Logistics Route Planning & Planner - Optimize Your Routes
By Komal Puri | January 19, 2024
In the context of deliveries, logistics route planning refers to the process of computing the most efficient, least-cost route across multiple delivery points. To ensure cost-effective deliveries, route planning plays a key role. It ensures reduced miles, timely deliveries, optimum driver performance and satisfied customers.
The Crucial Role of Efficient Logistics in Today's Supply Chains
According to ecommercedb, speed trumps cost. Customers are willing to pay extra for faster deliveries. While the need for speed puts pressure on retailers and shippers, there is a huge opportunity that is yet to be tapped to its full potential.
As the need for faster deliveries is growing, there is on the other hand, other logistics challenges such as driver availability. This makes it a challenge for logistics dispatchers to match capacity and demand.
Here is where effective route planning comes as an effective tool to save the day for planners. With effective route planning, they can take full advantage of the fleet capacity during available times and ensure more deliveries are accomplished.
What is Logistics Route Planning?
A. Core Concepts and Components
Although the definition of route planning is simple, it is a complex task with several variables involved. To plan routes, here are the core factors that planners need to factor. They have been grouped under 3 groups depending on order, driver and factors affecting the movement of the order.
- Total number of deliveries for the day - A key metric that keeps changing as per the season. This dictates not just fleet capacity but also the mapping of capacity within existing routes.
- Priority Orders - In cases where customers pay a premium to select slots or opt for expedited delivery, priority needs to be given to those orders and it has to be factored in at the time of routing.
- Addresses - Ensuring the right addresses and standard formats are present at the time of planning is essential. In addition, it also helps to identify the density of orders based on addresses to group them and allocate it to the drivers with most familiarity. The sequence of deliveries can also be mapped as per addresses.
- Available pool of drivers - On a given day, the number of drivers available to take orders is a key step in route planning. If there is over-capacity or under-capacity, the allocation and workload for drivers varies accordingly.
- Schedules - An awareness of roster is essential to make the right allocation. This ensures not just timely deliveries but also in a key step in honoring slot-selected deliveries by planning appropriate sequences and routes for the available pool of drivers.
- Rates - To stay conservative on costs and preserve margins, the rates of drivers is also a key component. This is particularly significant when there are demand spikes and businesses tend to crowdsource drivers. With rising hourly rates being a key concern for businesses, maximizing deliveries within the shortest possible time can be achieved with effective route planning.
- Additional Info - Tribal knowledge of drivers - It is always effective to leverage the tribal knowledge or the affinity drivers have with localities with a higher sense of familiarity. This enables them to execute deliveries quickly with less time spent in figuring out the location. Factoring this at the time of route planning paves way for effective route optimization.
- Traffic - The most critical parameter for same-day deliveries is real-time traffic conditions. It is essential to consider them in real-time and plan routes so as to meet ETAs and also reduce idling times for vehicles.
- Restrictions - For movement for certain vehicle types, there could be restricted hours or deviations. It is paramount to consider these restrictions while planning deliveries.
Static vs Dynamic Routing
When we look at types of routing, the primary two types are - static and dynamic routing.
- Static routing: When the same set of deliveries need to be repeated day-after-day in a routine fashion with no major disruptions in terms of volumes, sequence, this routing mechanism is employed. It is sufficient to set it up and it runs on its own with minimum intervention. This is most suited for milk runs.
- Dynamic routing: When the nature of deliveries - volumes, sequence and types change everyday, there is a new problem to solve everyday. There is nothing repetitive about the process. This methodology is known as dynamic routing where routes are drawn specific to that particular day.
B. The Impact of Effective Route Planning on Operational Performance
Effective routing is not just essential for customer satisfaction but is also a key determinant of operational efficiency. Here are the things that it impacts:
Cost of deliveries - More roundabouts mean more fuel consumption and fewer deliveries. This shoots up the fuel costs and ultimately impacts the cost of deliveries. With effective route planning, the cost of deliveries can be controlled to a great extent.
