The Ultimate Guide to Route Optimisation in 2023
If you’re a planner or have your own fleet, then you know how challenging it can be to coordinate the best routes. Your goal is to boost efficiency and increase profitability while delivering orders punctually and reliably. However, with increasing fuel prices and driver shortages, this job is by no means easy. That’s where route optimisation comes in.
Route optimisation is about ensuring your driver’s journeys are as smooth and efficient as possible. But how does it actually work and when should you invest in delivery route optimisation tools? We’ve put together everything you need to know about transportation route optimisation below to help your business save time and money.
What is route optimisation?
Route optimisation is the process of calculating the most efficient journey for a vehicle, based on numerous different factors. These factors include everything from the vehicle's capacity to road conditions or regulations.
To understand the challenge of route optimisation, it’s a good idea to understand the vehicle routing problem.
Whilst the vehicle routing problem is an interesting example, it doesn’t even include the complexity of the real-world challenges. There are additional factors and restrictions that limit the number of possible combinations and add a lot of complexity to the delivery route planning process. These limitations might include:
- Fixed delivery dates and assigned time slots at loading bays
- Customer wishes or restrictions at the delivery location
- Vehicle- and driver-specific equipment and abilities (e.g. temperature-controlled, hazardous goods, truck-mounted forklift, specific driver’s license of skill)
- Driving and rest times or working time regulations
- Combination of pick-up & delivery
- Several depots
What are the benefits of route optimisation?
Reduce transport costs
Route optimisation ensures that orders are distributed efficiently among all vehicles. It considers the vehicles’ loading capacity and aims to load them as full as possible. Furthermore, it combines deliveries and collections, avoiding empty runs. This reduces mileage and fuel consumption and ultimately leads to lower transportation costs. Double-digit percentage transport cost savings can be achieved – the solution often pays for itself in just a few months.
Improved transparency & reliability
Route planning ensures consistency in service quality. Planning knowledge is no longer stored in heads, but in software and is visible to everyone. That ensures minimal disruption, whether a planner is on leave or a new fleet manager is hired.
Manual route schedule optimisation keeps planners busy most of the day. A software solution, on the other hand, completes these tasks in just a few minutes. This leaves planners more time for strategic tasks, spontaneous changes to planned routes, and driver support.
Take special requests and requirements into account when optimising routes and schedules. Automated notifications about the estimated time of arrival (ETA) improve customer service. And because planning takes minutes instead of hours thanks to the solution, the cut-off time can be pushed back to the customers’ advantage.
Compliance with regulations
Legal and industry-specific requirements are automatically taken into account with route optimisation software. These include driving and rest times, company and contractual agreements, hazardous goods regulations, truck driving times, and environmental protection obligations.
Good employees are hard to come by, especially in the logistics industry. That makes it all the more important to hold onto them and to keep them happy. With good route optimisation, you can create realistic and feasible routes with little effort. This not only reduces stress and overtime work but also boosts the satisfaction of drivers and planners, leaving them more time for other tasks.
Cut CO2 emissions
Optimised transport routes mean lower mileage and lower fuel consumption. This reduces your company's carbon footprint. With vehicle route optimisation you can precisely calculate emissions for your entire logistics as well as for each customer with just a few clicks.
Free white paper: Route Optimisation Software
Digitisation, competitive pressure and a shortage of skilled workers pose major challenges for the logistics industry. Route planning software can help companies work more efficiently, automate their planning, save costs and become more flexible.
In this white paper, you will learn:
- Who benefits from route optimisation software
- How it can increase service levels and growth
- How route optimisation software assists planners
- What to look for when choosing a software vendor (checklist included)
Which industries does route optimisation help?
From parcel services to supermarket deliveries, and from waste collection to scheduling field force staff - the possible applications of route optimisation are diverse and by no means limited to the logistics industry.
Wholesale, manufacturing, medical services, field service, service technicians, delivery services, parcel carriers, waste disposal, and school buses - all transport goods or people and benefit from cost-based route optimisation. Possible applications range from home delivery to distribution in short-haul and long-haul transport, last-mile delivery and local transport pre-and post-carriage to multi-day routes.
