Business to Business (B2B) and Business to Customer (B2C) models require that someone decides how each service order or delivery ticket is assigned to the proper worker or vehicle for last mile delivery.
There are three primary methods used for making those decisions: manual routes, static routes, and dynamic routes.
For an organization that uses manual routes, a person identified as a route planner, trip planner, load planner, or dispatcher decides what work is to be assigned to each worker or vehicle. In many cases this is done by printing work tickets from another application and then manually sorting them on a table.
With a small number of tickets, each one can be assigned to the route that makes stops in a specific area. With a larger number of tickets, the tickets are first broken down by ZIP code or town name, then the routes are built by consolidating the ZIP codes, and finally, the stops are manually sequenced on each route.
Manual routes are popular for organizations with a small number of stops because the time needed to do the assignment appears to be minimal, and the routes appear to be cost effective. Other considerations are that any automated process would be expensive and would change a process that appears to be working reasonably well.
Many organizations visit the same customers on a regular basis, many with a visit once or twice each week or every other week. In this case static routes (often called master schedules) are used.
Here, routes are planned on an infrequent basis, usually annually or semi-annually, and the same routes are used many times over. When a customer is added or lost, the route is changed, but customers are not usually moved from one route to another until all the routes are reorganized.
There are two main reasons for using static routes: first, the routes are reasonably efficient as long as there are few changes; and second, customer service is improved by ensuring that the same driver visits the same customers on every visit, which may provide an improved level of customer service.
The final method of assigning work is dynamic routing. In many ways, dynamic routing is like manual routing on steroids. There is a process of taking each order, determining its actual location, and then assigning the entire group of orders to workers or vehicles in the most cost-efficient manner.
The assignment process removes the long-held biases of the planner. I have heard planners say “I would not have planned it that way”, but when shown the actual drive time and distance differences between their work and the computer’s, they always had to admit that the computer did find a solution with a lower cost. And the time needed to perform the assignment process was reduced as well.
So, if dynamic routing takes less time and builds a less expensive transportation solution, why not use it in all cases?
Is it expensive? The days of paying a large licensing fee upfront, followed by annual maintenance, is a relic of the past. Dynamic routing can be obtained on a per vehicle per month basis, in many cases with only a small upfront expense to move the data from the existing business application to the dynamic routing application.
Is it complicated? This question is really another way of asking whether or not the business process will change. At one time, when a planner was given an unfamiliar address, it required a lookup in a map book. Now everyone knows how to use a web mapping tool that will spot almost any address on the map. A change in process? Yes. But who would want to back to the old way? Dynamic routing may be different, but it is no more complicated than many business processes used today.
Does it impact customer service? This is a question often asked by those using static routes. A good dynamic routing application will allow some fixed assignments to be made, sometimes called anchor stops. These are the basis for the routing and all other work will assigned in the most efficient way around these constraints.
Will dynamic routing affect my order cutoff times or vehicle loading process? When using a process where a delivery in a specific area is assigned to a specific warehouse door, products may be staged at that door right after the order is entered and confirmed. If the assignments cannot be made until after the order cutoff time, the staging of the products cannot take place until after that, when the assignments are known. This is a legitimate concern. But if the savings from dynamic routing exceed the costs of changing the staging and loading process, then there will be an overall cost reduction by switching to dynamic routing.
What are the savings of switching to dynamic routing? Over the past thirty years in the route planning, scheduling, and dispatching marketplace, the Walzik team has found that there is at least a 10% cost savings over 90% of the time. The return on investment (ROI) is very different when you compare a large upfront payment against a software as a service (SaaS) model. In many cases, the savings from just a few months of dynamic routing will return all the upfront expenses.
Dynamic routing is a part of business process automation that will reduce the costs of executing the last mile of the supply chain. It is nothing exotic or futuristic. It is something that has been implemented by many organizations, large and small, for over thirty years.
Although dynamic routes may be the most cost-effective solution, we know that not everyone is ready to go there today.
Strategic Movements can be used for manual routing with the planner replacing paper tickets with a drag and drop interface that may automatically compute route times and distances and offer a visual representation of the routes on a map.
It can also be used for static routing by creating a daily route plan from a master schedule. Unscheduled stops may be added to existing routes with the drag and drop interface, or stops may moved from one route to another, as needed. The AI assignment process can be used to reorganize the routes when needed.
While there are always reasons not to change, it may the time now to consider making the move.
With no end of the economic turmoil from the coronavirus pandemic and the spread of COVID-19 in sight, businesses need to consider delivery solutions that make it easy to add and drop customers and to change the scheduled work time for those existing stops.
We offer a simple method to move service orders or delivery tickets from many applications to Strategic Movements. From there they may be assigned to routes using our artificial (AI) assignment process. And, for Microsoft Dynamics GP users, we offer a report option that will send a sales transaction to Strategic Movements with nothing more than the click of a button.
Please visit our website at www.strategicmovements.com for complete details.
Like the blog? Sign up and be the first to hear what we have to say.