Implementing route optimisation software can bring a huge range of benefits to a business, but in order achieve buy-in from stakeholders in the business estimating the ROI is a crucial step towards getting sign off. It’s important to consider all of the areas of the business that can be positively impacted by its implementation.
General Cost savings: Route optimisation software will significantly reduce operational costs of fleet operations and deliveries. Businesses will reduce fuel use, vehicle wear and tear, and manpower costs by optimising routes and simply driving fewer miles. By comparing the existing costs of fuel, maintenance, and labour with the anticipated decrease in mileage and overall costs after deploying the software, the potential cost benefit is clear and compelling.
Further areas to consider when calculating the ROI to gain buy-in from senior management:
Time savings: Efficient delivery routes can lead to time savings, enabling drivers to complete more deliveries in less time. This increases productivity and revenue-generating opportunities. Calculate the potential time savings by considering factors such as reduced driving times, potential increases in capacity and optimised delivery schedules.
Reduced planning time: Route optimisation software will significantly reduce the planning time required when generating delivery routes. Savings of around 75% in planning time are achievable. Automating the process of delivery route planning and using advanced algorithms, multiple optimised delivery routes can be generated in minutes or seconds. Route optimisation software will utilise data sources otherwise unavailable or difficult to assess for a manual planner, such as traffic flow data, historical delivery data, vehicle types and capacities, along with any pre-existing orders that may be in the system. While a visual Interface and mapping tool enables planners to easily visualise routes, drag and drop stops, and make adjustments, instantly seeing the effect on other routes and KPI’s. If a business is growing implementing route optimisation software will probably mean that the additional deliveries and routes can be handled by the existing team.
Labour Cost Reduction: Routes that are efficient result in less time spent driving and deliveries can be completed in the allotted time, minimising the need for paid overtime. Route optimisation and delivery scheduling software will also ensure that all drivers are working the allotted times and it is less likely that some finish early while others are still out delivering and running up overtime charges. This leads to a more satisfied workforce that knows their deliveries can be completed in the allotted time with the necessary rest periods, reducing staff turnover and the associated cost of recruitment. To assess the potential labour savings, take into account things like overtime pay, driver salaries, and related costs such as recruitment.
Fuel Cost Savings: Route optimisation software will determine the most efficient delivery routes, reducing the distance travelled per delivery and minimising fuel consumption per delivery. If additional deliveries can be added to a load due to the increased efficiency this will drive down the overall cost of that route further. Calculate the potential fuel cost savings based on historical data or industry benchmarks against the expected reduction in mileage, compared to a manually planned delivery route this can be between a 10 and 20% 20% saving with route optimisation software.
Reduced carbon footprint: By lowering fuel usage and vehicle emissions, route optimisation software can help achieve sustainability goals. By calculating the decrease in CO2 emissions based on fuel savings and the size of your fleet, you can determine the possible reduction in environmental impact.
Vehicle Maintenance Savings: Reduced vehicle wear and tear thanks to fewer miles per delivery on optimised routes will result in decreased maintenance expenses. Use previous data to calculate prospective maintenance and repair savings.
Increased Deliveries: With optimised delivery routes, your fleet can complete more deliveries in the same amount of time. Calculate the additional revenue generated by the increased capacity, when moving from a manual based system to an optimised software solution this can be around a 35% increase in capacity. Freeing up capacity also means that you can absorb small additional increases in deliveries with the existing resources eliminating the costs of additional vehicles, drivers or outsourced services.
Enhanced resource allocation: Better resource allocation is made possible through optimised delivery routes, particularly for equipment, vehicles, and drivers. This can lead to better resource management and less idling time at or between deliveries. By contrasting the expected improvements with the present resource utilisation rates, it is possible to determine the potential savings.
Minimised errors and delays: The likelihood of mistakes, delays, and missed deliveries is decreased with efficient optimised routes and delivery scheduling. Fewer customer complaints, returns, or fines for late shipments will be achieved. Analyse historical data on errors, complaints, and penalties to estimate the potential decrease in associated costs and potential benefit.
Data and Analytics Insights: Route optimisation software provides valuable data and analytics to enhance performance, helping to identify potential cost-saving strategies and process improvements. While a “sandbox” option permits quick scenario analyses to be undertaken, evaluating of the impact of various parameters or constraints on delivery planning and empowering informed business decisions to be made. Scenarios such as adjusting fleet numbers, the addition of new warehouse or the consolidation of multiple warehouses at a new location. The ability to perform quick “what-if” scenario analysis can be invaluable to senior management to make rapid and informed decisions to improve the business and helps to avoid expensive mistakes.
Improved customer satisfaction: By using route optimisation software, businesses can provide customers a quicker and more dependable service with deliveries on the days and times selected at the point of purchase. Increased customer satisfaction, recurring business, and favourable word-of-mouth referrals will come from this. By examining feedback from customers and conducting pilots in certain areas will enable you to calculate the effect on customer satisfaction, comparing service quality before and after implementation.
Scalability and future growth: As your company expands and orders increase, route optimisation software will accommodate the growth and manage the increase in the number of deliveries. Take into account when calculating the ROI the software’s scalability and capacity to adapt to your future needs. Calculate the cost of increased inefficiencies brought on by manual routing or your old solution as your organisation grows to determine the possible savings of implementing a new software solution.
Competitive Advantage: Examine the ways in which route optimisation might give your company a competitive advantage in the market served, possibly resulting in a rise in market share or a loyal customer base. Choosing the right route optimsiation software can enable customers to select their own delivery slots at the time of purchase, with only slots being presented that are dependent upon real time fleet capacity. This can lead to a greater number of deliveries being completed first time as the customer will more likely be in to receive them and reduced costs due to fewer, second, redeliveries. Customers like being able to choose and know their delivery date and time at the point of purchase and this leads to fewer abandoned baskets if you are an internet retailer. Investigate the number of abandoned baskets on your website and failed deliveries to understand the potential upside.
Make sure to include supporting information, case studies, and a clear breakdown of the potential financial and operational benefits when delivering the ROI study to senior decision makers. Any implementation or maintenance expenses related to the software must also be taken into account and included in the ROI calculation.
