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Route Optimization: What It Is & How to Succeed in 2021
10 min read

What Route Optimization is, and how to succeed with it in 2020

How to Improve Your Delivery Logistics With Route Optimization

Looking to optimize your delivery routes? This article has you covered.

Planning a delivery route is hard work. Planning dozens, or hundreds, of delivery routes is all but impossible without the right tools.

We're talking hours and hours of work, that when done right, often only results in saving a few minutes of delivery time—if you’re lucky. It makes you wonder, is all that effort really worth it?

Sure, sometimes people skip the whole planning thing, choosing instead to dispatch deliveries as they come into the warehouse. The problem with this is, sometimes multiple delivery truck drivers will end up being routed in the same neighborhood.

Effective route planning would’ve saved fuel that was wasted on sending multiple trucks to the same area, as well as freed up a driver. And that’s just one example.

But just how does one effectively plan their delivery routes?

In this article, we're going to go over what route optimization is, manual planning versus using route optimization software, the benefits of having optimized routes and how to start improving yours.

Want to skip ahead? Here’s a table of contents:

What is Route Optimization?

Can you Manually Plan and Optimize Routes?

Can Google Maps or Waze Optimize Delivery Routes?

5 Ways Route Optimization Software Can Improve Delivery Efficiency

9 Benefits of Route Optimization

Get Started With Route Optimization

Route Optimization: Customer Imperfect Foods Expands Pilot into 400K+ Customers

Route Optimization FAQs

What is Route Optimization?

Route optimization is the process of finding the best route for delivery drivers to take to get a package from the transportation hub to its end recipient as quickly and cost-effectively as possible.

This doesn't necessarily mean finding the shortest route. It's more so focused on minimizing the total driving time when making any number of stops, factoring in a bunch of variables including:

  • Delivery time windows
  • Vehicle load capacity (weight and/or volume)
  • Driver schedule
  • Driver proximity and/or hub location
  • Traffic congestion
  • Accidents on the roads
  • How far the different stops are from one another

When done manually, finding the best routes is a tedious (and near impossible) process. If you have just a few vehicles with 10 stops each, there can literally be millions of different route possibilities.

With route optimization software, you can calculate the best routes in a matter of seconds, maximizing the number of deliveries your drivers can make (and the amount of revenue your business can generate).

Why is Route Optimization Important?

Oh, it's not only important, it's critical, and here's why.

Humans don't have the mental bandwidth to adequately factor in all the different variables that can affect a route, or the ability to accurately determine the most efficient route based on the information.

What is the biggest challenge with last mile delivery?

Delivery efficiency is the biggest challenge with last mile delivery, and route optimization can help

Even if you could, it only means you’d be spending unjustifiable amounts of time on managing those delivery routes. Which runs the risk of dramatically increasing your operation costs with problems like overbooking vehicles and excess fuel usage.

Today, last mile delivery processes account for 53% of the total cost of shipping, and up to 41% of the total supply chain costs. Most of this expense is the by-product of poorly optimized delivery routes.

Can You Manually Plan Routes?

You could... but why would you want to?

Unless you're a micro business with only one or two delivery vehicles, the time and inevitable human error that will go into manual route planning just isn’t worth it. Any more cars than that and planning gets more and more complicated. As the number of stops, and possible routes increases, the number of hours spent planning them out do too.

Route optimization software, however, will use an algorithm to automatically run every possible route for you in a matter of seconds. These algorithms are known as “Vehicle Routing Problem”, or VRP, solvers.

Can Google Maps or Waze Optimize Delivery Routes?

Short answer, no.

Navigation apps like Google Maps, Waze and similar apps aren't the answer. That's because they're designed to provide simple point A to B directions, not complicated multi-stop routes that factor in a multitude of variables and constraints.

These apps can't effectively plan delivery routes consisting of hundreds of destinations on a daily basis. For one thing, the addresses would still need to be entered manually, which is not only time-consuming but error prone.

Sure, their low initial cost may be tempting but will end up costing you money in the long-run.