Driver productivity - With effective route planning, businesses can make full use of driver’s working hours. This ensures that they get adequate hours on the ground and enables them to accomplish more deliveries. This significantly increases their productivity and is also a win-win as every delivery executed translates into commission money.
Customer ratings - With effective route planning, businesses can stick to committed delivery slots and SLAs. This improves trust in the brand amongst customers. Consistency breeds loyalty and it translates into positive brand recall and loyalty points.
Dispatcher productivity - As against in the case of manual routing, auto-routing saves hours of time that would otherwise go in confusing and erroneous route planning. This saves hours for the dispatchers and enables them to send out their field staff much earlier. This significantly impacts their productivity levels and the ability of the business to scale.
Capacity utilization - Route planning adds an element of predictability to operations and it helps businesses to plan their delivery capacities better. It also paves way for expansion and scaling their delivery business.
Logistics Route Planning Challenges
Route planning is an age-old problem yet an evolving one. There are several macro and micro factors that impact route planning and a few of them are:
Complex Supply Chain Networks
Supply chain networks are getting increasingly complex. There are new expectations, compliances and goals. Consumer preferences are changing from emphasis on speed to an emphasis on sustainability. There are diverse needs and businesses to cater to the expectations of all their stakeholders. When speed is a priority, routing for the shortest possible time takes precedence while when sustainability is a priority, speed takes a backseat. In addition to this, the seasonality of demand, global factors affecting the supply chains, new types of fleet, all of them affect route planning operations.
Dynamic Nature of Logistics Operations
In an ideal world, logistics operations should be perfectly predictable. Given the kind of data, tools and technology that is available today, it seems like it is an easy feat to achieve. But, the core reason for why those tools are developed at all in the first place is the unpredictable nature of logistics. For example, although it is possible to forecast a demand spike, it is hard to say the exact volume. It could be a little above the forecast or fall a little short. By provisioning capacity for the spike, in either case, there is either shortstaffing or understaffing. In addition, there is always a problem of ad-hoc orders, undelivered orders, returned orders and several such possibilities which are hard to control. The bottomline is that the very nature of logistics is dynamic and this poses challenges for route planners.
External Factors - Traffic, Weather & Unforeseen Circumstances
In addition to the above macro and dynamic factors, there are everyday challenges that can affect route planning too. Traffic congestion due to peak hours, roadblocks, unforeseen events such as a gathering or a blockade or any other unforeseen disruption could impact route plans significantly. In addition, the weather also has an impact on the speed & serviceability of certain routes. It is important for a logistics route planner to be cognizant of these factors too.
Why Use FarEye For Logistics Route Planning?
A. Introduction to FarEye’s Role in Logistics Optimization
FarEye is an end-to-end logistics platform that combines orchestration, visibility and customer experience with business process management at its very core. This includes cutting edge AI-based routing capabilities that is leveraged by several leading enterprises to execute on-time deliveries each day.
FarEye Route enables businesses to plan routes in real-time based on customer’s chosen slots and preferences. Through its automated, multi-constraint (e.g. traffic conditions, vehicle types like EV trucks, driver affinity) routing solution, businesses can route next-day, same-day, big & bulky and hyperlocal deliveries and complete other last mile activities like returns, pick-ups, fly-bys in a quick and seamless way.
The loop optimization engine quickly creates dynamic routes even at very high volumes to minimize distance per stop while maximizing vehicle capacity utilization (~ 50,000 orders with 10+ constraints takes around 10 minutes for planning)
FarEye Route helps increase the number of deliveries your drivers can perform in a day. It will help you reduce transportation and fuel costs, while ensuring every delivery reaches its destination on-time, in full and with 100% accuracy and visibility.
B. Key Features That Set FarEye Apart
In a market that is crowded with routing tools, there are some special features that set FarEye apart. These are key to gaining a competitive edge.
With centralized, real-time operational visibility, businesses can eliminate guesswork, speculation and manual checks to see all the moving parts of the delivery ecosystem in one place. This is the fulcrum that ops teams depend upon to ensure smooth functioning of the delivery ecosystem. It also helps in ensuring accountability and transparency of operations.
