Vehicle routing and scheduling software
Implementing new IT systems can be a risky business – numerous government projects have foundered in high-profile fashion. But it doesn’t have to be like that, even for complex and critical systems like vehicle routing and scheduling software. Here’s how to do it the pain-free way.
The chief executive probably reckons that he is one who makes all the important decisions in a company. In fact, we suspect that the really important ones emanate from the traffic office and from the load planners in particular. It is the quality of their planning – order allocation, vehicle fill, drop sequencing and routing – that drives the profitability and efficiency of the transport operation. Unless the daily planning task is unusually simple it surely makes sense to employ technology to optimise the output.
Bearing in mind the well-documented difficulties of some big IT projects, we set out to find how truck operators should approach the task of selecting and implementing a daily routing and scheduling system. This is not tracking, navigation or route optimisation. This is taking the company’s order bank or workload and combining orders into sensible, viable loads and routes; then sequencing deliveries into a drop order that takes account of criteria such as cost, time, distance, delivery bookings/restrictions, driver’s hours and access or route constraints. The process can be summed up in a single word – optimisation.
We have spoken to three of the best-known UK suppliers of truck routing and scheduling software: Paragon Software Systems, Optrak Distribution Software and Route Monkey. Between them they have been involved with well over a thousand system implementations so nobody knows better than them how to do it as painlessly as possible. We asked for impartial advice, not sales patter.
Do I need a computerised system?
The obvious place to start is to establish at what point should truck operators consider a move from manual planning to a computerised vehicle routing and scheduling (CVRS) system. Defining that moment in terms of fleet size is difficult because so much depends on the complexity of the planning constraints, but Optrak co-founder and managing director Tim Pigden reckons CVRS typically becomes viable when fleet size is at least eight or nine and there are 100 or so orders to plan each day. He says the better definition is “when the projected savings are comfortably more than the cost of the system.”
Paragon managing director William Salter also suggests that around 10 vehicles is often a watershed for introduction of CVRS. At Route Monkey, chief executive Colin Ferguson pitches the figure somewhat lower, reckoning that at about five vehicles “the savings in time, mileage and vehicle utilisation start to make sense versus the level of investment required.”
But all agree that fleet size is not the only metric for considering a move from manual planning. For example, Pigden suggests that planning failures such as missed delivery time windows and consequential customer problems may be a trigger. “It could be simply that operators want to avoid too much reliance on individuals,” mentions Salter.
Each of our three experts remarked on the fact that many operators embark on a CVRS project with a lack of clarity about what they want to achieve. “They’re often rather vague,” observes Salter, pointing out that this makes it hard for the software supplier to deliver the best solution. “We have to be prepared to do a lot of hand-holding.” Ferguson says Route Monkey also finds that some customers appear uncertain about what they want out of a CVRS system. “Working with clients to understand their combination of parameters that they may not even know themselves is the most challenging aspect.”
One could assume that it is technical problems that dog problematic computer projects but that is not the case here: our three experts opine that human factors are more likely to be responsible for difficulties. Paragon’s Salter emphasises the need to “win hearts and minds” throughout the customer’s business. He notes that a lack of commitment or loss of focus from senior management can lead to a difficult implementation. “There is often a resistance to change,” observes Pigden, “particularly among drivers and planners. Drivers can be deeply suspicious of management.” Says Ferguson, “Planners may see their jobs threatened. We pitch the system to them as an assist, not something that replaces them. It’s always going to need someone to manipulate the settings and add some common-sense decisions.”
The best way to overcome these issues is to “get everyone on board,” says Optrak’s Pigden, adding that customers too need to be made aware that their deliveries in future may not follow the usual pattern. This is particularly true if your manual planning produces fixed or quasi-fixed routes; CVRS will break the mould by examining more options. Make sure IT staff also buy into the project because they will be crucial in making order data available in the right form. Adds Salter, “But don’t let the IT department’s agenda take over.”
What are the benefits?
