If you are in the delivery, courier service, or dispatching business, you must have come across the argument of centralized versus decentralized dispatching methods. While both are necessary to make business deliveries more stable, you might not have the resources to sustain both simultaneously. In such cases, it is better to go with centralized dispatching.
But we’re here to elaborate on all you need to know about centralized dispatching so you can make a sound decision for your delivery business. From what is centralized dispatching, how does it work, and how is it different from decentralized dispatching to its pros and cons and how you can improve your process, we’ll discuss it all. You’ll then be able to reap all its benefits. Let’s get started.
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What is Centralized Dispatching?
Centralized dispatching is a management system in which a central control unit directs and coordinates the work of various resources to optimize efficiency and productivity.
Centralized dispatching lets you control every single dispatching operation from a central hub (one single location). This hub contains all the vehicles, truck drivers, and goods to be delivered. The main hub also has a back office that uses software to track and dispatch the drivers. Upper is one such application that helps you dispatch your drivers with a single click while offering various other features like route optimization and planning.
The central hub also contains the tools and machinery to manage the products. For example, a seafood delivery company will have a cold room to keep their food fresh. Moreover, inventory management, individual work management, and, sometimes, packaging also take place in these hubs.
How does Centralized Dispatching Work?
Centralized dispatching is not an independent process. There are a lot of things that go on behind the scenes to make this work. Let’s have a look at it-
- When the customer places an order, it pings the central hub. This alert informs the hub workers that a package will be arriving soon.
- At the same time, the manufacturer is alerted to send the product to the central dispatching hub.
- The delivery driver brings in the package, along with many others, and drops it at the hub.
- Next, the package is sorted and prepared for last-mile delivery.
- The driver receives the delivery schedule and the route.
- Then, the package is delivered, and the delivery driver gets the customer to sign the proof of delivery.
- Finally, the systems at the central hub are updated to reflect the final status of the product.
Now, this working process was for a streamlined manufacturer who also delivers their own products. But things can be different if you have a different business model.
How is it different from Decentralized Dispatching?
Here is a small breakdown of the differences between the centralized and decentralized dispatch models.
|Centralized Dispatching||Decentralized Dispatching|
|Inventory management||All the efficient management and sorting of inventory take place at a central location.||First, the inventory is managed at a central location. Then, products are sent to hubs closer to the customer, where the second round of sorting happens.|
|Package pilferage||Rate of the package pilferage is the lowest.||The rate of pilferage is slightly higher as the package changes multiple locations, multiple times.|
|Delivery prices||Delivery prices are predictable for closer delivery locations. But, prices can be high for longer delivery locations.||Delivery prices can vary depending on how many times the package is transferred from various hubs.|
|Human involvement||With minimum human resources, you can increase your operational efficiency.||Decentralized system requires considerably more human resources as there are multiple hubs.|
|Decision-making||A central figure or the top management makes all the delivery decisions.||Each hub has a separate handler who keeps the top management informed about the deliveries.|
Pros and Cons of Centralized Dispatching
Before jumping on how to improve the processes, let’s understand the pros and cons of the centralized dispatch model to better your in depth understanding.
1. Decreased inbound costs
Inbound cost refers to the money you spend to get the goods from the manufacturer to the delivery hub. And since every product is first received at the central hub, you save money on transportation. In fact, you can save thousands of dollars with a centralized dispatching model.
Centralized dispatching rightly comes with several benefits
2. Better quality control and improved overall performance
Setting up a single warehouse is comparatively inexpensive than creating multiple smaller dispatch hubs. Hence, the surplus resources can be redirected to hire more workers and delivery drivers. Dispatchers can even invest more in automation and increase the quality control of the products. In addition, all the latest technology and upgrades become affordable for you.
3. Lower operations cost
Again, as dispatchers, you will save more money on operations as all operations happen from one hub. Overheads like utilities, rent, and employee wages also become manageable. Materials handling expenses decrease as there’s no need to constantly transfer packages from one place to another. As a bonus, the probability of damaging your products decreases. This leads to lower return rates and better customer satisfaction.
4. Improved Inventory control
Lastly, the back office need not scratch their head and pull their hair while managing the inventory. With centralized dispatching hubs, even simple inventory management software is enough to move and track your products.
1. Higher shipping times
Now, centralized dispatch system is a perfect solution to your delivery operations woes as long as you are within a city. But once you start expanding, some cracks start forming in your centralized dispatching delivery strategy. For one, you have to set longer timelines for far-away delivery locations. This increases the idle travel time and decreases the total number of deliveries made during the day.
