HOW TO GUIDE

What is ROI and How is it Calculated?

A logistics solution should be treated like any other investment. You need to know the upfront costs, the time it will take to get your team on board and using it, and the long-term benefits you stand to gain. Those may be hard benefits like dollars saved or they could be soft benefits, like time savings for your team.

If you decide to make a logistics solution a priority you should expect that the initial cost, over time, will yield a return. Return on investment (ROI) is a way to measure the performance of your investment over time.

When it comes to logistics solutions you need to understand the costs involved, the potential benefits, and the areas of your business that should gain the most from adopting new technology. 

Understanding Why These Data Points Matter

This may be the first time you've thought about these five data points. Maybe you're questioning why they are important to understanding the ROI of a logistics solution. In the following section, we break down why each of these key data points is relevant to your ROI results.

Average Number of Dump Trucks You Use, Per Day

This isn't always an easy value to calculate, especially when you factor in seasonality. However, identifying an average number gives you the baseline for achieving an optimal number of trucks per day.

- A sub-optimal number of trucks being used for the given work is common.

- Knowing this number allows you to optimize your usage of dump trucks.

- This is key to determine the impact that a logistics platform could deliver to your business.

Average Daily Pay Per Truck, Per Day

Any logistics solutions you bring on should aim to help you improve unit economics. This could be detrimental to the hauler if you aren’t aware of take-home pay from the beginning. However, including this data point in your ROI calculation allows a logistics solution to ensure haulers still benefit - while improving unit economics.

- This number provides a baseline for how you currently work with your drivers today.

- The goal is to improve your unit economics.

- At the same time, increasing the hauler's daily take-home pay.

Loads Per Truck, Per Day

This number will fluctuate based on the location of the jobsite, type of material, plant layout, and many other factors. There are many reasons why this is critical to determine your ROI...the most important being increasing the efficiency of loads per day.

- Establishing the baseline number of loads per day allows you to measure success over time. 

- Enabling your drivers to deliver more loads in a given period of time has a great impact on ROI.

- It's critical to understand what your typical load lengths and truck-a-days are. 

Total Hours Per Day, Per Driver

We know this number may be hard to calculate, which honestly just reinforces the need for a logistics solution. However, in general, are you getting your haulers a full day of work? Think back over the last few weeks and try to find an approximate number. Why?

- Fully utilized haulers get the maximum loads per day and are at peak efficiency.

- Improving the hours worked by each driver per day helps create a win-win scenario for you - and your haulers.

Payment Type Do You Pay by the Ton - or - By the Hour?

There is no wrong answer here, but the way you pay haulers will have an impact on the value you receive from a logistics platform.

- The way logistics solutions impact unit economics will differ for drivers working hourly vs by the ton.

- This helps determine incentives for haulers based on work type.

- Beyond pure efficiency, logistics solutions also deliver value in different ways for hourly jobs surrounding tracking and general visibility into operations, which may represent cost savings vs. unit economic savings.