All three of our experts agree that CVRS systems typically deliver transport cost savings of 10-20%. “Avoid unrealistic expectations,” warns Salter. “No software is a panacea. It can plan good, practical, routes every day, but it won’t make the tea. Expect planners to make tweaks.” Pigden reckons there are instances where CVRS systems can show savings of more than 20%. “The disciplines of using CVRS mean that distribution data becomes much more systematic and visible,” he explains, suggesting that this may prompt some pretty fundamental changes in distribution strategy. He mentions one customer that achieved savings of 50% as a result of taking its distribution back in-house after implementing Optrak.
Examples of the benefits that accrue include:
- Fewer kilometres
- Better vehicle fill
- Less fuel used
- Greater driver productivity
- More on-time deliveries and better customer service
- Faster turn-round times at delivery points
- Less planning time
- Later planning cut-off, reducing order lead times
- Better vehicle utilisation
- More consistent planning
- Easier to accommodate business growth
- A clearer overview of the distribution function
Some systems will calculate the cost of each individual delivery and compare that with a file of carriers’ charges, highlighting where it makes sense to sub-contract deliveries to a carrier.
The advice is to pick some KPI (key performance indicators) so that you have an objective view of your performance with manual planning. Discuss this with the CVRS software suppliers, agreeing some realistic performance targets under the new regime. If all goes to plan, the capital pay-back period should be remarkably short. “A few months” says Optrak’s Pigden. “Within a year,” according to Salter at Paragon. Route Monkey describes its system as “self-funding” because the capital cost usually is spread over 36 months. “The monthly cost of our software is always less than the savings it generates,” says Ferguson.
Choosing the right supplier
Nobody should attempt to select CVRS software without running a trial first, using actual data to compared one system with another and with manual planning. The size of the trial is open to conjecture: Paragon suggests that it should be large enough to encompass a typical distribution cycle – a week, perhaps – to test how well the software handles busy and slack periods. Optrak counsels against being too ambitious and suggests that one or two days’ data is normally sufficient to prove the case. Using more data adds to both parties’ workload without generating much additional useful information, reckons Pigden. Neither company charges for running the trial. Route Monkey also says most of its trials are free, but if it does make a charge to cover development work for the trial, that charge would be deducted from the capital cost if the operator buys the software.
When assessing the outcome of a trial, operators are advised to make sure that realistic settings have been used – results can be massaged by optimistic running speeds or rather rapid unloading times. Salter points out that the trial also provides an opportunity to assess how easy it is to work with a software company. “A good supplier will ask good questions when running a test,” he observes, “and you can judge how responsive they are.”
The importance of running background checks on software suppliers cannot be over-estimated. This is the start of a long-term relationship and one that goes to the very core of the business. Our three suppliers came up with a variety of suggestions for the sort of ‘due diligence’ that operators should carry out.
- Inspect the supplier’s annual accounts to ensure it is a secure, viable business
- Check references and visit existing customers whose planning task most closely resembles your own
- Find out if their results are as good as expected and if the system is stable
- Establish the level and quality of support: how many support staff are there?
- Check the supplier’s development resource and future development plans
The ABC of algorithms
Sophisticated algorithms lie at the very heart of CVRS systems, resolving constraints such as weight, cube, product compatibility, delivery bookings, access restrictions and so on to construct the optimum loads and routes. The problem is that these algorithms are deep within the system, unavailable for inspection. We asked if one system’s algorithms are much the same as another’s. Apparently not: our three suppliers all said there are some very real differences. “The quality of the algorithms dictates the outcome,” insists Ferguson at Route Monkey. Paragon boss Will Salter advises operators to put these algorithms under the microscope by getting into the nitty-gritty of the trial results. “A solution that on the surface seems to offer significant benefits is no good if the actual routes are unworkable on a daily basis, or if there is a genuine business constraint that can’t be handled,” he says.
On Optrak’s behalf, Pigden homes in on the load-building algorithms in particular, and reckons this is where some of the most significant differences can be found. He reasons that achieving the very best vehicle fill is a fundamental requirement, and believes that systems based on averages and approximations will produce poorer results than one that calculates fill factor in a way that can cope with complex three-dimensional measurements. “If you’ve got lots of quite small things you can probably get quite a good approximation with averaging, but that begins to break down with bigger and more awkward things,” maintains Pigden.
The techy stuff
Orders are input into the CVRS system by way of an interface with upstream computer system such as sales order processing (SOP) or enterprise resource planning (ERP) systems. That should not be a problem according to our three suppliers: all said they have interfaces to suit all the popular order-handling systems.
