I spent last week at the BevOps show in Tampa, Fla. During this show there were lots of great conversations about methods to reduce operational costs and conserve resources. One topic I heard several case study speakers discuss was route optimization. Route optimization is not new. Whether it is done by software with cool algorithms that connect stops with lines and dots, sales managers with spreadsheets & maps or even to a degree by drivers, it has been going on for a long time for direct store delivery (DSD) players. However, when fuel prices dramatically jumped in cost I think most DSD customers immediately started reconsidering how frequently they were looking at their routes, and optimization software became an instant hot button for many.
The ability to reduce the number of wheels &/or miles on the road is certainly appealing to fleet managers as they attempt to control cost of goods sold. My question is not whether or not you should optimize routes and potentially consolidate routes…my question is, how do you evaluate the cost savings versus customer service levels?
If we were dealing with another industry where your delivery driver just dropped goods off at the back door and then went on their merry way, this would be easy. Find an optimization package that works for you and run with it. However, DSD does not work that way. Route drivers have many different roles to fulfill. Those roles change drastically from one DSD organization to the next, and even within an organization they change from route to route. These drivers interact with customers on many different levels. Perhaps your route driver is responsible for product placement on shelves / merchandising? They may be responsible for taking pre-orders from customers as well for the next day’s delivery. Or they may be even more involved and actively assist the customer with the management of their inventory levels. The bottom line is a DSD route driver is far more than a delivery driver. These route drivers are far more likely to be a key part of customer relationship management, than just a part to be interchanged at random to save a few bucks in fuel.
I am not saying route optimization doesn’t have benefits…it absolutely it does. What I would like to hear from people considering implementing an optimization solution is that they actively considering how to best manage that customer-driver relationship as well. Perhaps this means having dedicated pre-sales teams? Or identifying those customers where the tolerance for change is far greater versus those that require active management of that key relationship and flagging those for a static route/driver assignment.
DSD distributors make cost versus customer service decisions all the time (as do all companies). This is merely another one of those key points that need to be addressed. Quoting cost saving statistics with graphs and ROI projections may look sexy in boardroom presentations, but without considering customer service levels and the impact to sales you may be selling this decision short. Looking at the other side of route optimization should really be part of this project evaluation.
Related ResourcesHighJump RouteTrack Datasheet
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