Planning routes manually is a time-consuming and ineffective option when your drivers have hundreds, if not thousands, of locations or clients to visit. Driver salary and fuel costs account for 59.8% of total operational costs per mile in various sectors.
As a result, even minor changes to your driver’s routes can help you not just deliver products or serve your clients more quickly, but also have a major influence on your bottom line.
Without extending your fleet, your company might save on mileage and increase order capacity with the right route optimization technologies.
In this article, we’ll give you a complete breakdown of what route optimization is and how it can benefit your business. We’ll examine real-world examples and provide use-cases for your industry.
How Does Route Optimization Work?
Route optimization systems provide fast and cost-effective delivery routes accompanied by an optimal delivery experience.
In addition to adjusting delivery times much more than before, they are the basis for tools such as customer notifications, which enable customers to know where their orders are at all times. These delivery notifications are automatically updated so that customers are aware of any changes to the initial delivery schedule.
What is a Route Optimization Software?
Route optimization software is a technology solution that plans a sequence of routes and stops a driver can follow with his vehicle. This is a seemingly simple idea, but one that in recent years is completely changing distribution, especially in the last mile.
Free route optimization software may not have complex features, but paid services have tools to make efficient fuel stops. Fuel route optimization helps to streamline processes and reduce costs by controlling travel miles. Ultimately, planning practical routing directions will save money. Such optimization software is set up and used while linked to a load board.
Compared to manual processes or old routing solutions, the benefits provided by today’s optimization platforms, which can also be integrated with comprehensive management software, are significant.
What Factors Does Route Optimization Take into Consideration?
Route planning refers to the process of selecting shipments, products, transportation, and other factors that may influence distribution to create a suitable route.
Identify Requests and Orders
We must know all orders that are received daily through order management, previously performed with Organizing Model systems.
Distribution Centers and Docks
The identification of the orders comes with the identification of the distribution centers. Being able to consult the distribution center schedules, the assignment and availability of docks, the types of vehicles, carriers, and drivers made available by the distribution center can speed up the planning of routes.
Available Resources For Vehicles and Drivers
Take note of the trucks, tractors, vans, even motorcycles, or any other distribution vehicle, whether owned or outsourced. Pay attention to the area they are heading to, the availability of the vehicle for one or more delivery points, zones, trips, routes, and quality of service. Similarly, consider the drivers with certificate restrictions.
Zones and Distances
Another important factor is the possibility to configure geographical areas and define which vehicles can enter these areas. Review the allowed times, mountainous areas/zones where there are restrictions on vehicle loading capacity, or if it is a dangerous area where the vehicle should not enter.
Other Business Rules
Time windows, load type by weight, volume, bulks, pallets, sales territory and distribution planning, box stacking, and rotation rules, and reverse logistics of receipts or returns, are a few common business rules that must be considered when planning routes and assigning vehicles.
Benefits of Route Optimization
Route optimization for logistics transportation is an essential part of the entire supply chain process that requires day-to-day evaluation, design, and optimization. Here are some of the benefits that it provides;
Better Efficiency for Planning
Increasing the utilization of professional service vehicles means getting better performance from a fleet. Improvements in average vehicle utilization represent high operating cost savings. As assets, vehicles are very expensive if they are not well utilized, so route optimization systems help to size the fleet and reduce costly empty trips. They are a key element in achieving vehicle operating efficiency in a fleet.
Reduced costs
Two of the major ongoing concerns for fleet managers are the control of fuel consumption and maintenance costs. Route optimization systems make it possible for vehicles to spend less time on the road, or to spend the time they are in service covering as few kilometers as possible. This has a direct impact on lower fuel consumption and less wear and tear on assets, which means lower maintenance and repair costs.
Customer Satisfaction Improvement
Both customer needs and expectations have changed in recent times, and exponentially in recent months. End consumers demand shorter delivery times and the highest possible accuracy within their home delivery window.
More Responsiveness to Unforeseen Events
Optimizing routes has a direct impact on the reduction of accidents and violations committed by drivers. It also reduces the possibility of theft or robbery. Despite all this, no operator or vehicle is free from eventualities that may force them to stop, from breakdowns to accidents.
It is also possible that traffic may be caused due to an unforeseen accident or certain weather conditions. In many cases, such as breakdowns or accidents, having a route optimization system allows the manager to detect the situation immediately and assign the closest and most available vehicle as a substitute.
How to Set Up Your Route Optimization
Companies are always looking for ways to improve their service and save money. Optimizing their routes helps them achieve their goals, as it helps increase profitability and win more customers. Here’s how to set it up.
Define Your Parameters
Key performance indicators (KPIs) are an excellent tool that people use when they want to analyze all of the parameters that hinder the choice of a route. With the information made available by KPIs, carrier managers can better meet the needs of each customer. In order to achieve success and boost overall results, it is essential that buyers are satisfied with the service offered by your store.
Optimize Fuel Routes
Given skyrocketing fuel prices, efficient fuel use has become an important priority. Strategically evaluate routing directions to save on fuel stops, picking the most efficient stops according to miles per gallon and daily gas price updates.
Drive Process Efficiency
A well-trained team of drivers is essential for the adoption of technology, the optimization of routes, and the other stages of logistics. In order to ensure more security, agility, and excellence in their activities, always make sure that the employees are qualified by providing adequate training. Moreover, by training them, you’ll stand out in the sector, since you will have employees prepared for the market demand, which is increasingly competitive.
Adjusting the Data
The operational and administrative processes of a carrier need to be well integrated through the use of data. This will ensure that all information is shared among the sectors. However, this is not a simple task.
Therefore, it is worth pointing out that technological tools offer solutions capable of improving the efficiency of the tasks and the profitability of the transportation company. Employees need to be prepared to be able to make the flow of data and tasks streamlined.
Increase Profitability with Route Optimization
E-commerce has grown significantly through the years, and consumers have also become more demanding with the delivery process. To improve your company’s logistics performance it is essential to optimize routes.
After all, route optimization generates more efficiency in your processes, reduces delivery costs, and reduces errors and failures. This happens because the shipper can organize the routes more efficiently.