How builders’ merchants can reduce costs
Selling building products as a builders’ merchant is a competitive and cost-sensitive business and driving profitability is a challenge. Operating margins are very thin, often as low as 2-3% for certain products and in certain regions. Builders Merchants are constantly striving for efficiency and a more profitable business.
One of the most impactful solutions, yet highly under utilised is route optimisation and in particular ensuring that the pre-defined route is followed by the driver. This simple change can deliver quick wins, especially for businesses hesitant about adopting new technology.
This article explores how driver mobile-enabled route execution addresses operational inefficiencies and demonstrates how it can quickly unlock measurable profitability gains.
The Profitability Challenge
Builders' merchants operate in a demanding market, characterised by fluctuating material prices, tight delivery schedules, and high transportation costs. A builders’ merchant’s annual fuel bill represents a disproportionately large share of their total operating costs and has a big impact on profit margins.
If fuel and operating costs can be reduced and efficiency improved by just 10% it will have a marked impact on a builders’ merchant’s bottom line.
The main challenge within the industry is the resistance to change. For years manual planning at the branch level has been the way things have been done, with a reliance on local knowledge along with skepticism towards technology, likely due to the complicated nature of building materials and how they need to be loaded on delivery vehicles, which remains prevalent today.
Businesses often underestimate how introducing even partial automation or system improvements to determining delivery routes can yield significant results.
Determining the optimal route and sequence for deliveries is one thing, but if the drivers don’t follow the route and delivery sequence, any benefit may be lost, and additional costs may be incurred.
The Mobile Application Route Execution Advantage
Mobile applications for route execution are a game changer for builders’ merchants. Unlike a traditional routing process that simply provides drivers with a list of their required stops in order, but allows them to alter it, Descartes can enforce routes and delivery sequences. This ensures that optimised delivery plans are adhered to, and drivers realise the planned efficiency gains andmonitoring drivers provides alerts to planners/managers, should a driver deviate from the prescribed route.
Benefits:
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Reduced Fuel Costs: By enforcing the use of optimised delivery routes, businesses can eliminate unnecessary detours and inefficient routes, minimising the variance between the planned and actual miles driven.
It is possible to save 10-20% of annual fuel costs simply by ensuring drivers stick to the optimised route and planned delivery sequence, benefiting with savings to the bottom line and increasing profitability per job.
Calculate your possible fuel savings here
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Improved Operational Efficiency: With enforced route sequencing, drivers can only view their next scheduled stop, reducing the risk of deviations. This approach ensures that jobs are completed efficiently in the correct order, streamlining delivery operations.
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Implementation has an Immediate Impact: Unlike large-scale ERP or fleet management system overhauls, delivery scheduling, route optimisation and the introduction of mobile applications for route execution can be deployed quickly and deliver savings almost immediately. The fact that savings can be made from day one should help convince businesses who are otherwise reluctant to invest in technology.
Overcoming Internal Resistance to Change
One of the most significant hurdles for builders’ merchants adopting route optimisation and route execution solutions often lies within the organisation itself. Internal resistance often stems from ingrained habits, skepticism about the technology's relevance and accuracy, and fears around disrupting established workflows. Overcoming this resistance is essential to unlocking the transformative benefits and operational cost savings that route optimisation and drivers’ mobile apps for route and delivery execution can bring.
Strategies to Address Internal Resistance:
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Engage Stakeholders Early: Resistance often originates from a lack of involvement in decision-making processes. Engaging planners, drivers, and other team members early can help foster a sense of ownership and highlight how the solution addresses their day-to-day challenges. For instance, emphasising features like reduced manual workload or real-time delivery updates can demonstrate immediate, personal benefits to the users.
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Present Clear and Tangible Benefits: Many employees resist new systems because they don't see the value. Detailed examples of how route optimisation and driver execution apps can reduce fuel costs, minimise planning errors, and save time will create a compelling case. Being able to show and prove it will immediately bring savings on fuel costs and reduce planning times, making the benefits hard to ignore.
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Provide Targeted Training: Fear of the unknown is a common barrier. Comprehensive, role-specific training ensures that employees understand and feel confident using the new system. Training sessions can address common concerns, such as how the system handles complex logistical challenges and how exceptions or custom delivery requirements can easily be incorporated into the delivery routes by planners.
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Adopt an Incremental Approach: Aiming for full-scale implementation immediately may overwhelm teams. Instead, start small—such as by deploying route optimisation and execution in one region or operational area—demonstrate its impact before moving to the next area. Success stories from these pilot projects will help build momentum and encourage buy-in across the rest of the organisation.
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Create Internal Champions: Identify and empower advocates within the organisation who can promote the solution. These champions—often experienced planners or trusted drivers—can share their positive experiences, address concerns and solve issues before a full roll out, while serving as go-to resources for their peers.
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Tie Change to Broader Goals: Resistance often weakens when employees see how the change aligns with organisational success. Framing the implementation of route optimisation and mobile route execution as part of a broader strategy to improve profitability, customer satisfaction, and long-term security for the business will help employees understand its importance and overcome the fear that the organisation is looking to simply cut jobs.
Transforming Builders' Merchants into Logistics Innovators
As profitability pressures intensify, builders' merchants must evolve from being traditional suppliers into logistics and service focused businesses. Route optimisation and mobile execution solutions are a catalyst for this transformation, enabling merchants to deliver the right materials to the right place at the right time, all while minimising costs and improving customer service.
Moreover, these tools better position businesses to meet future demands, such as the growing need for enhanced customer service, accurate delivery times, and greater operational transparency.
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