Seven deadly sins leading to delivery transport cost blowouts
Blowouts don’t just happen on the road; they are often found in delivery transport budgets. With delivery transport still a top five business cost at the best of times, it’s vital to clamp down on the common issues causing cost blowouts.
Let’s consider seven deadly sins leading to runaway costs:
First deadly sin: Gaps in your knowledge
The most common sin is not understanding your true delivery transport costs.
Isolating the true costs is possible via technology, but requires honesty and effort to locate those many “hidden costs” which impinge on the bottom line. Even experienced fleet managers are often shocked when true costs are revealed via a fleet x-ray.
This knowledge is a critical starting point, allowing you to identify and clamp down on those grey areas and seemingly insignificant expenditures, which quickly add up.
Second deadly sin: Lack of flexibility
An inflexible fleet will struggle to deal with absentees or break-downs. They may even struggle with demand spikes, often leading to more expensive solutions.
High-performing delivery fleets have flexible operating structures allowing them to be agile and responsive to changed demands and unforeseen problems. This is where true efficiency is put to the test – an efficient fleet can scale resources up or down at short notice.
Third deadly sin: Choosing the cheapest suppliers
Choosing a supplier on price alone is the biggest mistake you can make in outsourcing. If these suppliers are unreliable, or result in poor delivery outcomes, it’s likely to end up costing you more.
Fourth deadly sin: Ignoring telematics technology
Fleet tracking technology is critical in running an efficient delivery fleet – yet a surprising number of operators are yet to deploy telematics in their daily operations. Studies show a major lag among small-to-mid-sized fleets.
This is a missed opportunity when you consider the role telematics can play in efficiency, tracking, safety, proof-of-delivery, and vehicle protection.
Fifth deadly sin: Too many fixed costs
Many delivery fleets are hampered by having too many fixed costs – usually because they own and run many of their own vehicles. But too many fixed costs means you are at the mercy of inevitable cost variations.
Classic variations include driver absenteeism, fluctuations in fuel costs, and accidents or breakdowns. Others may include difficult obligations such as WorkCover claims. In most cases it’s both far easier and more efficient to remove these fixed costs, and make them a variable cost via selective outsourcing.
Sixth deadly sin: Wasted management time
This is a classic hidden cost – not always easy to identify or quantify. But if management are constantly putting out spot fires, and distracted from other important business, then substantial resources could be wasted, creating a major cost blowout.
Seventh deadly sin: Not measuring properly
Measuring performance is key to understanding and improving efficiency. It’s easier when you have telematics. But the technology can produce a huge amount of information which can overwhelm, so it’s important to decide which key metrics best suit your operation.
Measurement is partly financial, but other important factors may take time to track as a measurable ROI. These include increased professionalism, and more accuracy in delivering items in full, undamaged and on time.
By Walter Scremin
Walter Scremin heads up national delivery transport firm, Ontime Delivery Solutions. He has more than 30 years’ experience in logistics and is passionate about solving logistical problems by focussing on efficiency and technology.