It’s no secret that route optimization can have a significant impact on both delivery costs and customer service levels, especially in high volume / high density delivery operations. But what factors contribute to route optimization excellence and how are they put into practice? Has COVID-19 had an impact on this? Those are some of the key questions I discussed with James Kostoroski, Director of Logistics at Smith Brothers Farms, during a recent episode of our Talking Logistics series on Route Optimization Excellence.
A legacy of delivery
Smith Brothers Farms is celebrating its 100th year of delivering dairy and other products, starting as the local milkmen for the Puget Sound (Seattle, WA) area. They still deliver milk today, but have branched out into delivering over 250 other products, as well.
What is unique about their business, according to James, is that they don’t prepackage orders in a warehouse before delivery. Instead, the delivery driver selects the items for each customer at their site from bulk inventory on his truck. “We deliver all orders to the porch in an insulated box. The routes are fairly static; the milkmen have their routes and the order of customer deliveries is consistent, so one of the challenges is building routes and adding new customers that follow the same path.”
Speaking of new customers, the pandemic has significantly increased the organization’s customer base in a relatively short period of time. “Pre-COVID we had about 52,000 customers and 51 routes. Now we have almost 70,000 customers and are making 50,000 deliveries per week with 70 drivers and a mix of large and small routes. We went from adding 50 new customers per day to adding 500 per day during the peak of the pandemic. Initially, this was great because we had the tools and software to route these additional 300-500 customers per day. The problem is that you can only put so many customers per route before you break the route. That was the challenge. How do we keep taking the new business without breaking our underlying operation?”
The need for technology
One of the challenges with home milk delivery is that customers get used to receiving their orders on the same day each week. “Changing a customer’s delivery day opens the door for them to stop doing business with us,” says James. Over the course of 100 years, as routes grew organically and more customers were added, keeping the routes balanced while meeting customer commitments was a growing challenge. Therefore, it became clear to Smith Brothers Farms that it needed technology to help it create optimized routes while maintaining customer preferences.
“We selected RouteSmart because it’s designed for high-density routing such as ours,” says James. “Driving a semi from Arkansas to California and dropping off a trailer and picking up another one, that is one kind of routing. When you have 25 customers in one small neighborhood, that’s a different kind of routing. You can’t just go from Point A to Point B — you definitely need some intelligence behind it. We also went with Geotab tracking devices on our trucks to give us tons of data on routes and drivers. Together these tools are enabling us to move forward with intelligent decisions.”
One example of using the data to create intelligent route plans has to do with the time a driver spends making a delivery at a customer site. Some spend 60 seconds while others take two minutes. Designing routes based on the average time of 90 seconds would underuse faster drivers while taxing slower drivers, potentially leading to service issues. James notes that RouteSmart allows him to tailor routes to each driver to balance performance and service. “There really is no limit to the ways RouteSmart allows me to customize routes to the specific drivers and situations.”
When I asked James about the benefits they experienced from the new technology, he commented that having it in place prior to COVID hitting was crucial. “We were able to add 15,000 new customers into the routes over a three-month period. We began by adding overflow routes to buy time while we rapidly began service for the new customers without disrupting existing routes and customers. We are now almost complete with re-optimizing existing route blocks incorporating the new customers, with room for an additional five-to-ten percent growth.”
Implementing the solution
James had a very specific plan for rolling out the RouteSmart application, which was important since some of the drivers had been there for decades and he would need their buy-in. He also has plans for further automation, as well as advice for companies looking to select and rollout routing optimization technology. Therefore, I encourage you to watch the full episode for all of James’s insights and advice. Then keep the conversation going by posting your own questions or experiences.