What is Route optimization? Optimize delivery routes effectively

FarEye’s Route optimization software helps optimize the delivery process, improving customer satisfaction, increasing efficiency and reducing costs.

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As faster and same-day deliveries take center stage, savvy businesses are embracing today’s route optimization tools to enhance delivery planning and drastically reduce delivery turnaround-time. Dispatchers need to plan routes effectively to accommodate different delivery preferences. Speed and accuracy are critical to ensuring that drivers spend maximum time delivering and not driving.

The benefits of route optimization tools are better delivery productivity, reduced operational costs and enhanced customer experience. Before diving into all the benefits route optimization can provide for your business, let’s understand what route optimization means.

What is route optimization?

Route optimization is the process of optimizing delivery routes through the most efficient routes and help 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’s about finding a route that is efficient and satisfactorily incorporates all of the variables involved.

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Can’t I optimize and plan my routes manually?

It is difficult to optimize routes manually when volumes are high and 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’s discover 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 of the nuances involved in computing a route and present a fool-proof optimal route, especially in a small amount of time, day after day. Delivery route optimization algorithms can do it daily, increasing revenue per route and time saved per route.

Logistics 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 optimize my driving routes?”

As convenient as that may seem, in reality, Google Maps or similar apps like Mapquest and Waze cannot optimize the routes. Apps like Google Maps and Waze are made for the use of individuals and are 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 delivery route optimizer can plan unlimited optimized routes from any point to any point while also accounting for unlimited stops, over vast distances, and last-minute contingencies. FarEye’s partnership with HERE Technologies allows precision route optimization with advanced location data to increase on-time-in-full delivery while decreasing costs.

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 shipping optimization 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. Making use of technology and automation in the form of route optimizers should be the top priority to enhance workforce productivity.

Route optimization examples and use cases

Route optimization case study #1

Businesses need to do much more than deliver on time to satisfy the rapidly evolving needs of B2B customers, like resellers, and hotels. They need to optimize last-mile delivery operations. Providing customers with accurate estimated time of arrival (ETAs), ensuring transparency of delivery processes, and 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

  • Reduce delivery time and increase customer happiness score due to enhanced route planning, better performance monitoring of delivery fleet and improved productivity

  • Increase recurring orders by providing greater customer transparency, visibility of stock availability and shorter delivery cycles

  • Data-based decision making and delivery planning are possible because of analytics driven business insights

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

  • Generate 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 their final delivery destination. Managing returns were becoming a bottleneck as well. All these issues 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

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

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

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

  • Improve 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 can help businesses solve their route optimization problems and challenges caused by traditional route-planning techniques.

Lack of Real-time Tracking

Unlike traditional routing methods, a route optimizer can account for real-time, on-road traffic conditions. 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 last-mile deliveries. However, delivery productivity will decline 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 they cannot take into account real-time traffic conditions and blockages like route optimizers can. Reviewing fleet performance and fleet management 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 experience that not can cause loss of revenue and 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 less time than pre-optimization. Route optimization enhances the driver's productivity, making each delivery trip more profitable.

End-to-end Ground Level Visibility

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

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 gasses (primarily C02) emitted into the atmosphere by human activity. However, since route optimization makes more efficient routes with minimal idling of drivers and fleets on the streets, it saves fuel costs and reduces 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 experience 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?

By using FarEye's Route, you can optimize your dispatch process and save up to 30% of the time spent in manual dispatch operations. Route allows you to plan routes and allocate orders effectively by factoring in constraints like vehicle capacity, traffic conditions, serviceable areas and hours, specific driver needs, and driver familiarity with the area. 

FarEye’s geosmart technology converts non-standard addresses into smart codes and enables drivers to figure out delivery locations faster. Leverage AI-driven Smart Suggestions to make sure your drivers spend more time delivering and less time in administration, sorting or driving. FarEye helps you power profitable and faster deliveries. 

FarEye’s Route helps you:

  • Keep your scheduled deliveries intact while adding same-day orders to next-day deliveries through hybrid routing technology.

  • Offer flexibility, convenience and choice to your customers without sacrificing driver productivity or increasing operational costs.

  • Manage vehicle and driver capacities to meet on-time delivery SLAs.

  • Optimize green fleet deliveries to reduce fuel bills and delivery costs by reducing miles traveled.

Route Optimization FAQs

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.

Why is route optimization important? 

Route optimization helps companies to reduce fuel costs, minimize travel time, and improve delivery time and customer satisfaction, which results in increased productivity and profitability.

What factors are considered in route optimization? 

Factors that are considered in route optimization include the distance between stops, road conditions, traffic, time windows, load capacity, driver availability, and more.

How does route optimization impact the environment? 

By reducing the distance traveled and minimizing inefficient routes, route optimization can help to reduce fuel consumption and emissions, which is beneficial for the environment.

How is route optimization different from GPS navigation? 

GPS navigation provides turn-by-turn directions to reach a destination, while route optimization considers multiple destinations and finds the most efficient route to visit them all.

What is the role of technology in route optimization? 

Technology, such as route optimization software, plays a crucial role in route optimization by providing real-time traffic data, enabling efficient route planning, and automating the optimization process.

Can route optimization be customized for different businesses?

Yes, route optimization software can be customized to meet the specific needs and requirements of different businesses, taking into account their unique constraints and objectives.

How long does it take to see the results of route optimization? 

The time it takes to see the results of route optimization can vary depending on the size of the fleet and the complexity of the routes. However, most businesses can see a significant improvement in the efficiency of their operations within a few weeks of implementing route optimization.

How does route optimization improve delivery efficiency? 

By calculating the quickest and most cost-effective route, route optimization helps delivery companies save time and money, reduce fuel consumption, and improve overall customer satisfaction.

How does route optimization affect delivery times? 

Route optimization can greatly reduce delivery times by choosing the most efficient route, minimizing detours and delays caused by traffic congestion, and ensuring that the delivery is made within the specified time frame.

How does route optimization help reduce fuel consumption? 

Route optimization helps to reduce fuel consumption by choosing the most direct and efficient route, minimizing unnecessary detours and stops, and taking into consideration the fuel efficiency of the vehicle being used.

Is route optimization suitable for all types of delivery services? 

Route optimization can be applied to a variety of delivery services, including parcel delivery, food delivery, and even large-scale freight transportation.

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