What is route optimization? Guide on how to optimize & plan delivery routes effectively

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By FarEye | October 13, 2022

As faster and same-day deliveries take center stage, savvy businesses are embracing modern route optimization tools to enhance delivery planning and drastically reduce delivery turnaround-time. The benefits of such tools are better delivery productivity, reduced operational costs and  enhanced customer experience. Before we delve into what all a route optimization can do for your business let us quickly understand what route optimization entails.

What is route optimization?

Route optimization optimizes delivery routes through the most efficient routes and helps create the most cost and time-efficient way to get from point A to point B.

Route optimization helps businesses complete orders while incorporating factors like driver schedules, available hours, total stops, fulfillment estimates and legal requirements. Route optimization is not about finding the quickest or the cheapest route, it is instead about finding a route that is efficient and satisfactory incorporating all of the variables involved.

Can I optimize and plan my routes manually?

It is difficult to optimize routes manually when volumes are high with many drivers and destinations involved. Efficiency, scalability, accuracy and flexibility of your supply chain will be compromised if things are done manually.

How does route optimization work and how to optimize delivery routes?

Having established the importance of route optimization, let us understand how route optimization works.

Like most complex processes that cannot be optimally achieved by human or manual competencies, route optimization uses computer algorithms to achieve its purpose. It is not possible for a human mind to account for all nuances involved in computing a route and present a fool-proof optimal route, especially in a small amount of time, day-on-day. Route optimization algorithms can do it each day, increasing not only revenue per route, but also, the time saved per route.

Modern route optimization techniques can:

  • Monitor and analyze historical route data via machine learning to identify low-efficiency routes and to enhance future route efficiency.

  • Leverage the actual, on-road traffic pattern knowledge and on-road contingencies like road blockage or slow-moving traffic to plan a best alternate route.

Can businesses leverage Google Maps or Waze to plan routes?

An obvious question that may have crossed your mind is "Why can't I use Google Maps to do this?”

As convenient as that may seem, in reality, Google Maps or similar apps like Mapquest and Waze cannot optimize the routes. It should be understood that apps like Google Maps and Waze are made for the use of individuals and is not for the volume and professional requirements of a logistics company. How efficient is it when you have to plan a route from point A to point S with nine stops along the way?

A route optimization software or a route optimizer, can not only plan unlimited optimized routes from any point to any point, but it can also do so accounting for unlimited stops, over vast distances, and last-minute contingencies.

Why do I need route optimization?

As a modern logistics company, it makes sense to incorporate technology into your routing. Advanced logistics tools generate the best route optimization algorithm by leveraging artificial intelligence (AI) and by screening multiple possible routes from point A to point B, computing the best, most efficient delivery route, thereby reducing manual dependencies, automating the end-to-end logistics process, and saving time and money.

An advanced route planning software can also help with processes involved in the delivery by optimizing on-ground operations like shipment, transportation, last-mile delivery, and reverse logistics. In order to enhance workforce productivity, making use of technology and automation in the form of route optimizers should be the top priority.

Route Optimization Example and Use Cases

Route Optimization Case Study #1

Today, to satisfy the rapidly evolving needs of B2B customers, like resellers, hotels, etc. businesses need to do much more than deliver on time. They need to optimize last-mile delivery operations. Providing customers with accurate ETAs, ensuring transparency of delivery processes, facilitating seamless collaboration between delivery stakeholders are equally important. To deliver on these expectations, businesses need advanced supply chain and logistics tools that improve fleet productivity and visibility, ensure interoperability of disparate systems and provide real-time information on stock availability.

A large retailer leveraged a modern routing solution to ensure high levels of operational efficiency and delightful delivery experiences. The solution’s unique Business Process Engine helped the organization drastically enhance routing and improve routine delivery tasks and last mile delivery jobs.

Impact of the Solution

  • Reduced delivery time and raised customer happiness score owing to enhanced route planning, better performance monitoring of delivery fleet and improved productivity

  • Increased recurring orders were driven by greater customer transparency, visibility of stock availability and shorter delivery cycles

  • Data-based decision making and delivery planning were possible owing to analytics driven business insights

  • Provided transparency of field operations by empowering managers and customers track delivery fleet in real-time

  • Generated accurate ETAs by predicting route delays and managing exceptions better

Route Optimization Case Study #2

Route optimization in e-commerce is absolutely critical. A leading home goods seller in Europe embraced a modern routing and logistics platform to build a customer-centric end-to-end delivery process. The business was facing visibility and productivity challenges when goods were being transported from warehouses to its final delivery destination. Managing returns were becoming a bottleneck as well. All these resulted in poor customer experience and increased operational expenses.

The platform empowered this e-commerce business to enhance delivery tracking and route planning with real-time dynamic routing capabilities. It kept customers abreast with live information on delivery status and deployed customizable workflows to manage reverse logistics better.

