required to implement them downplay any short-term savings that they generate.
The only way to truly reduce fuel costs is to use technology to reduce the number of miles driven per each delivery.
Delivery management software helps with this.
Due to its modular design, the system has all the necessary route planning and route optimization capabilities to improve fuel consumption at all levels of your operation.
But choosing the best routes doesn’t mean simply calculating the shortest route (in terms of distance).
To truly cut fuel costs, you also need to map routes with multiple stops and reduce delays en route to the destination.
That’s why route optimization takes into account key factors such as drivers, vehicles, traffic patterns, types of roads or junctions, and delivery windows to calculate the best route based on all available assets.
So with better routes, you can reduce:
- Distance to destination
- Time to destination
- Number of miles driven
- Out-of-route mileage
- Fuel consumption per route
- Fuel consumption per driver
At the same time, the routes are not just shorter (in terms of distance), but they are shorter
But the solution also raises visibility over your operations. You can actively track and monitor driver behaviour that affects fuel consumption, such as speeding or excessive idling.
In fact, drivers can impact the fuel economy of your organization by as much as 33%, according to the EPA.
And when you do the math, one hour of idle time per day comes to 26 miles on the road during a year.
4. Right-size the delivery fleet
Owning vehicles is one of the highest costs of operating a private delivery fleet.
In fact, buying a new van can set you back a lot.
In the UK, the price is at least several thousand pounds.
This price guide shows how much it costs to buy a new commercial vehicle based on its type:
- Microvans (start at £6,495)
- Car-derived vans (start at £9,000)
- Pick-up vans (start at £15,400)
- Panel vans (start at £12,000)
In the USA, the estimated cost for a new van can be as much as $10,000 per vehicle.
But these prices don’t include the cost of insurance, registration, maintenance, and fuel.
According to FleetLocate, the average upkeep for light-duty vehicles is between $5,000 and $8,000 per vehicle, per annum.
And the larger your fleet, the greater the cost of owning it.
That’s why one of the biggest delivery challenges is to know how many vehicles you need to keep up with demand.
While simultaneously maintaining cost-effectiveness at off-peak times.
Too few vehicles and you risk not fulfilling order requests when demand exceeds your capacity.
Too many, and you end up running up overhead on idle vehicles parked in your garage.
The solution is to right-size the delivery fleet with delivery management software.
This tool makes it easier to manage your fleet because it gives you complete visibility over the entire delivery.
That means you can track the performance and utility of each vehicle, and know exactly how many vehicles you need to fulfil all of your orders to maintain customer satisfaction.
In return, this information helps you to identify vehicles that are underused so you can remove them from your fleet and cut waste by right-sizing your delivery fleet.
And based on the previous price list, eliminating just five vehicles from the fleet can save you up to $40,000 per year.
5. Regularly maintain vehicles
Maintaining your vehicles in solid working condition costs a lot of money.
And while a routine service for every vehicle in your fleet is a major expense, it’s also a money-saving opportunity for most businesses.
For example, maintaining the recommended tire pressure and alignment helps you to lower fuel consumption and extend the longevity of the tires on your vehicles.
At an average cost of $128 per new tire, it’s a significant return on a sizable investment.
Similarly, regularly changing filters, lines and oil during a routine engine service improves their performance and prevents mechanical issues on the road.
So technically, it’s much more cost-effective to regularly tune-up vehicles than to lose money on expensive repairs, new parts, vehicle downtime, and missed orders.
Delivery management software can help you to track the distance covered by each one of your vehicles.
All you have to do is connect the software with a telematics system.
Once you set it up, you can create alarms to notify you when a vehicle has reached a specific distance (5,000, 10,000 or 15,000 kilometers) and it’s time for a regular tune-up or tire change.
The software also makes it easier to plan better delivery schedules around those downtimes.
It means that you can closely monitor when a vehicle is scheduled for maintenance, so it doesn’t overlap with another.
At the same time, you can account for the shortage in vehicle capacity by diverting the tasks of a vehicle in maintenance to others.
This ensures that your drivers don’t miss any orders and the entire operation continues to run smoothly even when it’s short one vehicle.
6. Make better use of space
Like it or not, infrastructure is a key component of delivery.
Without facilities, it would be a lot harder to own and operate a delivery fleet.
Regardless of whether you are looking to buy or rent space, infrastructure is a sizable expense when managing a delivery operation.
On the one hand, renting storage, office, and supply depots means a lot of monthly overhead.
Add to that physical stores and hiring a third-party delivery provider, and overhead can become a major operating expense (OPEX).
On the other hand, buying a building to house all your staff, vehicles, equipment, and supplies is a big upfront investment (or capital expense - CAPEX).
Either way, you need to make the best use of available space to reduce overhead and get quick returns at the same time.
Delivery management software can help you do both and more.
From the point of infrastructure, a software solution like this centralizes the management process.
Adopting a cloud-first approach to delivery logistics means that you have access to all operations from one location.
So instead of relying on multiple sites to manage multiple delivery areas, you can manage all of them from one central hub.
So it also becomes a question of whether you want to centralize or not to centralize delivery operations.
That means less need to invest in infrastructure in the first place.
At the same time, you can take a more granular approach to manage the use of space.
The software lets you maximize vehicle capacity, so the space inside is used efficiently.
In turn, you have better insight into how much products you actually need, which is the first step to improving the ordering process.
7. Streamlines the ordering process.
Effective ordering is responsible for two things: demand and supply.
Unless you have a tight grip over delivery requests coming in and supply orders going out, you can end up wasting a lot of resources on:
- Too much stock of the same product
- Products with not enough demand
- Supplies that can’t sell quick enough
- Orders you can’t fulfil
- Lack of supplies
But streamlining the ordering process is complicated.
You have to track both supplies and deliveries to ensure the accuracy of orders coming in and out of your depot locations.
And handling that requires a single software package.
Using delivery management software helps to increase order accuracy.
The software relies on cloud technology, which means two things:
- it can integrate with multiple other apps and software solutions via APIs, and;
- it automatically updates any changes across the entire ecosystem.
On the one hand, this ensures that any order you receive is created as one task, be it via your web store, Shopify account, or social media page.
And once that task enters the system, it is visible across all dashboards.
That makes it easier to track inventory and prevents staff from ordering too much of the same products or supplies.
But you can always set up approvals so that nothing is ordered twice.
With increased transparency over the ordering process, you can also increase the supply order frequency.
Raising the order frequency doesn’t directly cut costs, but it does reduce the time it takes to sell off your inventory.
In turn, that not only minimizes the idle time of your product in inventory but also raises returns and profit gains.
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