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ASCM Insights

5 Ways to Reduce Transportation Costs

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There are many reasons why transportation logistics costs are skyrocketing these days. Lack of proper planning, transparency and decision-making all can lead to increased overall costs, failed deliveries and appointment targets, unhappy customers, and lost business. So, what can you do? Here are five important considerations:

1. Provide your drivers with well-optimized routes. One bad route can make all your good planning efforts futile. Vehicles run empty. Drivers face unbalanced workloads. Drivers spend more time on the road stuck in traffic or traveling longer-than-necessary distances. All of this leads to skyrocketing fuel usage and expenses. Add in any overtime costs for drivers spending more time than estimated on the road, and the bottom line looks even worse. To ensure accurate and well-optimized routes, consider using a route planner. This tool automates the route-planning process, factoring in traffic, weather conditions, sunrise/sunset times, one-ways, avoidance zones, weight and load capacity, and more.

2. Monitor drivers. Planning optimized routes may be the most important step, but it won’t have any impact on your total costs if your field reps and 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. Such actions inevitably lead to increased expenses and even excessive fuel usage or road mishaps. Track your drivers and vehicles in real-time with a simple GPS to monitor status and provide speed alerts. A tracker can even help you protect your vehicles from theft. 

3. Educate and reward field reps. Field reps are essential stakeholders in your transportation activities, and you cannot optimize transportation processes without their 100% involvement. So, let them know why it is important for the business to save on fuel, as well as how they can contribute to reducing other expenses. Rewarding them for fuel-efficient driving will boost their morale and commitment to saving even more. Again, a route optimizer can help. 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 about performance.

4. Ensure regular vehicle maintenance. A breakdown can cost as much as $760 per vehicle per day. Avoid breakdowns and keep your vehicles in top shape with preventive maintenance. A successful program tracks total distance traveled, number of stops and amount of fuel used, as well as regular vehicle inspections.

5. Eliminate failed deliveries. Sometimes, your drivers show up on time, but the customer is unavailable. Such an event not only jeopardizes your other deliveries or appointments, but also costs you more, as your drivers will need to go back to that stop again. One of the best ways to improve first-time delivery success is by empowering customers to choose their preferred delivery windows. Other proven methods include allowing customers to track their delivery statuses and providing notifications when packages are nearby.

Running smoothly

The turbulent economy is making it difficult for field service and transportation businesses to thrive. Gaining an in-depth understanding of your transportation costs — and how to mitigate rising expenses in order to improve profit margins — are essential to winning the transportation race.

About the Author

Molly Jacobson Owner, Jacobson Strategy

Molly Jacobson is the owner at Jacobson Strategy. To learn more about Route4me, visit route4me.com.

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