Recently my colleague Jane Geary, with many years’ marketing experience of route scheduling technology, published an insightful article: The true definition of dynamic scheduling.
For me, this raises the question: “Why does true dynamic scheduling technology actually matter?”
I believe it matters because it offers users a competitive advantage over non-users. It will cause well established companies, who cannot adopt dynamic scheduling, to become uncompetitive and fail, whilst those who do adopt dynamic scheduling are able to grow – becoming the next generation of market leaders.
Magenta’s real time decision making algorithms, which form the basis of our real time auto allocation and dynamic scheduling solutions, have their origins in research into Artificial Intelligence at Cambridge University. Google ‘Artificial Intelligence’ and ‘Disruption’, and the results tend to add some weight to my argument. Couple this with the examples that Clayton Christensen provides us about complacent market leaders poo-pooing the impact of some new-fangled technology on their market dominance (e.g Kodak) … and further weight is added to my view.
But will it really cause such disruption?
From a solution provider’s perspective, what follows is a pattern I see across all of our markets. In the absence of artificial intelligence, how does a big fleet operator work out which employee or vehicle to send where? The answer I see deployed is always some kind of rules-based mechanism or logical shortcut, often required by the limitations of legacy technologies.
In each case, these mechanisms have enabled larger organisations to provide scheduling answers (that are neither the most efficient nor customer friendly) which work in the absence of anything more accurate.
“If you are in Didcot, we deliver there only on Tuesday mornings or Friday afternoons.”
“You’re in Basildon, and its not working at all? The emergency engineer for your territory is Bob and he is busy today.”
Over time, these ‘logical shortcuts’ become ingrained in the business. And, let’s be fair, to become a market leader, success has always been down to how well these logical shortcuts could be ingrained into business processes, employment contracts, customer agreements, legacy software, habits and expectations. They become part of the culture. But, paradoxically, for market leaders, the very thing that made them successful is the very thing that now prevents them from adopting new technology and surviving.
Let me give an example from the distribution sector. Many established companies operate ‘fixed routes’. In simple terms, every delivery point is put on a fixed route which runs on a particular day or days. So, for example, all Bristol customers are on route B, and all Swindon customers on route S. Delivery points are sequenced assuming every customer orders. Historically this was necessary because it was simply impossible to calculate, every night, a more accurate schedule so that only the vehicles needed were used. However, not every customer orders every day and not every customer orders the same amount every day, guaranteeing that every day fixed routes are inefficient.
We meet lots of established companies operating fixed routes. We carry out data modelling to compare the efficiency of their fixed routes against what Maxoptra dynamic planning can do. After deducting the cost of our solution, typically we can show that re-sequencing each fixed route daily will save about £600 – £700 per year per vehicle – but if they abandon the fixed route culture, then savings are between 10 and 15 percent of annual vehicle operating costs. Showing how a fleet of 100 vehicles can get the same amount of work done, improve customer service with five fewer vehicles and save £500,000 per annum is not uncommon. But the ‘once needed’ logical shortcut has sunk its teeth too far into the business culture to allow progressive change … “We couldn’t possibly do that …”
Start-ups and smaller operations, on the other hand, are different. Habits are not yet so ingrained and they are hungry for competitive advantage and growth. For such companies, adopting newer technology is easier – and nowadays it is quite easy to put together API connected cloud solutions that can facilitate a more dynamic job allocation and scheduling process. When the smaller providers grow to 100+ vehicles or engineers, no doubt they will offer a better service with greater profitability and at a lower cost to the customer, compared with the legacy providers addicted to the logical shortcuts of the past. In my experience, the one risk for the smaller operations is, as they grow, that they parachute in a corporate logistics expert who then tries to turn the clock back to the ‘logical shortcuts’ of yesteryear to serve tomorrows customers.
Watch your thoughts for they become words.
Watch your words for they become actions.
Watch your actions for they become habits.
Watch your habits for they become your character.
And watch your character for it becomes your destiny.
Stuart Brunger – Head of Business Development, Magenta Technology