What if you do not invest in transport planning software?

Posted by Louis D'hondt on 06/03/2018

Today, some transporters manage to survive without the use of a route planning application. Plenty of arguments have been presented supporting the immediate use of decent software. But let's look ahead and focus on factors that will keep evolving and will become even more important. You might be successful right now but staying ahead of competition is essential for future success, keeping up with competition is not. What are the risks if you do not invest in transport planning tools?

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1. Cost of work is increasing, willingness to pay is not

There's no need to stress that wages and salaries are high, making manual work very expensive. No matter what type of work, it should be organized efficiently. In the case of the transport industry, transport planning tools directly influence the work of planners and drivers.

  • Without the combination of the planners’ expertise with route optimization algorithms, you'll face tough times.
  • The drivers' expensiveness is twofold. First, personnel is costly. Secondly, high quality drivers are hard to find. This is a profound bottleneck in many transport companies. 

To allocate drivers efficiently, optimized route plans are necessary. For optimized route plans, planners must have a good planning tool at their disposal.

The cost of manual work must be placed in the bigger picture. Almost every successful company is constantly striving to work at the lowest possible cost while keeping customers satisfied. For transport companies to get to that optimized scenario, a transport optimization application is critical.

Rest assured, whether or not you'll make the investment, your competitors will.

 

2. Customer demands are high; a differentiator is needed. Think WITH your prospects.

The quantity of accessible information is not a problem anymore, the quality is. Customers can scan the market, conduct a research, see what each player has to offer. More than often, competitors are played off against each other. At this point, being able to differentiate yourself from the pack is priceless.

Offering more than just a good price is the way to go. Usually prospects are seeking more than just a good price. By showing your customers that you're a reliable partner and that you're thinking along with them, you're touching a sweet spot.

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For example, when a customer sets strict time windows (i.e. opening hours), resulting in expensive services when trying to fulfil his demands, simulate the impact of wider time windows. If this generates a significant cost decrease, offer a discount resulting in an improvement for both parties.

This is just a simple example but without decent tools at hand, deals will be lost.

 

3. The Eco-Friendly Sharing Economy

One of the goals of the sharing economy is to eliminate unnecessary resources. Hand in hand with the sharing principle comes the sense of ecological responsibility that the general public is appealing for. Applications like Uber, Airbnb and TaskRabbit are cleverly embracing this trend. Apps like Teleroute present transporters with the opportunity to exchange orders. 

The key question is which orders to outsource. Sharing is an honourable principle but let's be honest, factors like costs and competition are inherent to running a business. They are in turn dependent on other variables. To get the actual cost, we're talking about variables such as:

  • the location of the order. How many other orders are in that region?
  • the time window of the order;
  • the time windows of nearby orders;
  • the available resources

Concerning the exchange, multiple pros and cons must be taken into consideration. What does it cost me? What would it cost to the other transporter? What's his price? Is he a close competitor? In that context, you might opt to execute an order yourself even though it would require extra effort. To optimally conduct this analysis, the right tools are necessary.

 

4. Data

State of the art applications provide features to capture, store and present data. Correct information is essential in all aspects of transport business.

  • Planning
  • Monitoring
  • Reporting
  • Sales. How does this prospect fit my business?
  • Strategic. To get reliable insights when analysing multiple scenario's, correct data is essential.

The age of pen-and-paper will soon be history. People are getting incomprehensive when it comes to unreliable data. Delaying the investment in proper infrastructure makes the gap harder to close.

 

5. Complexity

Technology is evolving quickly and the complexity of the problems that software can solve is evolving with it. Packages exist that can align multimodal transport. The variety of variables and constraints to take into account is rising exponentially. To name a few:

  • Compatibility between locations, requests, vehicles and drivers
  • Service times, lead times, max cross dock times
  • Hub capacity
  • Costs

multimodal complexity transport logistics

People do not even think about challenging these levels of complexity manually.

 

'Sticking your head in the sand might make you feel safer, but it's not going to protect you from the coming storm' - Barack Obama

Topics: business strategy, Transport, Route optimization

Louis D'hondt

Written by Louis D'hondt