Downstream connectivity is mainly to tracking and telematics systems, and this should not be a problem either – Paragon, for example, says it can interface with over 20 different tracking systems. Route Monkey has its own tracking system that integrates with its CVRS. It is possible to use tracking to feed data back to the CVRS, thus comparing planned with actual in order to make adjustments as the day unwinds – in theory. We are told that there is a limited demand for this at present, mainly because rarely is there an opportunity to change things. However, Paragon’s Salter gives the example of a big grocery retailer with a 24-hours-a-day operation that gradually slips from plan if minor delays begin to accumulate: it uses real-time tracking data to “re-spin the plan” to get actual and plan synchronised once more.
We all know that computer software moves on apace. Does that mean that a CVRS system is heading for obsolescence within a few years? Should operators attach a finite life to their investment? Our suppliers say their annual subscription charges cover the cost of updates such as on-going software upgrades and new map releases, so the systems should be good for many years.
“Implementation is all about planning,” observes Salter. “Operators should take advice from their software supplier – we’ve done it hundreds of times before. We have a tried and tested methodology. We will draw up a detailed implementation plan and we make sure up front that everyone knows what their role is.”
It typically is two to four months between placing the order and CVRS going live. The suppliers reckon that the speed of the project normally is driven by the customer, in particular the time it takes to “cleanse” data such as product information, address post codes and delivery restrictions like times and vehicle access limitations.
Once the software supplier has completed any customisation to shape the CVRS system to your exact requirements – some are more flexible than others – the software is installed on your computer and testing will be carried out to make sure the interfaces work smoothly. Then it is time for staff training, followed by the first use of the system. Optrak and Paragon both advocate a phased introduction, ideally starting with a period of parallel running alongside the manual system to iron out any glitches. “A common problem is that clients find it hard to allocate sufficient time to the parallel testing,” comments Pigden. “After all, the planners are still planning in the old way.” He believes that management must be prepared to allocate the resource to overcome this hurdle, pointing out that it makes no sense to delay implementation of a system that is expected to save money.
At Route Monkey, Colin Ferguson sees no sense in undue delay, saying that the original trial should have generated confidence in the system. “Our customers wouldn’t be going ahead with the system if the trial didn’t go well,” he argues. He advises that small companies should go for a “big bang” implementation, with a phased roll-out more appropriate to bigger projects.
With payback periods of less than a year, it could be argued that the up-front cost of a CVRS system is almost immaterial. Nevertheless, we live in a world ruled by budgets, so we must address the issue of price and running costs.
A typical Paragon system suitable for 20 vehicles working out of a single depot would cost around £20,000. That rises to about £50,000 for a fleet of 100 vehicles spread across several depots. A system designed for a multi-depot operation with up to 1,000 vehicles would be around £250,000. Those prices are the licence fees, covering use of the software. Then there is the cost of training. Salter says a typical training package (for as many staff members as you wish) is normally 10-12 days and would cost a further £7,000 or so. Finally, there is the annual maintenance fee, levied at 15% of the up-front capital cost (licence fee). This annual charge covers technical support, map updates and software upgrades. This annual maintenance fee kicks in at the end of year one. Salter advises operators to check out the quality of telephone support hot-lines. “You don’t want just a triage service where somebody promises to ring you back later,” he says. “You must get through to somebody who knows the system.” Paragon’s standard support covers normal working hours: if you plan at night or weekends it may be worth paying a premium for out-of-hours support too.
Colin Ferguson says an “entry-level” Route Monkey system of the type bought generally by fleets of up to 25 vehicles costs around £10,000. This is a relatively low starting point for CVRS, making Route Monkey attractive to smaller fleets, says Ferguson. As mentioned earlier, Route Monkey promotes its “self-funding” approach with payment spread typically over 36 months; customers may, of course, buy the system outright if they so wish. Ferguson stresses that the precise costs depends not on fleet size but the amount of development time needed to shape the software to a company’s needs, so a 20-vehicle fleet with an unusually complex planning task could be charged £20,000. Equally, a £10,000 system may suit a 50-vehicle fleet with simpler needs. Training is included as part of this capital cost.
