Planning towards the Triple Bottom Line
Posted by Louis D'hondt on 13/06/2019
Do businesses respect the interests of all stakeholders, do they use an environmentally sustainable approach, and are they still profitable? People, planet and profit: these are the three values of John Elkington's triple bottom line. It's a key concept in Corporate Social Responsibility that all companies must embrace if they want to generate sustainable value. It's worth emphasizing the contribution of high quality route planning software to this philosophy. Here's how.
Most companies nowadays understand that the old and singular bottom line of yesterday – profit – has actually shifted into three different bottom lines. Making a profit is, of course still mandatory but doing it in a way that puts the least amount of pressure on our planet and its inhabitants is equally important. Here's how decent route optimization software fulfills a higher purpose than just getting things done at the lowest possible cost.
The first bottom line is social equity: People
State-of-the-art tools make the life of planners and drivers more pleasant, so they contribute to that first bottom line.
- Planners: the role of a planner is far too often the one of a fire fighter.
A proper tool enables the planners to shift their focus from 'getting everything planned' to fine-tuning a plan to the point where the requirements of the company, the customers and the drivers are fulfilled.
Decent packages deliver a plan in no time and accept suggestions from planners. With smart KPI's and the ability to compare different scenario's, they can evaluate the impact of their suggestions. The role of a planner transforms from firefighter to a consultant who is striving for continuous improvement.
- Drivers: the new bottleneck of every transport company.
As a result of the excessive customer demands – getting everything delivered at the right place, at the right time and at the lowest possible cost – drivers must sustain stressful working conditions. For the planners, simply coming up with a feasible plan already is an admirable accomplishment so drivers aren't surprised if they are confronted with a 4-hour working day on the first day and a 14-hour rush on the next. Who hasn't been run off the road by a sprinter, hurrying to get the e-commerce packages delivered on time? Don't shoot the messenger!
State-of-the-art planning tools don't only generate a feasible plan quickly, they provide the option the set a maximum AND minimum work time. Combining this with a minimization of the time lost in traffic and break scheduling results in more stability, less stress, better working conditions and a better work-life balance.
The second bottom line is the environmental one: planet.
Most optimization packages are minimizing costs, which leads to a minimization of the environmental impact. This improvement is achieved in multiple ways and some of them are more obvious then others:
- The longer the distance you cover, the costlier it gets. So it's obvious for route planning applications to minimize the distance. Because shorter distances means less pollution, it's fair to say that these applications have a beneficial ecological impact.
However, there's a but... If taking the shortest path means decreasing the distance by 1% but spending 20% more time in traffic, then the ecological footprint does increase. That's why the next factor is critical.
- Every driver must get paid, so minimizing the necessary time is another obvious objective. It's an obvious one but slightly more sophisticated than minimizing the distance. Situations where a decrease in distance of one km results in an hour extra will be avoided.
Minimizing the required time for transportation isn't only depending on the route you take, but also on the time. Traffic fluctuates over place and time. E.g. traffic West of Brussels peaks earlier than traffic East of Brussels. This enables smart routing applications to plan "around" traffic, instead of just foreseeing backup time or starting earlier.
Not only does minimizing the above two direct costs have a positive effect on the ecological footprint, other less obvious optimizations contribute to this effect too.
- Nobody uses a 13.6m-trailer to pickup groceries at the supermarket. Not only does it take more time but it's very expensive too.
This was a no-brainer but things get much more complicated when having to ship 100 packages of different types, shapes and sizes to 100 customers with varying requirements. Do we use 10 trailers or 20 sprinters? Using the right vehicle for each job requires serious calculations. The fact that the average load factor on Belgian road was 43% in 2017 suggests that there's room for serious improvement.
Having the optimal fleet available might not be an option for some companies in the short term but smart investments in their fleet is a must in the longer run. Good planning tools provide the option to conduct simulations, enabling them to gradually optimize their fleet composition.
At the moment we're going through a downward spiral. The saturated roads cause structural congestion, making it difficult for transporters to reach their destination, which leaves them with no option but investing in extra vehicles, leading to more traffic jams... The ecological impact of this trend is evident.
Reversing this trend is not a walk in the park, but the use of high-quality route planning software is a significant help in reaching that tipping point. Optimal planning ensures less vehicles on the road, causing a decrease in traffic, which again might lead to a more efficient plan...
The third bottom line is the economic one: profit.
As mentioned in the previous two dimensions of the 3BL-concept, cost minimization is omnipresent in route planning applications, but that doesn't prevent the companies from contributing to a higher level of prosperity or a greener planet.
On the contrary, because of the high costs that – in the long term – come with social or ecological disregard, minimizing these costs makes companies reach that triple bottom line. The trick lies in attaching the right costs to each factor, translating the requirements of people, planet and profit into a well-balanced cost function.
One crucial factor in this sustainable objective is the presence of state-of-the-art transport planning software: creating happy planners, drivers and customers that support an eco-friendly and profitable environment.
So, in the end, everybody wins: companies, clients, citizens and planet Earth.