Impact of the Solution

  • Optimized multi-stop deliveries by leveraging real-time dynamic routing capabilities

  • Ensured end-to-end visibility of shipments for delivery stakeholders through real-time tracking, tracing and alerts

  • Made deliveries flexible by using easy-to-change customizable business workflows

  • Improved delivery happiness score by ensuring timely and transparent deliveries

How is a route optimizer better than traditional route planning techniques?

Route optimization has not been around since the beginning of time. But it has arrived as the ultimate solution to multiple efficiency-reducing problems and challenges posed by the traditional route planning techniques:

Lack of Real-time Tracking

A route optimizer, unlike traditional routing methods, can account for real-time, on-road traffic conditions. In simpler terms, it means that if there is a blockage 800 meters ahead of your driver's current path, the route optimizer can help them take a diversion and avoid the blockage in real-time. Real-time tracking and route optimization analytics help logistics companies save month-on-month transportation costs, and help ensure on-time deliveries, thereby enhancing not only revenues but also customer satisfaction.

Manual Route Planning

As a logistics company, you might hire the best person who might manually devise the best and most efficient routes for the delivery drivers to follow for deliveries. However, what happens to these routes when there’s a blockage or a last-minute contingency like a road blockage owing to an accident?

Poor Delivery Productivity

As e-commerce continues to grow and there are more destinations for deliveries along with the increasing pressure of adhering to customer expectations, businesses want to stay on top of their deliveries. However, delivery productivity is bound to weigh down if it’s not powered by a sophisticated route optimization engine and GPS tracking possible only via a route optimizer.

Inability to Ensure On-time In-full (OTIF) Deliveries

Manual route planning and traditional route planning software fail to guarantee on-time and in-full deliveries, because, as mentioned, they cannot take into account real-time traffic conditions and blockages like route optimizers can. Reviewing fleet performance and fleet management also is an added bonus to route optimizers.

Lack of ETA Adherence

ETA planning helps companies to plan in advance and to stay ahead of time. However, since ETA cannot be recalibrated in real-time with traditional means of route planning, there is no ETA adherence.

Poor Customer Experience

On-time delivery of goods and packages is one of the most influential factors when it comes to measuring customer satisfaction in today’s world of same-day deliveries. Traditional route planning methods, by lacking real-time tracking and ETA adherence, lead to a poor customer service experience that not only causes loss of revenues but also a loss of reputation and business.

Increasing Overhead Costs

Fuel and labor have been identified as two of the greatest contributing factors to overhead costs in logistical operations. By using traditional means of route planning methods and by failing to optimize routes, companies end up losing money on these overhead costs.

Benefits of Route Optimization

Route optimization is the easiest way for any company to achieve greater ROI, greater time savings, limited fuel consumption, and a smooth process flow.

Here's how route optimization helps:

Delivery Profitability

Route optimization helps maximize the number of drops and pickups, allowing the drivers to attempt more deliveries in much less time than pre-optimization. This enhances the driver's productivity, making each delivery trip more profitable than before.

End-to-end Ground Level Visibility

Route optimization provides real-time, on-ground, end-to-end visibility of all resource movements across a company. This enhances the potential for better profits by allowing better control across logistics and operations processes.

Enhanced Tracking

Route optimization helps companies to focus and drive their operations on intelligent factors like GPS tracking and real-time traffic situations. Managers can set goals to measure against performance and to analyze KPIs, thereby increasing productivity and keeping the drivers accountable for the job.

Reducing Delivery Turnaround Time

Though route optimization is primarily about finding the most efficient route for delivery fulfillment, it also helps reduce the turnaround time for customers by optimizing first-mile operations.

Shrinks Carbon Footprint

A carbon footprint is defined as the number of greenhouse gases (primarily C02) emitted into the atmosphere by human activity. However, since route optimization optimizes and makes more efficient routes with minimal idling of drivers and fleets on the streets, it not only saves fuel costs but also CO2 emissions, thereby shrinking the carbon footprint- one delivery at a time!

Boosts Customer Experience

With lots of competition in the logistics space, if one company fails to meet consumer expectations, consumers will move to other companies. Route optimization, however, helps keep your customers intact and lets you improve customer service pursuits by offering accurate arrival times, efficient and on-time deliveries, shorter turnaround times for return products, and pre-announced time slots for deliveries.

How can FarEye’s last-mile delivery route optimization platform help?

If you don't meet the expectations of your customers, they will find others to do business with. By using FarEye's route planning software, you improve customer experience and generate savings on fuel and labor costs. Our intelligent route planner offers fully customizable solutions, address geocoding, intelligent vehicle and route selection feasibility, magic geofencing, FIFO assignment process, customer DNA mapping, real-time dynamic routing options, and interactive route maps with load balancing suggestions that take your routing and delivery process to the next level!

Route Optimization FAQ

What is route management?

Route management involves planning and optimizing routes in order to make the most of the available fleets. Route management goals include reducing fuel costs, driving hours and to make deliveries fast and efficient.

How can I improve my last-mile delivery?

Last-mile delivery can be improved by adopting an intelligent delivery management platform that facilitates end-to-end visibility of delivery operations, automatic route planning and helps in centralizing logistics data.

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