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The CX Pod

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Delivery Route Planning: A Hotbed for Innovation

December 10, 2019
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How does the customer experience affect delivery routes? What are the low-hanging fruits of making deliveries and where can companies differentiate? George Shchegolev, co-founder and VP of operations at Route4Me, answers these questions and more as he shares what happens behind the scenes to make fast deliveries possible.

Transcript:

Judith Aquino: Hi, welcome to the CX Pod, I'm Judith Aquino and today we'll be talking about what happens behind the scenes to make fast deliveries possible. Joining me in this discussion is George Shchegolev, co-founder and VP of operations at Route4Me. Welcome to the show, George.

George Shchegolev: Thanks for having me Judith. Thank you.


JA: So first, can you tell me what gave you the idea to start a company like Route4Me?

GS: That's a great question. So, I used to work at Hewlett-Packard and I was just a trainer going from store to store training a variety of people and a lot of times I would almost finish my band and just realized that I missed the store. Essentially, I was provided with a list of a large number of stores and I was told to go figure it out and that was in 2008, 2009.

So, I researched everything that I could under the sun. There was just nothing out there that permitted [me] to optimize routes and figure out what group of stops should be done first or logically and then in what sequence to visit those stops. At that time also, my friend Dan Khasis, who's the CEO of Route4Me, he was looking, he was house hunting in New Jersey and he was zigzagging in town.

He called me and is like, “George there has to be a better way. I was like, you know what, I have researched it and the reason and so like, why don't we make an app?” I was immediately on board with that. We made an app, this is, you know, a few months later after Steve Jobs announced the App Store and, when we launched, so we got 50,000 downloads in the first week.

So it was a, you know, a kind of a very rapid growth. We got a lot of feedback. The app was very slim, meaning they didn't have a lot of features. Since then we started listening to our customers and customers coming to us and say, Hey, can you do this? Can you do that? Then it became part of our DNA because we listened to what customers want. And then we implemented.

So since then we built an overall platform called Base Solution that works on Macs and PCs. It's web-based as well as mobile applications on iOS and Android. And they'll work seamlessly together to empower customers not just to plan and optimize routes, but to dispatch them, to monitor them, see reports and notify customers about the upcoming and completed deliveries. So, there's lots going on behind you know, as you were saying, behind the doors to make a very customer-centric delivery happen.


JA: And can you tell me what were some of the features that customers requested that you hadn't thought of?

GS: It's not that we haven't thought of but look, we're coming in from, not necessarily from a different world but we're coming into a space that did not have a lot of innovation necessarily, and the customers are coming to us in the first stages and they just wanted to do things faster and more rapidly. They are like okay, can I move 20 stops from one route to another quickly? Can I plan multiple routes, at the same time? Can I dispatch multiple routes to multiple drivers? Can I restrict drivers from making changes to the route after planning them? Can I restrict drivers from seeing routes scheduled for the future or the past? And so configurability of the platform permits, look, every business is different. Some cases you want your driver to have the ability to see old routes in case they need to do some sort of a customer service and some service industry. And, and in the other ways, it's a liability. So we were able to structure our platform in a way that can accommodate many different verticals and support them.


JA: I was curious which industry is the most complicated for planning routes?

GS: It's a great question. And the complexity, is not really translating necessarily to the industry. I don't think that there's a direct correlation because if you take a look at it, there's, there are sometimes ultra large organizations that have very low complexity and on the other end, sometimes you have a fleet that's not a fleet. It's a two truck operation and they have every possible business rule under the sun like arrive by this time, depart by this time, which we'll call the time windows priority vehicle constraints in, you know, five other things that, you know, you wouldn't even think that it would even exist. And when you increase the complexity, you actually increase the cost significantly. Not because of the cost of our software but because the efficiency of routes drops. So what happens quite often is that the customer centric organizations have more complexity because they want to accommodate the customers as beautifully as possible.

