Transportation costs are typically the highest operational expense distributors experience. For foodservice businesses, controlling these expenses is further complicated because of the distributors' inherent challenges presented by next-day deliveries, multiple stops, tight time windows, and delivery restrictions, all of which have to be considered and finalized quickly in order for the night crew to begin the selection process.
Among the workshops offered at this year's annual Foodservice Distribution Conference & Expo was Controlling Costs Through Better Routing. The session, which offered insights on ways to use technology to maximize truck utilization and pieces per mile, was presented by Jon Birdwell, assistant operations manager, Ben E Keith Foods - Oklahoma Division, Edmond, Oklahoma, and Sabrina Stewart-Mosley, product manager, UPS Logistics Technologies, Baltimore, Maryland.
Leading off, Birdwell said there are four major elements to better routing. The first is routing software, which provides significant savings over manual routing because it eliminates “seat of the pants” routing processes through optimization. Next come account maintenance, cube utilization, and delivery software.
“For standard routes - a set pattern for each delivery day, routing software gives you the ability to make decisions on stops and delivery windows,” Birdwell said. “When an order is placed, the software automatically assigns the stop. With sequence stops, the software block stops geographically so trucks are not back-tracking.”
As for account maintenance, Birdwell said the key is communications. “When a salesperson lands a new customer, he needs to contact the transportation department to find out what days deliveries are made in that customer's area, and then let the customer know. The salesperson also needs to arrange with the transportation department to have that stop added to the appropriate route and placed in the proper order picking and delivery sequence.”
This doesn't always happen, he noted, and when it doesn't, “a mistake in sequencing deliveries has a domino effect that impacts the service levels of all subsequent stops, as well as the profitability of the route.”
Improving cube utilization also can help cut transportation costs, said Birdwell. No easy task, he noted, because the majority of foodservice deliveries are done by 11 am.
“As opposed to adding stops, drivers, and equipment, and all the associated costs, I suggest you work with key customers to be able to make deliveries to them when they are closed.
“Suppose you have a ‘dog route’ where a truck travels 300 miles in one direction with only seven stops and low cube utilization with only 283 pieces. By having your salespeople work with customers to have the ability to get into some of the larger accounts - the ones that get full pallet loads - after hours, you may be able to add some stops and turn that 283-piece truck into a 700-piece stop.
“This gives you the ability to meet early delivery time windows and get better truck utilization by adding cube.”
To be able to make deliveries after hours may require licensing and bonding, Birdwell said, “depending upon what the customer will allow you to do.”
He recommended the use of delivery software that includes route overlay capabilities. “With an overlay, you have the ability to pull up an area and overlay maps so you can see where your trucks are delivering. This helps you determine where you can save time and miles by changing stops from one truck to another.”
Another nice feature of delivery software, he said, is that it gives a company the ability to scrutinize its previous day's routes to see how well its deliveries went.
“Despite the importance of truck routing, the individuals who handle these tasks are usually overlooked in helping a company's bottom line,” Birdwell said. “Often, companies don't include them in operational meetings and decisions, yet routers have a direct influence on what is being shipped out everyday.”
Birdwell shared that his company periodically sends out route evaluations to its drivers. “Nobody knows a route better than the driver. He's out there every day. He knows his customers.”
The route evaluation used by Ben E Keith Foods - Oklahoma Division is a simple form that asks: “If you were to have routed your run today, what would you have done differently?”
“That information is very helpful,” Birdwell said. “We look at it and see if the driver's suggestions makes sense as far as time, miles, and so forth, and make any changes that are beneficial.”
The company uses a routing and delivery software that allows incorporating a driver's “working speed.” Each driver is assigned a working speed based on his work pace - slow, medium, or fast. With this feature, each route has a true delivery time window according to each driver's “ability,” he said.