5 Ways Route Optimization Software Can Improve Efficiency (and Save You Money)

Here are five ways route optimization software can improve efficiency in your company, lowering operational costs, increasing revenue, and saving you a whole lot of time.

Whether you decide to go with Onfleet or a different software solution, look for the following:

1. Visualize Delivery Routes

If you have to spend time trying to decipher a route, that's a huge red flag. This is often the case with physical and paper maps, or text-only directions.

Route optimization software translates delivery routes into a visual map, so dispatchers and drivers can see at a glance exactly where the different stops are, who's going where, and any updates that are made based on real-time traffic conditions.

Onfleet’s route optimization feature.
Onfleet’s route optimization feature.

For example:

Onfleet’s integrated route optimization engine factors in multiple variables - time, location, traffic and vehicle capacity - to map out the most efficient routes for your delivery trucks. And, if anything unexpected comes up (eg: accident, flat tire etc), routes can be re-optimized in real-time, and updates sent out to the appropriate drivers.

This level of automation eliminates a lot of administrative burden put on delivery managers by adding smart GPS style offerings.

2. Cut Delivery Times

We mentioned earlier that algorithms can be used to create optimized delivery routes. If you've been planning manually until now, you might have some trust issues around this. After all, no one likes the idea of being replaced by a robot.

An optimized delivery route can save you 20% to 40% on fuel and drive time, though, so it’s definitely worth looking into. Just don't think of it as losing control of your routes, but rather that this algorithm just became your personal assistant made to make your job a lot easier. Not to mention you customers will be much happier! Of course, the best routing solutions will allow you to make manual adjustments to the routes as you see fit even after they’ve been optimized. There will always be an element of human knowledge that is nearly impossible for any algorithm to consider, so manual tweaking is often necessary.

3. Auto-dispatch to Avoid Bottlenecks

Imagine not having to print out and hand your drivers a pile of paper before each delivery route. Route optimization software can make it happen.
First off, everything will be digital. Second, you can sit back and relax as software dispatches drivers for you, telling them exactly when to go, where to go, and any instructions they’ll need along the way.

Onfleet’s dispatch interface
Onfleet’s dispatch interface

With Onfleet, delivery managers can set rules to automatically assign deliveries based on proximity and route distance, while collecting proof of delivery - photos, signatures and barcodes - right from their mobile phones.

4. Improve Customer Experience

Customers want to know where their stuff is, and you want to know where your drivers are.

These are the most popular items customers ask for when asked about their delivery expectations:

Delivery customers are asking for visibility and efficiency in their delivery services

Some route optimization software, such as Onfleet, doubles as real-time driver tracking and visibility software, so you know exactly where your drivers are at all times.

For instance, if one of your drivers gets delayed for whatever reason, this will be visible in real-time to both the company and the recipient, and the amount of delayed time that will be added to the original estimated delivery time, keeping it accurate.

This also reduces the amount of support calls received as customers will receive status updates automatically, avoiding the need to call your support team.

An example of an SMS notification your customer would receive when you use Onfleet.
An example of an SMS notification your customer would receive when you use Onfleet.

With Onfleet, customers will receive automatic status updates when a delivery has started, as well as delivery ETAs, via automatic SMS notifications. The platform also allows customers to communicate with drivers, dispatchers and call centers, enabling your team to problem solve in real-time.

5. Continually Improve Performance

Route optimization is not a one-and-done thing. It's essential to track delivery operations and continually make improvements to ensure they stay as efficient as possible.

Most route optimization software comes with built-in reporting capabilities, so you can see precisely which areas need to be improved to lower costs and increase profits.

For example, every delivery operation should be tracking KPIs such as:

  • On-time rates
  • Service times
  • Successful deliveries
  • Customer feedback ratings
  • Idle time
  • Drop offs per pickup
Onfleet advanced analytics dashboard
Onfleet advanced analytics dashboard

With Onfleet, managers and drivers can view these KPIs and segment the data by team, driver, day, week, and hour of the day. This level of insight makes it easier to identify costly bottlenecks in the delivery process.

9 Benefits of Efficient Route Optimization

Besides telling drivers where to be and when to be there, route optimization has many other benefits.

