Would you buy a dump truck, skid steer, or excavator without knowing you had the work to keep it busy, or without knowing exactly what its capability is? Chances are slim. You know the value a piece of equipment will bring to your business well in advance of buying it. So, why should you make a decision about technology without the same information?
When it comes to construction logistics software, you may not have the same playbook you do for purchasing a piece of yellow equipment - so we’ve put together a guide to help decide if construction logistics software could benefit your business today. Determining the return on investment for construction logistics software comes down to five key data points. What are those key data points for calculating the ROI of construction logistics software and how do they align with your business objectives and goals? We’ll take a closer look in this article.
Understanding The Costs and Benefits of Construction Logistics Software
As with any purchase there are costs involved with construction logistics software and you need to be cognizant of them as you evaluate whether it will be right for your business. There are two types of costs involved in a purchase like this...
- The Fee: There will be a hard “fee” for your logistics solution. These are the dollars you are investing in a purchase. Whether it is a monthly subscription payment, or one lump sum, may vary depending on each product.
- The Time: There is also a significant time commitment you and your team need to be prepared to make. Preparing for implementation, and training team members doesn’t happen overnight.
It can’t be stressed enough how important the time commitment from your team is. Taking the time upfront to carefully evaluate solutions and ensure your team will take the time to learn how to leverage whichever software you select will be a huge factor in determining whether you’ll get a return on your investment.
Let’s take a look at a simple formula for ROI:
While there are upfront commitments both in terms of time and money spent there are significant benefits you can expect including:
Better Relationship with Haulers
Fewer Invoice Overpayments
Less Material Waste (Spoilage)
Improved Freight Margin
Digital Chain of Custody
Increased Customer Satisfaction
Greater Data Accuracy & Reporting
So, now that we know the cost and benefits, plus a basic formula to understand ROI, let's take a look at the five data points that are critical to determining whether construction logistics software will be the right fit for your business.
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Will Construction Logistics Software Provide a Return? Look To These Five Data Points
They may not be data points you are currently looking at but they are important when it comes to determining if a construction logistics software could benefit your operations and generate a return on investing in construction logistics software.
Average Number of Dump Trucks You Use, Per Day
Average Daily Pay Per Truck, Per Day
Loads Per Truck, Per Day
Total Hours Per Day, Per Driver
Payment Type (Hourly vs Load- Based)
Each of these data points provides an indication of areas in which you could potentially improve your performance - with the help of construction logistics software. If you are using fewer trucks than is needed for the task at hand - construction logistics software could help you get the volume of trucking right each day.
If you aren’t aware of how much you are paying your haulers per day today - you could implement changes that negatively impact their livelihood; however, if you know those numbers you can improve efficiency, keep your costs down - while improving the take-home pay of your haulers. If you know how many loads are occurring per day without construction logistics software, you can measure success over time.
If you are using many haulers for partial days, construction logistics software could help you improve the number of hours worked per day, per driver. Finally, the way you pay your haulers will help determine incentives for haulers - based on work type.
It isn’t enough to simply know these data points, although it is a good start. You also need to see how they align to your business and operational goals. In the next section, we’ll take a look at four common goals we hear from our customers and how you can leverage construction logistics software to achieve your goals.
Set A Goal For Your Business
If you are thinking about leveraging a construction logistics solution, the best place to start is with a goal. Having a goal, plus the 5 key data points we outlined in section one will help your team align and allow you to measure the impact a construction logistics software has on your operations and overall business health.
We’ve pulled together four of the most common goals we hear from customers across the country, and we have broken down how construction logistics software can help achieve each of these common goals.
1. I Want More Efficient Operations
If you would like to create more efficiency in your operations, you aren’t alone. Many people that consider purchasing a construction logistics software say they want to improve operations. One of the biggest drivers of success for you could be increasing load efficiency. What does that mean? It means delivering more material within the same number of hours - and - with the same number of trucks in a day.
What could this mean for your ROI? The value of improving this one metric is huge. You could save hundreds of hours per month for your dispatchers, improve the number of loads you deliver per hour, save 10’s of thousands of dollars, and get close to 3x ROI on a construction logistics software investment.
2. I Think My Drivers Could Work Longer Days
If you feel like your drivers are only working for 4 or 5 hours per day, you are right to be concerned. The largest area of value a construction logistics software could bring to your business is achieving full driver days. If you can maximize the number of hours per day each hauler is working for your company you could reduce the number of haulers you need to complete a project. This means less coordination and quite frankly, happier haulers.
Getting a full day of work on one project means they aren’t deadhead driving in between jobs and they aren’t going home feeling short-changed.
This improves your relationship with key haulers and improves your margin. Not to mention, it could save you tens of thousands per month and typically results in 3x ROI on your construction logistics software investment.
3. I Want To Be Less Reliant on A Single Source For Trucking
There is nothing wrong with having favorite haulers or brokers - your business has likely been built on the relationships you have developed over the years. However, if you become too reliant on a single source for trucking you are putting yourself in the position of potentially paying above market rates or worse - getting stuck without haulers when you need them most.
Construction logistics software that also provides access to a Marketplace could be a differentiating factor in whether you get value. More access to haulers, reduction in broker fees, flexibility for last-minute work are all huge benefits of a logistics solution.
Again, if this is your goal you can expect a 3x return on your investment plus thousands of dollars saved. Additionally, you’ll have a digital chain of custody for all the haulers you work with.
4. I Know Manual Processes Are Slowing Me Down
When you know that manual processes are taking up your team’s valuable time, it’s time to consider a construction logistics solution. Digitizing dispatching and invoicing reduces the burden of manual processes on your team and allows them to shift their attention to other high-impact areas of their job.
The main driver of ROI, if this is your goal, is the time you can save with a construction logistics software product. Many customers are seeing hundreds of hours of time-savings for their dispatchers and the back-office, plus a 1x ROI when it comes to hard benefits.
Bringing It All Together
Most of the time, if your business needs help in one of these areas - it needs help in more than one of these areas. It is very common that construction logistics software can help you accomplish more than one of the goals above. When it comes to improving your operations - the value of construction logistics software increases exponentially especially when you are targeting improving more than one goal.
In many cases, construction logistics software can help streamline operations, by reducing manual processes, getting full driver days for each of your drivers, and providing you an additional source of trucking. This means going from a 3x return on investment to a 6x return on investment.
While the information in this article can provide a framework for thinking about construction logistics software and the value it will bring to your business, it is important to know that each business is different.
Need help understanding the data points mentioned in this article? Looking to get started with construction logistics software? The best way to determine the exact value a logistics solution could have for your business is to connect with our team today. Scheduling a call is quick and easy - and could save you thousands of dollars in the next year.
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