2. Lower disaster prevention processes
With a central hub, you need to spend more money preparing the place for disasters. As everything is in one place, a single mishap can wipe out the entire inventory and set you back a couple of months. To add to your problems, the ongoing supply chain management issue is already affecting logistics and deliveries. So, a single incident wiping out your inventory is the last thing you want.
3. Inflated shipping expenses
Naturally, setting up a single hub means that some delivery locations will be more distant. Therefore, to reach them, you need to spend more on transportation costs. It also increases fuel usage and takes longer delivery time. Using route optimization software does reduce some burdens by adding extra stops on the route. But it cannot magically decrease the distance your delivery driver has to travel.
How can You Improve Centralized Dispatching?
As it is a delivery business, dispatchers need to concentrate your efforts on improving your deliveries and route scheduling. Here are a few ways how you (as dispatchers) can improve your centralized dispatch system for increased efficiency.
1. Get an all-rounder centralized dispatching system
In this digital age, there is a right software solution for virtually all problems, and centralized dispatching is no different. Good centralized dispatching system helps you abandon the paper trails and the manual entry processes. The driver can directly get the customer’s signature and proof of delivery through the software’s mobile app interface. Furthermore, the back office workers do not need to pile and sort through tons of paperwork and can move to paperless documents. This also eliminates chances of human error.
2. Pre Schedule deliveries
Prescheduling helps your drivers stay ahead of the curve as well as remain independent. They do not have to rely on you to finish your route planning every day. Instead, they can reach the hub, check their schedules, and start delivering on their specified routes. Route planning and optimization software enable you to schedule of deliveries months in advance. As a direct result, you will reduce the operation load on your back-office employees.
3. Automate customer communication
Again, the right software eliminates the need for individually informing the customers about their pending deliveries. Once you have scheduled the deliveries at the hub, the software automatically sends an SMS, email, or real time notifications to the customer informing them about their upcoming delivery. It prepares the customer to stay home and accept the package or find other alternatives.
Additionally, the customer gets an option to reschedule the delivery to a more convenient date. In the long run, it reduces back-tracking, improves your fuel efficiency, and enhances customer experience.
4. Real-time driver tracking
Real-time driver tracking is beneficial for both you and your customers. To begin with, you can know the exact location of your drivers at any given time. This allows you to be more dynamic with your route planning and change delivery strategies on the go.
Tracking delivery drivers via data collection devices also means you can track their efficiency and offer constructive feedback accordingly. For the customers, the real-time driver tracking feature allows them to see the ETA (delivery status) of their deliveries.
Improve Centralized Dispatching Process with Upper
Your centralized dispatching can be further improved by adding route planning software to the mix. Upper Route Planner brings in its advanced one-click dispatch, and customer notifications features to enhance your centralized dispatching processes.
1. Optimize routes and reduce fuel costs
With route optimization, you can set up multiple stops within the same route. Consequently, it enables you to add more stops to a condensed time frame. Driving preferences and traffic are also taken into consideration when Upper optimizes the routes. Apart from that, you can save about 40% on fuel costs.
2. Save time with route scheduling
Along with route optimization, route scheduling empowers you to maximize your service appointments. Once set, you can save the routes in the system archives for future reference. You will also save hours with automated route scheduling features.
3. Improve efficiency with one-click dispatch
Upper provides the functionality to automate your entire dispatch process in one click. All the deliveries are optimized, and drivers are assigned their tasks. As a result, the drivers do not have to return to the base multiple times to get reassigned. It also improves the overall operational efficiency of your central dispatch hub.
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There is no clear way to determine which dispatching model is better than the other. However, depending on the industry and your business needs, one type can be seen as an improvement over the other.
While a lot of industries share similar elements, dispatching processes are rarely the same. Different dispatching processes have different attributes and contribute differently. So, the dispatching process depends on the specific needs of that particular industry.
There are two types of dispatching models- Centralized and decentralized dispatching. Centralized dispatch is a delivery system where deliveries are dispatched from one central location. Decentralized dispatch system is quite the opposite.
Centralized dispatching and managing it well can increase the ROI of your business by manifolds. Of course, it does not generate any direct cash flow. But it makes up for it by simplifying your delivery services systems and logistics. And, with route planner software like Upper, you can even extract more from this dispatching model.
With Upper, you can schedule your deliveries months in advance, plan multi-stop routes, and send automatic notifications to customers—all without any manual effort. These facilities are sure to tremendously improve your dispatching process. Are you ready? Try the Upper 7-day free trial today.