Ways to reduce your operational costs

People often joke about how much easier their business would be without the customers – they wouldn’t have to restock shelves or be interrupted by phone calls. Of course, without customers, there would be no reason to be in business in the first place!

Business relies on customers, so it makes sense that they should be one of your top priorities. But, behind closed doors, the way you service your customers and the balance you strike between sales and operations are matters which can dramatically affect your profitability. Your sales and distribution network is a key example of how close attention to this delicate relationship can result in improved business outcomes.

True Optimal

Let’s look again at the notion of a business without customers. Although this is not something to strive towards in the real world, Omnitracs Roadnet software allows you to use this hypothesis to determine True Optimal routes for sales and delivery, without the complications of what your customers demand or request. Once you have run this scenario and considered the results, you can then start to add back-in the restrictions which are necessary in order for you to do business with your customers. Restrictions such as not being able to call on someone before 10am or requiring delivery every second day.

The True Optimal scenario and your current business model can then be compared to find possible efficiencies. For example, you may be able to set a wider time window for deliveries, or you may be able to reduce the number of days you call upon a set of customers.

Doing this analysis may also uncover ways for you to reduce unproductive travel. This is something which all businesses should try to eliminate, and it commonly occurs when the delivery area is too wide, or too far from the depot. A strategy which can be used to reduce this waste is the implementation of depots and cross-docks. Once these are in place, businesses can reroute activity to eliminate workplace imbalance. It may also be possible to improve clustering of delivery days – so you can reduce despatch to three days a week instead of four or five.

Omnitracs Roadnet software uses all these details and sets up routes which evenly distribute workload, and offers the best solution for customer service, employee satisfaction and ongoing safety. The software can also keep workloads balanced in instances where last minute sales calls or deliveries are required. For example, instead of a Planner simply adding a stop along the way on an existing route, the Suggest Route option can better recommend where and when the additional stop should be included.

Opportunities for compromise

Changing the customer service arrangements that your sales people have developed as part of their relationship with the customer is always going to be a delicate task. For this reason, it is better to implement a change in delivery schedule or sales territories when other significant changes are also underway – for example, if you have recently acquired another company, or there has been a significant change within your product portfolio. These types of opportunities may not come up often, so make sure you take them when they do.

Which route?

Most people think there are two options when it comes to routing – standard routes, which have a higher cost, but also a high driver to customer consistency, which can lead to better customer satisfaction; and also dynamic routes, which have a low cost, but also a low driver to customer consistency – which can mean that driver is not familiar with the area, or that they may take longer to get in and out of a premise, therefore adding time and cost to the journey.

There is also a hybrid option which sits between these methods. Market Motion can work with your business to find a hybrid routing solution that suits your needs.

Achieving Business Optimal

Once you have your Business Optimal route set, the next step is to find out what the reality of your distribution network is. There may be many reasons why your sales and delivery people do not run exactly as prescribed, so having them record their actions over a set period can help you to understand the challenges they face. These occurrences can be recorded as Event Exceptions, and once analysed, can be used to implement behavioural changes, or to alter distribution networks if required.

At Market Motion, we are committed to using the latest technology to arm our clients with as much data about their operations as possible. Call us on 1300 558 381 to discuss.

Want to hear more? Recently, we broadcast a webinar on important things to consider when reducing fleet and delivery costs. You can listen to the recording today.