Transportation costs for convenience store deliveries can be cut by up to 20 percent – by reducing mileage and improving driver and vehicle utilization – with vehicle routing and scheduling optimization software created by Paragon Software Systems, the company says.
Using the software, George’s Chicken was able to reduce its fleet size by 10 percent, cut road miles by 5 percent, and reported saving $31,000 a year on fuel costs. George’s has 250 stores in the Northeast US.
Another company, Hagopian Cleaners, reduced its fleet mileage by 10 percent a year, and had an annual fuel cost reduction of $7,500 for 27 vans while using the program. The company reports a cumulative five year savings of $250,000.
The convenience store sector is growing, with sales projections at $856.5 billion for this year. In addition, big box retailers like Wal-Mart are opening convenience store locations at an increasing rate because of customer demand.
Some analysts predict the convenience sector will represent almost 25 percent of the grocery market by 2019.
Convenience store deliveries are complex for a number of reasons, such as restricted delivery time windows, smaller order volumes with increased frequency, limited parking for delivery trucks, door height restrictions that limit truck sizes and local road restrictions.
Using an algorithm designed to optimize road-based transportation operations, Paragon’s software uses digital mapping to calculate the most effective delivery and collection sequences with accurate journey times, allocating loads to appropriate vehicles and drivers accordingly.
Users of the software have reported additional benefits, including improved customer service, reduced delivery lead times, lower administration costs and reduced carbon emissions.