The Strategic Importance of Routing
July 14, 2020
The Strategic Importance of Routing
A Guest Post From Wes Verno of Verno Consulting
As the market continues to change, it’s time for wholesalers to focus on routing and make it a core competency. Improving routing practices is a strategic move that will create a competitive advantage for your business.
The Evolution of Routing
In the past, when wholesalers were smaller and portfolios were much simpler, routing was not as critical of a function as it is today. Before technology, management would put a territory map on the wall and build routes based entirely on geography with string, pins, and notecards. This process would occur maybe one time a year with slight route adjustments occurring as needed.
As the industry has changed over the years, each of the following factors have made routing significantly more complex:
Conversion from driver-sell to pre-sell
Introduction of alternative sales models (such as channel sales and tel-sell) that split up geographic territories
Delivery restrictions and dock time windows at certain accounts
Various types of trucks and equipment
Impact of service policy and intentionally adjusting account service frequencies
Expanded geographies as a result of consolidation
Strategic Importance of Routing
Between the ever-rising costs of trucks and CDL drivers, delivery is the most expensive function within the wholesaler. As cost management continues to be more and more paramount, wholesalers need to manage their delivery expenses by optimizing routing efficiency as much as possible.
Everyone is well aware of the shortage of CDL drivers throughout the country. Hiring and retaining delivery drivers will continue to be a major challenge for every beverage wholesaler, regardless of size, portfolio, and location. Inefficient routing can lead to unbalanced and/or unreasonable workloads, resulting in increased turnover rates within the delivery department.
Adjusting to Changing Market Dynamics
With the retail landscape and employee dynamics changing today quicker than ever before, wholesalers are constantly adjusting their strategies and business models to meet the evolving needs of the market. Most changes eventually require adjustments to the sales, delivery, and merchandising routes.
Routing - A Core Competency
Going forward, as the market continues to change and territories continue to expand, wholesalers are going to be adjusting current routes and conducting market-wide reroutes on a much more frequent basis than in the past. Recognizing this, we believe that routing needs to become a core competency for beverage wholesalers. Someone within the wholesaler that has an intimate knowledge of the market needs to become the company’s routing expert. Management needs to ensure the designated routing guru receives proper training and has access to the right tools and technology in order to build routes effectively.
Encompass offers tools such as Dynamic Routing and Mapped Routing to help distributors make informed decisions regarding route optimization. The tools are user friendly, and also offer precise insights on metrics such as case count, weight, travel time, and route cost for efficient route planning. The Encompass Route Optimizer tool is perfect for planning re-routes for the off-season or handling market changes. Route Optimizer allows you to bulk sequence the stops on a route by shortest distance, closest stop first, furthest stop first, or by service windows. Incremental adjustments can be made manually, allowing for full control over your routes.
About Verno Consulting
Verno has worked with over 400 beer wholesalers, helping them improve their profitability and market shares. Verno provides proven methodologies and customized solutions to wholesaler business challenges. Contact Verno today to determine how we can help your company meet its biggest challenges.