Why you must Digitalise Your Distribution Enterprise!
All forms of transportation, but perhaps distribution more than any, live with the schism, that the sales price is usually set according to weight and/or volume plus distance. Your cost price, on the other hand, is defined – or driven - by much more complex parameters. Of these parameters, the total handling time imposed on your organisation is most likely the most eminent, yet also the most difficult parameter to determine. It is also, however, probably the best way to approximate your cost, if you can do it.
Sales price: Defined by distance, weight and/or volume
Cost price: Defined by total handling time
Everybody we talk with have made attempts to determine what the costs are of, for example:
Operation X: “Don’t worry, we will put a barcode on for you”
Customer Y: “Often last minute ordering or city centre deliveries during rush hour”
Product Z: “Delivery before 10 a.m.”
Usually these calculations are ad-hoc tasks involving many hours of work and they are therefore rarely done. Even when they are done, the result may be of questionable quality often with a lot of provisions. Yet, these are precisely the kind of questions any business owner wants a proper answer to.
We, at AlgoPlan Technologies see this as an iterative process – It never ends.
You won’t get there in one go. Don’t see this as “a project”, see it as a way of conducting your business. You want your operation to be as cost effective as possible and You want to know what and what your cost drivers are.
1. Tailor made Procedures
All the daily events that determine your business must have each their business rule and procedure. E.g. [Customer not home] – What exactly do you want to happen? Well, if for instance you want [Automatic re-order for the next day], should that then instigate an extra invoice? How much work does that entail today? If it is not 100% automatic from the moment the driver makes the registration at delivery site; then why isn’t it?
[Parcel damaged], [Partial Delivery], [Unadvised Pick-up] etc. etc. How do you handle this today? How much extra administrative work does each unplanned event impose on your organisation? AlgoPlanner will allow you to set up any combination of rules you wish. You should expect to start simple and advance step by step.
2. Inherent Data Collection
Get rid of any need for “extra registration”. Make sure that any data collection is always inherent; meaning that every point and/or event you want to capture is always done as a natural part of something the Driver/Warehouse worker/Salesman/etc. has to do any way. This is one of the most fundamental rules for good and reliable Business Intelligence. Use technology and smart business rules to get the consistent and reliable data you need for the documentation and analyses you ultimately require. You should never rely upon extra registrations.
3. Enhanced Analyses
What is the difference between a KPI and Business Intelligence? Well, for AlgoPlanner users, the KPI’s are what you get first – meaning, as a new user. These could be:
- Correct PoD’s per driver per day.
- Number of deliveries to address X in a month.
- Distance traversed per driver per week.
What we call Business Intelligence [BI] is more demanding, and includes an enhancement of your data by our algorithms and/or an intelligent correlation of different data types. The result of the AlgoPlanner BI engine could be:
- Average amount of time spent on customer X’s address Y; including standard deviation – [If you want to know the time consumption every customer imposes on your operation, and where/when it is most expensive].
- The share of the total distance traversed, allotted to destination X, per day and aggregated over time – [If you want to know what each of your customers really cost you in fuel].
4. Identify Cost Drivers
You will discover, that the result of your analyses over time will drive the composition and nature of your data collection, and improve your business procedures, and this will in sequence inspire you to re-assert your procedures, and so you are back at point no. 1.
Talk to us! If you want to digitalise your enterprise. It is not a job for your IT department alone, it is a strategic decision, that involves and implicates everybody in your organisation. The good news are: You don’t need to wait for something to be just right first. Digitalising and streamlining your enterprise, is an iterative process – and it starts and continues with AlgoPlanner!