Some companies not only use route optimisation tools to schedule journeys, but also to calculate and reduce the expected CO2 emissions. They forward the emissions balance sheet to their environmentally conscious customers or use it as a basis for compensation and offsetting measures. Even care services can benefit from route optimisation software in their work.
When should you invest in delivery route optimisation?
If you experience any of the following challenges, then route optimisation would be beneficial:
- Your transport costs are increasing faster than your revenue
- You’re struggling to meet delivery deadlines
- You have a high turnover of drivers
- Your planners spend a lot of time communicating delays to customers
- Your customers complain about delays or long waiting times for orders
Investing in delivery route optimisation tools helps you tackle all these issues. It enables you to reduce costs and usually pays for itself in a matter of months.
Learn How Global Logistics Companies Improve Revenue with Route Optimisation
FAQs About Route Optimisation
What is a delivery route?
Delivery routes are used by fleets of vehicles to deliver or collect goods or services. To create delivery routes planners typically:
- assign orders to individual vehicles and routes
- determine the sequence of stops within each route, and
- define routes to be driven between the individual stops.
In the process of creating delivery routes, customer wishes, regulations and constraints must be accounted for. The goal of the planning process is to create an efficient schedule that uses all available resources efficiently.
What is route optimisation in logistics?
Route optimisation in logistics evaluates all possible combinations of journeys to produce a schedule that makes the most efficient use of resources available. The goal of route optimisation in logistics is to identify the most efficient delivery route for multiple stops, while also accounting for all relevant restrictions, legal regulations and customer wishes.
Is there an app to plan delivery routes?
Given the complexity of delivery route planning, the use of custom solutions is needed to optimise routes and schedules. PTV Group has more than 40 years of experience in creating solutions for logistics and transportation. Take a look at our solutions for delivery route planning:
What is vehicle routing and scheduling in logistics?
Vehicle routing and scheduling are essential to efficient logistics operations. Scheduling is the process of distributing orders or service requests to all available vehicles and employees, determining the sequence of delivery, and assigning specific time windows to each stop. Routing is the process of mapping out optimised routes for delivery drivers and service forces to get from one stop to the next.
What does routing mean in logistics?
Vehicle routing in logistics describes the entire process of planning and optimizing delivery routes for the vehicles in a fleet. The goal is to identify the most cost-effective routes that minimise the time and distance it takes to reach a number of stops with the available resources while accounting for other factors and constraints that impact the journey besides distance.
What are the objectives of routing & scheduling?
The objective of routing and scheduling is to ensure that all vehicles are on the most efficient route possible when delivering goods or services to customers. Thereby, routing and scheduling contribute to the optimal utilisation of resources, minimise transportation costs, boost efficiency and profitability and facilitate the satisfaction of employees as well as customers.
Can Google Maps optimise a route?
Google Maps does not offer a truck-specific setting and is therefore not suitable to optimise routes for trucks. For example, its suggested routes include bridges or tunnels which are closed for trucks. This results in detours, loss of time, and higher fuel consumption. In the worst case, drivers go over the legal driving time or miss their time slots at delivery bays. Google Maps is not suited to schedule routes for fleets of vans or cars, because it can’t optimise schedules for many vehicles simultaneously.
Does route optimisation only make sense for large organisations?
No, route optimisation makes sense for any organisation. Even if you’re planning routes and schedules only for one or a handful of vehicles and customers, investing in optimisation solutions pays off quickly. Which solution works for you depends on your size and IT infrastructure:
What’s the difference between static vs dynamic routing?
Routing and scheduling can be either static or dynamic: Static route planning works with fixed schedules, where the sequence of stops remains the same for any given day. These schedules are planned once – often manually – and then used for a long time.
Very few businesses can adhere to preset routes and schedules, and even if they can, it’s likely a waste of resources, money, and time. This is because static route planning can’t account for last-minute changes in routes, unforeseen traffic, human error and the many additional factors influencing a timely delivery.
Dynamic route optimisation, in contrast, makes improvements and adjusts to risks and disruptions instantaneously. Dynamic route optimisation is only possible when using the latest available technology, including real-time data.