The traditional logistics landscape has changed drastically, with Amazon rewriting the rules for last mile logistics. We have entered the age of instant gratification with same day and next day deliveries. One of the important factors that influence the success of your logistics experience is how well your fleet performs. Factors like an explosion in e-commerce, changing consumer expectations, rising traffic snarls, complex fulfillment scenarios, and environmental considerations have put tremendous pressure on optimum fleet performance. Today, logistics fleets can incorporate tools that empower them to overcome these challenges in real-time, with technologies designed to optimize resources and fleets while providing an optimal customer-centric experience.
The vehicle routing problem
The vehicle routing problem involves dealing with complex delivery workflows, allocating the right vehicle, planning multiple stops, and meeting shorter delivery window timelines while managing fuel efficiency. Another important aspect for any logistics or supply chain business is to make routes cost-effective as their customer base expands. As more and more routes get added into the system, route planning turns exponentially more complex and challenging, which can only be aided with the help of advanced technology.
A study by The Hinkle Charitable Foundation found that 16 mins of vehicle idling per day can result in wastage of 3.8 million gallons of gas, while a Capgemini research highlights that 55% of customers would stop using a retailer after two to three late deliveries. These figures accentuate the need for better routing so that businesses can commit to faster shipping!
Why is route planning complex?
Route Planning is not a simple exercise because there are various factors associated with this function. Let’s understand some critical factors that make route planning complex:
The on-demand delivery model can lead to massive fuel consumption because of the nature of its work of delivering a successful last mile delivery experience. We are already living in an age where same-day deliveries are becoming the new normal. Hence mapping fuel-efficient routes is critical to running profitable logistics.
2) Driver productivity
Serving deliveries with multiple stops needs more accurate route planning; otherwise, your driver productivity goes for a toss. Inaccurate routes could lead to more driver idling, late deliveries, and incidental delays. This also leads to overtime expenses and penalties from hours of service (HoS) non-compliance.
3) Environmental regulations
Companies are increasingly putting a check on their carbon footprint. This means reducing miles per delivery, shrinking paperwork, and digitizing proof of deliveries.
4) Optimizing costs
Another imperative of route planning is to reduce overall transportation costs, not just per vehicle but at an overall level, by reducing the number of vehicles altogether. Clubbing orders, reducing travel distance, and ensuring optimal utilization (vehicle load factor) are some ways to achieve this.
What is a route optimization software?
Route optimization software intelligently designs optimal navigation routes allowing logistics managers to spend their time on other important tasks. By smartly considering various factors such as available vehicle capacity, driver costs, multiple destinations, and committed time windows, the system helps businesses manage their logistics and supply chain in a way that’s most efficient and cost-effective.
Routing software can support in-house fleet as well as third-party fleets, or a combination. It can also design routing strategies that are static, dynamic, or hybrid involving the automatic or manual selection of certain preferences, such as the specific time period, live traffic, seasonal trends, etc. A dynamic dispatching algorithm then distributes orders across the designated fleets and calculates the best routes and vehicles for ensuring that deliveries reach customers on time. What’s more, is that it allows live tracking with predictive ETAs. By leveraging your fleet’s historical data, this routing software can drive significant efficiency and savings.
The growing list of advantages for route optimization software includes shorter routes, multiple stops, delivery SLA compliance, accurate addresses, lesser idle time, better utilization, predictive insights, which overall contribute to a greener initiative!
As the battle to conquer the last mile of logistics heats up, there’s a rise in demand for vehicle routing and dispatching technologies. Irrespective of in-house or third party logistics, these tools help them optimize operations throughout the supply chain. A recent report from Gartner emphasizes the necessity for companies to adopt new technologies such as Dista in order to remain competitive and improve vehicle routing in this volatile transportation environment.