Reduced fuel costs

Less time spent on the road means less money spent on fuel.

Reduced vehicle maintenance costs and downtime

Similar to the first point, less time spent on the road also means less wear and tear on your delivery vehicles.

Improved customer experience

Real-time updates on driver’s whereabouts mean estimated delivery times are always accurate, but just in case, customers also have the ability to talk to the driver directly.

Reduced manual route planning

You can spend less time doing admin work and other tedious tasks by automating them with software. The time saved can be better spent working on getting new business and other revenue-generating tasks.

Respond to schedule changes in real-time

Routes are updated right away when unforeseen circumstances come up, like traffic on the road, accidents, weather warnings, and more. Drivers are notified of these updates in real-time so there’s no need for them to try and figure out what to do next.

Increased number of daily deliveries

More deliveries means more business, but over-scheduling can make your drivers burn out and annoy your customers with increased delivery times or inaccurate delivery windows. Route optimization ensures service time isn't impacted by telling you when you need more drivers to get more work done within specified delivery windows.

Improved driver satisfaction

Optimized routes mean no more overlap of regions for delivery or getting stuck in unexpected traffic and not getting all their deliveries done. And, of course, happier drivers = happier customers!

Deliver products faster

Simple, optimized routes are faster routes.

Healthier bottom line

All the byproducts of route optimization have one thing in common: more time and money in your pocket.

Customer Imperfect Foods Scales Deliveries with Smart Route Optimization

Onfleet began working with Imperfect Foods, a grocery delivery service that offers imperfect (yet delicious) produce, affordable pantry items, and fresh eggs and dairy. Imperfect Foods partnered with Onfleet with a test pilot program in Portland, Oregon in 2017.

“Before we had our Onfleet partnership, we were outsourcing. The first pilot with Onfleet in Portland was such a huge success, we just continued to roll out new customers and markets, coordinating our pack centers, drivers, and customers in a hub and spoke model utilizing Onfleet’s route optimization technology. It’s been a strong collaboration.”

Adding in Onfleet's software and route optimization features enables Imperfect Foods to add in multiple cities, coordinate hundreds of drivers, routes, and, now, to serve over 400,000 customers in 38 states (and counting.)

Frequently Asked Questions (FAQs) with Route Optimization

Q: My organization has variability in the mode of transportation used by our drivers: sometimes they are on a bike, and sometimes they drive a car

  • A: All of the drivers considered in one specific instance of "route optimization" must have the same transportation or vehicle type set: "truck, car, motorcycle, walker". In this way we can assume that each individual will have roughly the same "capacity". Selecting the correct vehicle type will also result in more accurate ETA's in your dashboard as well as any predictive ETA notifications sent to your customers.

Q: When I ran Route Optimization, I selected 10 drivers, but only 8 had tasks and routes assigned to them—why?

  • A: Route Optimization is built on efficiency over fairness. What does this mean? So, if routes can be produced to fit within all other constraints set within Onfleet, the fewest number of drivers will be assigned which results in the most efficient outcomes for the planned delivery schedule.

Q:  We realize that some deliveries naturally take longer than others in real life delivery scenarios. For example, some city deliveries require drivers to find parking before locating a recipient apartment building, and/or drivers are expected to consult with delivery recipients before completing tasks successfully. What is the best way to handle these cases to ensure accurate task arrival and completion estimates?

  • A: Create tasks with a Service Time! A service time describes the time a driver is expected to spend at a task's destination. This value can be set on individual tasks, or globally for all tasks considered in one instance of Route Optimization. When defined for an individual task, this service time value will override the global service time value defined when optimizing tasks.

Q: Is there a general demo I can share with new delivery drivers that explains route optimization in the context of the breadth of Onfleet's delivery software?

A: Yes! Watch this 5-minute demo video to learn more here. It helps explain an overview of Onfleet and highlights the value of route optimization in achieving your delivery goals with dispatcher, driver, and customer points of view and the Onfleet product dashboards and driver app's in action.

Start Optimizing Your Delivery Routes Today

Ready to start planning more efficient delivery routes? Get in touch with our sales team or start your 14-day free trial of Onfleet today.

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