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Route Optimization: The Secret for a Profitable 2024
11 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 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 businesses skip the whole planning step, 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 saves fuel that would otherwise be wasted on sending multiple trucks and drivers to the same area.

But just how does one effectively plan their delivery routes?

In this article, we'll explain what route optimization is, manual planning versus using route optimization software, the benefits of 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 Planner Software Can Improve Delivery Efficiency

9 Benefits of Route Optimization

Get Started With Route Optimization

Route Optimization Use Case 1: Customer Imperfect Foods Expands Pilot into 400K+ Customers

Route Optimization Use Case 2: United Supermarkets Boosts Capacity, Using Existing Vehicles

Route Optimization FAQ

What Is Route Optimization?

Route optimization is the process of finding the best and most cost-effective route for delivery drivers.

This doesn't necessarily mean finding the shortest route. Route planning focuses on minimizing the total driving time when making any number of stops, factoring in variables such as:

  • 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 planning 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 factor in all the different variables that can affect a route, or the ability to accurately determine the most efficient route based on data.

Even if you could, you’d be spending unjustifiable amounts of time on managing those delivery routes. And you’d run the risk of dramatically increasing your operation costs due to problems like overbooking vehicles and excess fuel usage.

What is the biggest challenge with last mile delivery?

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

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 delivery business with only one or two drivers, the time and inevitable human error that will go into manual route planning just isn’t worth it. Any more vehicles than that, and planning gets more and more complicated. As the number of stops and routes increase, the number of hours spent planning them do, too.

Routing software, however, uses 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 and Waze aren't effective route planners. 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, these apps are free, but they’ll end up costing you money in the long run, because of their inefficiency. They also lack the communication features you’ll find in route optimization software.

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

Following are five ways you can use route optimization software to improve efficiency, lower operational costs, and increase revenue:

1. Visualize Delivery Routes

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

Route planner 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 occur based on real-time traffic conditions.

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

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, with updates automatically sent to the appropriate drivers.

This level of automation incorporates smart GPS and alleviates a lot of administrative burden for delivery managers.

2. Cut Delivery Times

We mentioned earlier that algorithms can help create optimized delivery routes. If you've been planning manually until now, you might have some reservations about trusting “a robot” with such an important task. An optimized delivery route can save you 20% to 40% on fuel and drive time, though, so it’s definitely worth looking into. An optimized delivery route can save you 20% to 40% on fuel and drive time, though, so it’s definitely worth looking into.

Don't think of it as losing control of your routes, but rather that this algorithm is your personal assistant and can make your job a lot easier. Not to mention your customers will be much happier! Of course, the best routing solutions will allow you to make manual adjustments to the routes 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 might be 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 planning software can make that happen.

First off, everything will be digital. Second, you can sit back and relax as the software dispatches drivers for you, telling them exactly when to go, where to go, and providing 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

These are the most common expectations customers have about deliveries:

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 is delayed for anyreason, this will be visible in real time to both the company and the recipient, and the estimated delivery time will update automatically.

This means customers won’t need to call your support team, as they can see when their delivery is arriving.

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’s route planner.

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 solve problems in real time.

5. Continually Improve Performance

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

Most route planner software comes with 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
  • Dropoffs 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 drivers’ 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 planning routes and doing admin work by automating tasks with route planner software. The time saved can be better spent working on getting new business and other revenue-generating endeavors.

Respond to schedule changes in real time

Routes are updated right away when unforeseen circumstances come up, like traffic on the road, accidents, weather conditions, and more. Drivers receive these updates in real time, so they don’t need to spend time figuring 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 longer delivery times or inaccurate delivery windows. Route optimization software tells you when you need more drivers to complete deliveries within specified delivery windows.

Improved driver satisfaction

When you optimize routes, you eliminate the problem of overlapping delivery territories, long delays, and incomplete deliveries, which reduces stress for drivers. And, of course, happier drivers = happier customers!

Deliver products faster

Simple, optimized routes result in faster deliveries.

Healthier bottom line

All the benefits of route optimization mean more money in your pocket.

Route Optimization Use Case 1: 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 for 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.”
- Minnie Fong, Vice President of Business Operations and Strategy, Imperfect Foods

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

Route Optimization Use Case 2: United Supermarkets Boosts Capacity, Using Existing Vehicles

United Supermarkets was an early adopter of online ordering and curbside pickup when it rolled out that service in 2016. Initially, the company used Google Maps to manually plan routes and scheduled only two deliveries per hour, to avoid potential backlogs.

Company leadership knew that its existing service model wasn’t scalable, if trucks had to return for reloading several times per day. United Supermarkets partnered with Onfleet, and the software’s route optimization intelligence revealed the company could handle a 50% increase in capacity, using its existing vehicle fleet, and still deliver all orders on time.

“Since adding Onfleet, we have more confidence in our capacity, and that’s translated into us providing a better service to guests while being more efficient.”
– Chris Farr, E-Commerce Manager, The United Family

Frequently Asked Questions (FAQ) 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. Can I still use route optimization software to optimize routes?

  • A: All of the drivers considered in one specific instance of "route optimization" must have the same transportation or vehicle type set (truck, car, or motorcycle, for example). That’s because each individual must have roughly the same capacity for the software to optimize the routes. Selecting the correct vehicle type will also result in more accurate ETAs 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. So, if routes can be produced to fit within all other constraints in Onfleet, the fewest number of drivers will be assigned tasks, 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. You can define this value for 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.

Q: Is there a general demo I can share with new delivery drivers that explains Onfleet's route planner software?

A: Yes! Watch this 5-minute demo video to learn more here. It provides an overview of Onfleet and highlights the value of route optimization in achieving your delivery goals and simplifying tasks for drivers.

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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