The turbulent economy has lately made it difficult for field service and transportation businesses to thrive. The industry is morphing into an intricate space, meaning that it has become critical to gain an in-depth understanding of your transportation costs and how you can mitigate the rising expenses to improve your profit margin and keep your head above water.
There are many reasons why your transportation logistics costs are skyrocketing. For example, a lack of planning and transparency or bad decision making can lead to increased overall costs, failed delivery or appointment targets, unhappy customers, and ultimately a loss of business.
So, what should you do instead to reduce transportation costs? Well, here are five important things you should consider doing.
#1 Provide Your Drivers with Well-Optimized Routes
A bad route can make all your route planning efforts be in vain and your entire route could be a mess if you’re planning routes using a pen and paper. Poor routes also mean that your drivers will spend more time on the road being stuck in traffic and traveling longer distances which will skyrocket the fuel usage and expenses. When you add the overtime costs of your drivers spending more time than estimated on the road, the transportation costs look even worse.
So, instead, ensure you always provide 100% accurate and well-optimized routes to your drivers.
You can do this with an advanced technology solution, such as a route planner, which will automate the route planning process and make logistics management seamless. Such software will plan accurate routes while factoring in traffic, weather conditions, sunrise/sunset times, one-ways, avoidance zones, weight and load capacity, and more, within a minute. In this way, your vehicles will never run empty and your drivers will have balanced workloads and better routes. They’ll ultimately make more stops without you spending more on fuel.
#2 Monitor Your Drivers
Planning optimized routes may be the most important step, but it won’t have any impact on your costs if your field reps or drivers don’t follow it. They may make personal stops, idle vehicles for too long, brake frequently, or even accelerate harshly to make up for delayed deliveries or appointments. All such actions will inevitably lead to increased fuel expenses. Bad driving behavior can even lead to excessive fuel usage or cause road mishaps which means that the damage costs will also add up.
Therefore, you should track your drivers and vehicles and see what the drivers do on the road. To do this, you can use a GPS tracker to monitor your vehicles in real-time and set up speed alerts to get notified as soon as a driver speeds. A tracker can even help you protect your vehicles from theft.
Also, if you go for a route optimization software that comes with GPS tracking, you’ll get the best of both worlds: you’ll be able to plan routes and track the drivers’ progress.
#3 Educate and Reward Your Field Reps
Drivers and field reps are the most important stakeholders in transportation and you cannot reduce costs without their 100% involvement, even with the best process in place. So, let them know why it is important for the business to save on fuel costs as well as how they can contribute in keeping the expenses down. Then, reward them for fuel-efficient driving which will boost their morale and commitment to saving more.
A route optimizer will go a long way in helping you with this. Its reporting and analytics feature will give you the data you need to identify every fuel expenditure which you can then use to provide feedback to your drivers about their performance.
#4 Ensure Regular Vehicle Maintenance
One vehicle breakdown can jeopardize your entire plan and the downtime costs can vary from $448 to $760 per vehicle per day. Can you afford that?
Therefore, you should have a preventive maintenance program in place because regular vehicle inspections and maintenance will prevent breakdowns and keep your vehicles in optimal shape to provide better mileage and save you money. Also, you must change air filters, replace spark plugs, and change the oil and oil filters in regular intervals. Here are six vehicle maintenance tips you should be following.
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The reporting and analytics feature of a route planner we discussed above will also be useful here. It provides critical data, such as the total distance traveled, total stops, and the fuel used, which will help you identify when vehicles require maintenance. For example, if a vehicle needs maintenance every 2,000 miles, you can easily predict how soon it may need maintenance again.
#5 Focus on Reducing Failed Deliveries
Every failed delivery will put a dent in your profits. Your drivers may show up on time but it will still be for naught if the customer is unavailable. Such a missed customer will not only jeopardize your other deliveries or appointments but will also cost you more as your drivers need to go to that stop again.
One of the best ways to improve first-time delivery success is allowing your customers to choose their preferred delivery windows. This will ensure that someone will indeed be available at the location when the driver shows up.
You can also allow your customers to track their package delivery statuses or notify them when their packages are nearby. For example, Route4Me offers customer notifications and alerts feature that does just that. It also comes with a customer portal feature that helps customers monitor their own package delivery progress. You can even set access restrictions, depending on how much information you want to reveal regarding the visit, including custom fields, driver identities, and estimated arrival times. So, what’s your strategy for reducing logistics costs? Do you have any other cost savings methods to add?