They want to make sure that they get there early, they get it done in time. But when you have these business rules such as Dominoes, a lot of times you start to zigzag and it's not because that is the most efficient way to do it because you need to be from 9:00 to 9:15 in one location and then you have to call them from the other side of town from 9:15 to 9:30 and then you have to go back. So the first one to complete the 10 AM arrival and so on. So the cost of service or delivery significantly increases when you do this extreme concierge service.


JA: What are your thoughts on the partnerships that retailers are making with more and more delivery companies? I mean, there's UPS partnering with Michael's and FedEx partnering with Walgreens. Is that a viable strategy for winning the so-called last mile?

GS: The time will tell. It's all about execution and, and how customers respond to these you know, the partnerships, like as you say you know, as these partnerships play an important role because I'm providing customers with alternative ways to get their packages or drop off their packages. I always think that's positive because that permits, that actually offsets some of the operational footprint from going place to place for pickups. A lot of times also customers are not there to make, to get the delivery. So it's worked out really well for them to say, Hey, after work I can just swing by Walgreens and just pick it up or Michael's or CVS, whatever the partner. So it makes total sense. How is it going to play in and how's it actually gonna to affect the bottom line and if it's actually going to improve the operation you know, it's yet to be seen at the, I think that there's a lot more low hanging fruits out there.


JA: What are some of those other low hanging fruits?

GS: I mean, look, I think that organizations, FedEx, UPS and a lot of shipping companies are definitely doing a better job informing customers about, you know, Hey, we're coming signature required, getting text messages. But the big problems that, you know, a lot of times you have is that, you know, there's, there's constant doubt that the package will be delivered, especially during the holidays. You have a situation where, you know, you have thousands, I mean hundreds of thousands of packages being thrown at you very quickly. And you had taken the package and there's assumption that Hey, we've been getting this package delivered from, you know, let's see, Secaucus, New Jersey, which is a big distribution hub for a lot of companies to a place in Manhattan in one to two days. But during the holidays, you know, you use the same service because you don't want, you want to keep your bottom line same and you're paying for the ground shipping or federal FedEx Express Saver.

And now all of a sudden it turns into three or four days. But there's no way these companies notified vendors about it. So there's, you know, there's no dimension thing because the demand increases. They don't really know what they will be able to deliver as well. And on time. Yes, maybe there are no deadlines because people are not paying for that two-day, one-day service. But it does impact the customer experience because customers nowadays expect everything. I personally, if it's over two days, I'm starting to have anxiety. I'm like, where's my package? Where, where is, where's the item I ordered did something happen? Let me call them, let me check my email. It's you, you immediately start thinking about it. So there's an immediate sense for getting it, like if you're not getting it quickly, it's a problem. So Amazon is going to a one-day shipping.

More and more companies are trying to you know, improve their supply chain by having a higher number of distribution centers throughout the country to increase, you know, how quickly the packages and items come. But, you know, it's important to recognize that during the holidays specifically you know, the hiring, there's a lot of part-time drivers coming in and the interesting part about that is that there's currently a very big shortage of drivers in this country. With that, I don't know how well this holiday season is going to play out, but you know, we’re gonna see. So there's definitely a lot of space for improvement.


JA: Right? And also this ability to scale up and down at a moment's notice.

GS: Correct. And look, the scalability thing, it's kind of interesting and I, you know, I think that there's a lot of models that you can predict how people are going to be shopping. There's peaks of, you know, during the holidays each industry has an ability to identify the peak seasons and you can get a higher number of drivers. I don't personally have a problem if somebody tells me, Hey, I know you live here. And usually we can deliver there in two days, but right now with delivering three but unless you know, the shipping companies notify about the current load and current demand that's happening. You're not going to get up to that degree of transparency and transparency is extremely important nowadays.


JA: Right. Well, George, thanks so much for speaking with me. I really appreciate all the info you shared.

GS: Absolutely, it was my pleasure to speak with you.