Like Paragon, Route Monkey also provides on-going product support, mapping updates and software upgrades for an annual charge of 15% of the original capital cost. Ferguson says the company has five or six developers on call to handle support at any time of the day.
Optrak’s charges are pitched rather differently, explains Tim Pigden. He says there is a one-off implementation charge of £10-15,000 for a typical 25-vehicle fleet, followed by an annual subscription charge, also £10-15,000, to cover support and upgrades. Pigden explains this relatively high subscription charge means that the task of recruiting new customers does not overshadow (in financial terms) the importance of supporting existing clients. “We think this works out best for our customers because it means we are constantly looking to do stuff for our customers rather than chasing after new ones. Our development work is expensive.” For instance, Pigden explains “some fairly hard research and development” is needed to modify software to take advantage of the growing sophistication of the latest mapping, showing banned turns and access time restrictions in city centres. “But it’s worth doing because we are always trying to get the model better,” he adds.
We should add that there are several web-based CVRS products that provide access to planning software via your web-browser. This removes the need to make a capital purchase, with all costs covered by a monthly service charge. Although the payment system is different, the issues surrounding selection and application of the software are similar.
Paragon managing director William Salter stresses the need to “win hearts and minds” when implementing computerised routing and scheduling.
Paragon Paragon Software Systems, based in Dorking, Surrey, is the largest supplier of vehicle routing and scheduling systems in the UK, claiming around two thirds of the market. The company has upwards of 750 clients using the software in around 2,300 sites, spread across over 45 countries. Paragon’s customers include some of the very biggest names such as Tesco, Royal Mail, Sainsbury, Argos and DHL Supply Chain. The company’s turnover in 2011 was around £9m.
Managing director William Salter reckons that home delivery is the most challenging application for CVRS, balancing tight delivery windows and the need to keep costs in check. Paragon’s home delivery software is used by the likes of bed retailer Dreams, Wickes and Marks & Spencer.
Route Monkey Route Monkey is the youngest of our three software suppliers, established in 2006. Chief executive Colin Ferguson says Route Monkey saw a gap in the market for CVRS software suitable for smaller fleets, typically with fewer than 50 vehicles. “That’s where we are particularly strong,” says Ferguson, but adds that some far bigger fleets figure on the customer list too, including Bunzl, P&H and the NHS.
Route Monkey is particularly proud of its expertise in electric vehicles, spawned through a partnership with Smith Electric Vehicles to develop routing software specifically for battery-electric trucks and vans. Its EVOS software uses Navteq three-dimensional mapping to take account of gradient and gross weights to model battery charge levels in order to maximise vehicle range. In October 2011 Route Monkey secured £500,000 of investment funding from the North East Technology Fund, for development of the electric vehicle algorithms and to drive international expansion. That was followed in December 2012 by a second tranche of a further £500,000 to fund further expansion and development and a move to larger premises in Gateshead.
Optrak Distribution Software of Hertford was co-founded by managing director Tim Pigden in 1988. Since then it has built up a client base that includes some blue chip names such as food wholesaler 3663, paper distributor The Delivery Company, drinks supplier Matthew Clark and Fuchs Lubricants (UK).
Optrak is known for developing CVRS software for specific applications that are difficult to model due to complex loading restraints. Pigden says the work it has done in the lubricants and bulk oils business is typical of this, mentioning how multiple compartments in tankers and cross-contamination issues between certain products call for sophisticated algorithms.
Top tips for selecting and implementing CVRS software
- Be clear about your objectives
- Give potential software suppliers accurate information and data
- Have realistic expectations
- Use KPI to evaluate performance before and after implementation
- Use due diligence when selecting a supplier
- Scrutinise trial results to ensure they are robust and realistic
- Understand and manage resistance to change, getting planners, drivers, management and customers “on board”
- Understand the full costs but focus on the operational benefits
- Take up supplier references with other appropriate operators
- Plan and manage implementation carefully – heed the software supplier’s advice
- Do not skimp on training
- Ensure the supplier offers good support when you may need it
- Examine the supplier’s resources and commitment to on-going development
W H Marriage & Sons
W H Marriage is a long-established, family-owned flour milling company and animal feed producer. It is based in Chelmsford, Essex and delivers to customers such as bakeries, farms and shops throughout the south east of England. Its daily planning task involves building 15-20 loads with a total of 100-130 deliveries.
