Leveling the Playing Field: Automation Means Doing a Whole Lot More with a Lot Less

By Stephan Karczag

How on earth is the average LTL carrier supposed to keep pace with the technological sophistication of the major players? Backed by an impressive array of wireless, handheld and real-time tracking tools, companies like FedEx offer rapid delivery throughout the nation backed by a no fee money-back guarantee. Meanwhile, a UPS company known as Overnite Transportation has achieved a customer satisfaction index of 8.7, compared to 7.0 for the LTL field as a whole. So is there any point in even trying to compete with such powerhouses? The answer is an emphatic yes – if you automate.

The traditional dispatch, LTL and delivery model, after all, is labor intensive. As you gain more customers, you have to hire more people. Their time is so absorbed in inefficient manual processes that profits don’t increase much despite an increasingly busy staff.

Automation offers a way out of this trap. It makes it possible to improve productivity through centralized route planning, dispatch and customer service. This technology enables route optimization, automated dispatch utilizing automated wireless messaging with drivers, real time GPS tracking of drivers and shipments, as well as real-time information on pick-ups, delays and exceptions.

Perhaps even more importantly, however, automation offers a sure way to reduce costs. More efficient routes translate into ten to thirty percent lower mileage. In terms of labor costs, the savings are even greater. About 25 to 50 percent is the norm due to automated route planning, which makes all route planning as good as your most experienced and accurate route planner.

When building routes, a route optimization system factors in critical parameters such as the maximum number of stops with the least amount of miles to be driven, trailer capacity, the impact of physical restrictions at the customer site, customer- or product-specific service times, customer prioritization and promised time windows. Further, it does all this while planning routes with a view to minimizing overtime. The end result is increased route density. More stops are achieved per hour using fewer drivers.

But it isn’t just the number of driving hours that are cut down. Dispatching man hours can be slashed with automation. Here, a fifty to eighty percent reduction in costs is the rule. One dispatcher can easily handle 25 trucks, and in some cases a single dispatcher can handle as many as 100 trucks.

So instead of three dispatchers, for instance, companies can cut back to one dispatcher – and run the operation more efficiently than before. This is achieved by using automated wireless messaging systems to communicate with drivers. Gone are the endless hours spent on the radio and phone trying to find out where drivers are, why Smith and Co’s delivery hasn’t arrived yet or where 2534 Rumsfeld Drive might be. All that traffic is transmitted over two-way messaging systems built into cell phones i.e. the driver hits a couple of keys after each stop to signal completion of that delivery, route/delivery information is sent to the phone by the system, and even driving directions are instantly accessible that are based on where the person is now and where the next stop is. Thus the dispatcher can view the location of any driver in real time without making a single call. He knows what has and hasn’t been delivered and when it will arrive with certainty.

Such functionality also exerts a significant impact on the customer service department. Customer service reps (CSRs) generally undergo a 10 to 25 percent leap in productivity immediately following automation. With “one-click” real-time access to POD’s, ETA’s and pickup details, they too are freed from the burden of having to call up drivers or dispatchers to get their questions answered. Traffic is further reduced by a variety of automated services: web-based access to real-time shipment tracking for customers; email notification on ETA’s and unexpected changes; and automatic notification via email of POD to shipper and consignee. Not only are customers far happier, fewer CSR’s can accomplish a lot more than before. As well as less time burned up in driver or dispatcher communication, their call cycles to customers are much shorter as they have immediate access to shipment details.

Opening the Door to Higher Margins

Automation, then, is a sure way to consolidate driver, dispatcher and CSR resources. It opens the door wide open to higher margins and increased productivity with fewer personnel. It reduces costs by keeping mileage per stop low, re-optimizing routes automatically when new stops appear, and providing drivers with turn-by-turn directions. New orders are automatically relayed to the correct driver without dispatcher intervention. And order completion details are returned to the system in real-time. In short, automation is an ideal way to streamline costs, improve customer service and increase profitability.

About the Author: Stephan Karczag is vice president of Cheetah Software Systems, Inc. of Westlake Village, California. For more information visit http://www.cheetah.com/.