Is your company caught in a “fail to scale” scenario? If you are a bulk distributor trying to expand but facing challenges, it’s time to consider using technology to unlock the full potential of your existing resources. Automation strategies create new opportunities to reduce the number of delivery vehicles, decrease mileage, and increase gallons delivered without constantly relying on adding more trucks.
It’s difficult to gauge your company’s success without a system in place that focuses on optimization and insights. This article explains how investing in technology is not just another expense, but a way to improve your business.
Invest in Automation
Consider this: instead of buying more trucks, what if you could tap into the unused capacity of your current fleet by investing in automation technology? Similarly, hiring more order entry clerks might seem like additional support, but if they’re duplicating work that could be automated, wouldn’t it be smarter to streamline your delivery workflows and integrate them directly with your back office?
We’ve identified ways that technology can help companies measure and manage their operations. In response to the idea that “You can’t manage what you can’t measure”, we’ve developed a logistics maturity model that outlines the necessary steps to achieve higher levels of efficiency.
As companies invest in technology, they progress from manual, paper-based dispatching on the left side to becoming fully-integrated organizations on the right side. This integration optimizes routing, forecasting, and inventory management for smoother operations.
Bulk Distributor Maturity Model
Level 1 – Paper-Based Dispatch
Level 1 companies rely on paper-based dispatch, like paper delivery tickets and manual dispatching. There is little to no software automation. In the past, using paper was the norm. As a result, these companies lack adequate systems to measure logistics efficiencies, like gallons per hour or per trip. While being at Level 1 doesn’t mean a company is highly inefficient or provides poor customer service, it does indicate a lack of established processes for consistent and efficient delivery.
At Level 1, success is typically defined as making all deliveries without worrying about overtime or having too many trucks – just focusing on getting everything delivered. Many companies are reluctant to move beyond paper-based dispatching because they fear potential risks to customer service and struggle to see the benefits beyond the initial expense. However, without systems in place to capture and analyze data, businesses cannot grow or operate efficiently like their larger competitors. While Level 1 may work for some companies, embracing change and moving beyond it is essential for growth and efficiency.
Level 2 – Basic Automation
At Level 2 of the bulk distributor maturity model, logistics functions move away from paper-based processes and start to allow shared information. This basic automation helps measure efficiency better. With drivers using mobile devices, trip durations can be tracked, and important bulk metrics like gallons per hour, gallons per trip, and gallons per mile can be reported.
The smartphone delivery app turns your truck into a virtual cash register, enforcing consistent delivery rules. Each tank has a barcode that allows you to track the delivered quantity, tank capacity, and GPS location over time. The delivery app also prevents drivers from delivering the wrong product to a tank, ensuring product integrity.
Level 3 – Integration
Level 3 companies focus on moving from reactive logistics to resource planning through integration. They achieve this by optimizing routes to determine how long a trip should take and comparing it to the actual performance through “plan-vs-actual’ reports.
For example, let’s say a driver took 10 hours to drive 350 miles, but according to the optimized plan, the trip should have only taken 8 hours and covered 275 miles. At a $25/hr and $2/mile rate, the optimized plan saved you $50+ in overtime costs and $150 in loaded mileage expenses. You can easily see if the route ran out of sequence so you can take corrective action.
Integrating with your ERP system means you don’t have to re-enter orders separately. As a result, the Order-To-Cash (OTC) cycle is shorter, and customer service is improved.
Level 4 – Visibility
Level 4 companies focus on using data to make smart decisions and have moved beyond basic route planning to optimize operations. They do this by implementing centralized dispatch, which standardizes processes to ensure efficient and consistent deliveries across ALL depots.
Many companies think site-based dispatch is more agile because their dispatchers know the customers and territories, but there are risks. For instance, what happens if your dispatcher falls sick or leaves the company?
In reality, decentralized dispatching can lead to inefficiencies. However, Level 4 companies use data to make better business decisions and have well-established processes that allow them to scale effectively. They don’t have to worry about the operations and quality of service being dependent on a single dispatcher. This data-driven approach ensures smooth operations regardless of individual changes.
Level 5 – Optimization
In Level 5 of the bulk distributor maturity model, companies use automation to achieve higher profitability, customer satisfaction, and reduced waste. Now that all tanks are barcoded, you forecast orders for unmonitored tanks using Machine Learning. Instead of constantly topping off keep-full accounts, you schedule deliveries based on when the tank actually needs to be filled. This results in larger drop sizes, increasing your average gal/delivery. Instead of delivering 1x per week, you deliver 2x every three weeks and use the extra truck capacity to service more customers.
Level 5 integration involves multi-vehicle, multi-compartment optimization. The software routing engine plans orders across vehicles to minimize total transportation costs while still meeting customer service windows.
For example, the routing engine can allocate orders to 10 trucks with 100 orders in a way that meets all customer service windows but only requires 8.5 trucks. The optimization gives you extra capacity equivalent to an extra truck and driver.
This kind of advanced optimization is particularly useful for companies with more than 50 trucks. While some companies advertise multi-compartment routing, in our real-world experience, there are only a few companies that actually succeed in implementing it effectively. Dynamic, multi-compartment routing requires a high level of sophistication and commitment. When implemented correctly, multi-vehicle, multi-compartment routing has proven to save an additional 10-25% of total transportation costs. This statistic is dependent on the delivery area’s density and the number of stops per day per truck.
Unlock Your Bulk Distribution Potential with Technology
BizSpeed’s goRoam MobileHub offers software solutions to help take your company from Level 1 to Level 5 of the bulk distributor maturity model. Contact us to optimize your delivery operations!
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