In her portion of the Controlling Costs Through Better Routing workshop, Sabrina Stewart-Mosley, product manager, UPS Logistics Technologies, said that in order to get the most out of routing and scheduling solutions, a company must first have a good understanding of how its present route execution system is working, know if there are any particular areas of “pain” - issues that are continually having to be dealt with, and whether or not its current performance measurement system is effective.
Following this, a company needs to decide upon what it wants to accomplish with its routing, what measures will be used to quantify its progress, and what delivery and shipping issues matter most to its customers.
“For measurements to be effective they must be quantitative, defined and focused, simple to understand, and visible to everyone in the organization,” she said. “And you must measure what is important: utilization, productivity, and performance.”
Stewart-Mosley outlined four key factors to bettering routing: proactively planning for tomorrow, collecting data and establishing benchmarks, analyzing quantifiable route data, and implementing changes. “You need to strive for continuous improvement because good is never enough.”
When creating a plan, she said it is important to base it on solid intelligence. The plan also needs to incorporate technology that is adaptable to one's operation, takes into account that “not all customers are created equal,” and is forward-thinking and not just reacting to today's events.
Collecting data can be done by various methods, both manually and with technology. A simple way, she said, is to give drivers a manifest and have them write down their arrival and departure time at each stop. Another method is times studies, which can be done to make comparisons between what is thought to be the service time for accounts versus the actual time.
Using a GPS tracking system will allow for easier collection of such data and can track any off-route exceptions, she said. Mobile computers can be used to track arrival and departure time and analyze delivery performance.
“Every component of the delivery, including taking into consideration such things as service time - how long at each stop, time windows, routes costs, and exceptions need to be evaluated consistently and frequently, always thinking about the next step forward,” said Stewart-Mosley. “Then, you need to compare this data against the benchmarks you set in your plan to see where you are in relation to them.
According to her, “three benchmarks you can't live without:
Time window validity and accuracy - If you are striving to meet a time window that isn't accurate, then you're striving to meet a goal you are never going to reach.
Actual versus projected data - Does your plan measure up to what happened? If it doesn't, you need to see where the breakdown occurred.
Accurate customer data and account maintenance - If you don't know where you're delivering your products - not having the correct address, for example. or know what time deliveries need to be made, it's going to be harder to create and analyze a plan.”
Another important element of the analysis, Stewart-Mosley said, is to look at measurements in quantifiable terms, such as location delivery cost per stop and per account, and per gross profit dollar per stop. Other key measurements are vehicle utilization - vehicle case load, for example, driver productivity - driver performance, cases per hour, etc., and delivery performance - dispatch, on-time, etc. “If there are drastic changes or deviations, take a look to see what might be the problem.”
Moreover, it is important to “keep in mind that all customers are not the same.” She suggested creating profiles for customer service levels to take this into account. “Customer profitability is always going to be a key to routing.”
The final step in improving routing is implementation of the plan. “For it to succeed,” said Stewart-Mosley, “participation by senior management is critical. Keeping them involved keeps the plan ‘trickling down,’ and helps make sure everyone is tied into the same goals, which leads to faster implementation. So will providing information on key operating items to all involved.”
Stewart-Mosley stressed the importance of driver participation in routing improvement. “They can make or break any improvement since they are the ones that carry out the plan. If drivers buy into it, and believe in it, there will be a much smoother transition because they will want to make it a success.
“That results in increased driver productivity, and this helps builds a company's brand image through increased customer service with more on-time deliveries and pickups.”
The sales department's participation in implementing a routing efficiency plan also is essential, said Stewart-Mosley. “Sales must understand your transportation strategy and the impact they have on it. They are the ones that sell the accounts and make the promise of when deliveries will be made. If given times are unrealistic, that makes your job harder.”
Both Stewart-Mosley and Birdwell concurred that the benefits to improving routing include better driver management, increased driver productivity, better utilization of vehicles, and improved performance of drivers. “All of this helps reduce driver turnover, as well as delivery costs,” they said.