Director Peter Marriage says the mixture of products and vehicles – compartmentalised bulkers for feed, different ones for flour, plus curtain-sided rigids and trailers for bagged deliveries – means that efficient load planning is not so straightforward as it may appear for a modest fleet. “We are little but we survive by being complicated and doing niche things,” he explains.
He looked at a several CVRS systems in 2010 and was not fully convinced that any of them could really do everything he wanted. But he felt that Route Monkey came closest, so that was what he bought. He recalls that the preparation for the project was quite considerable, making sure all the address post codes were correct and setting vehicle restrictions for each delivery point.
“The system does what they said it would,” concludes Marriage. He still finds it difficult to evaluate the savings it has made because the business has not stood still since Route Monkey was implemented at the end of 2010. “The overall journey times are surprisingly close,” he comments, “although perhaps it could be a little more sophisticated in certain areas, such as dealing with the London lorry ban. But I’m sure it’s saving us money.”
Based in Northwich, Cheshire, Roberts Bakery runs a fleet of trucks making direct daily deliveries all around the country to food distributors, sandwich-makers, retailers etc. This entails around 40 routes and 250 drops each day, using mainly 18-tonne GVW boxvans. In 2010 Roberts switched from manual planning to a Paragon CVRS system. “One of the biggest benefits we’ve seen since then is that we have been able to incorporate a lot of new calls at virtually zero cost, handling growth in the business,” explains Roberts’ director of logistics Mark Owen.
“For example, we recently introduced 17 new stores and it was a fairly easy task to incorporate them into the route structure.” Implementation, which took two or three months with a “project owner” from Roberts working closely with a member of Paragon’s support staff, was “relatively pain-free” says Owen.
The core of Roberts’ route structure is fairly similar to how it used to be when planned manually, but about 30% of the routes look significantly different, reckons Owen. “We have our own internal ‘Green Fleet’ policy,” adds Owen, “looking at various aspects of our efficiency. Our use of Paragon is part of that.”
Oakwood Environmental Services
Oakwood Environmental Services, based near Mansfield in Nottinghamshire, runs a fleet of about 50 trucks working on nationwide collections of waste oil and other hazardous waste such as oil filters, batteries, anti-freeze and tyres. The fleet includes 22 multi-purpose vehicles that can handle a variety of waste streams in a single visit to garages and workshops. They have tanks for waste oil plus separate compartments and cages for batteries and filters etc.
Planning their collection routes – a mixture of one, two and three-day trips – to maximise these vehicles’ capacity and adhere to Oakwood’s service level agreements with its customers is a complex task. Just over two years ago the company made the move from manual planning to CVRS. After trialling other systems it decided that Optrak provided the best solution, largely on the basis that it was the most flexible and so could be customised to model the different waste streams.
Planning time has been slashed, says Daniel Roberts, Oakwood Environmental Services’ planning supervisor, explaining that the optimisation process takes around an hour, and after review and application of the finishing touches, the final routes are produced a couple of hours after that. “The system takes account of the various capacities on each vehicle and also calculates gross weights and axle weights,” says Roberts. He believes that the use of Optrak has allowed the company to handle a significant uplift in the volume of waste oil it collects .
Following implementation of CVRS Optrak subsequently worked with Oakwood to add some new functionality to the system so that it alerts customers to the imminent arrival of the collection vehicle. “Optrak’s support is absolutely superb,” comments Roberts.
- AutoLogic Systems: www.autologic-systems.co.uk
- DPS International: www.dps-int.com
- Graticule: www.graticule.com
- MJC2: www.mjc2.com
- Om2 Solutions: www.om2solutions.com
- Optrak Distribution Software: www.optrak.com
- Ortec: www.ortec.com
- Paragon Software Systems: www.paragonrouting.com
- Route Monkey: www.routemonkey.com
- TruckStops: www.truckstopsrouting.com
- TouchStar Technologies: www.touchstar.co.uk
- 121 Systems: www.121systems.com
Other Useful Links