With FarEye, businesses can forecast what’s coming ahead of time with its unique ability to sift through volumes of transactional data. This helps proactively identify and prepare for demand spikes. This gives businesses sufficient leverage to plan and manage fleet capacity.
Dynamic Routing Algorithms
FarEye supports different methods of routing - static, dynamic, real-time dynamic and loop optimization. This encompasses all possible use-cases and scenarios that a business in the modern-day may need. The ability to assign ad-hoc orders and still meet SLAs is a special feature that sets FarEye apart and makes it a preferred tool for businesses offering hyperlocal deliveries.
Scalability for Growing Operations
FarEye is an enterprise-grade platform that is built to scale. The world’s leading enterprises rely on FarEye to manage their large scale of delivery operations.
For a leading logistics company in Thailand, FarEye Route helped in planning and optimization, and recommended better volume utilization of the vehicles. Its AI/ML capabilities predicted the cubic meter (CBM) expected from the customer in advance, based on past 1.5 years of historical data. This helped in planning appropriate load and vehicle type. The complete process was entirely headless. The loop optimization engine quickly and dynamically created efficient routes that helped achieve minimum distance per stop, delivery and pick up on the same route while maximizing vehicle capacity utilization (~97-98%). With real time dynamic routing, drivers get assigned new pick up requests automatically, without the need for any manual intervention.
These resulted in a 60% reduction in the number of vehicles needed. It also reduced the need for planners by 70% and helped them achieve the same number of deliveries with 40% less drivers.
Benefits of Logistics Route Planning
Cost Reduction & Resource Optimization
By leveraging an efficient logistics route planner, businesses can reduce the following costs:
Fuel Costs: With reduced miles due to route optimization, businesses can save mileage and reduce fuel costs.
Driver Costs: By optimizing driver productivity and capacity, they can reduce expenditure with effective driver utilization.
Re-attempts Costs: With increased on-time deliveries, there is an automatic reduction in missed or failed deliveries thereby enabling them to save reattempt costs.
Improved Delivery Times and Customer Satisfaction
With effective route planning, enterprises can stick to promised delivery times. By consistently delivering on-time they can win the trust of their customers. This results in improved customer satisfaction ratings. In an environment filled with alternative choices, brand loyalty due to consistent on-time performance is a valuable asset that makes the brand indispensable to its customers.
Enhanced Visibility & Control Over Logistics Operations
A lack of route planning can potentially lead to excess miles and cause delays to deliveries. It also impacts turnaround times, cost of deliveries etc. With route planning and real-time tracking, businesses have a way to detect disruption in the flow of things proactively. This gives them real-time control and enhances their chances to take control of operations when a deviation or disruption occurs.
FarEye’s Contribution to Sustainability
A. Green Logistics: Reduced Impact On the Environment
With ambitious zero carbon goals by 2050 for deliveries by the world’s largest logistics company, we are heading towards a new era where carbon neutrality will be highly valued. FarEye has helped many organizations get close to meeting their sustainability goals with its ability to plan routes even for green fleets. This paves way for more organizations adopting green fleets and thus fortifying their efforts towards a sustainable future.
B. Optimizing Routes For Fuel Efficiency
While planning routes, a logistics route planner can drive efficiency in two ways.
Firstly, by reducing distances traveled, mileage and associated fuel usage can be reduced. Secondly, when there is traffic congestion, re-routing vehicles through a slightly longer path may be a better option in terms of preserving fuel efficiency. Idling consumes more fuel and thus, by avoiding it, fuel efficiency can be achieved.
Logistics route planning is important not just its far-reaching benefits but an indispensable tool for businesses to balance operational continuity and efficiency. A logistics route planner can be a clear differentiator elevating the service levels and customer experience for businesses. Talk to our experts to evaluate FarEye Route for your enterprise.
Komal Puri is a seasoned professional in the logistics and supply chain industry. As the Senior Director of Marketing and a subject matter expert at FarEye, she has been instrumental in shaping the industry narrative for the past decade. Her expertise and insights have earned her numerous awards and recognition. Komal’s writings reflect her deep understanding of the industry, offering valuable insights and thought leadership.