How Route Optimization Reduces Costs and Improves Efficiency
For fleet managers who want to lower costs and improve efficiency — and what fleet manager doesn’t — route optimization is a viable solution for fleets of all sizes and applications.
Although the route optimization process varies depending on a fleet’s business model, its goal is the same for every fleet — to deliver products/freight/services on time, every time, and in the most efficient way possible. With businesses facing increased headwinds in today’s “I want it yesterday” climate, leveraging route optimization software for smarter route planning and route management is a solution worth considering to help tackle business goals.
Far From the Shortest Distance Between Two Points
Route optimization is the process of systematically and consistently identifying the fastest and most cost-effective routes for drivers. It is not just finding the shortest distance between point A and point B. It’s a complex, scientific process that includes all relevant factors regarding a route, including:
- Number of stops
- Location of stops
- Delivery/service time windows
- Real-time traffic conditions
- Current road construction
- Recent accidents
- Number of turns and intersections
- Best or nearest driver to dispatch
Determining the best route optimization software to fit your unique business needs requires some homework on your part. You first need to compare core routing techniques to help narrow down your options. These techniques include:
Static vs. Dynamic Routing
Static routing is a planned routing optimization approach and is typically the most common technique for fleets that deliver to the same customers on a regular timeline. It’s leveraged most by businesses where customer satisfaction depends on the driver's relationship with the customer and delivery consistency. Static routes lack flexibility, which can present challenges. But with GPS tracking, fleets can adapt to different paths as needed.
Dynamic routes are established daily and create new routes and stops to create more efficient geographical paths. Unlike static routes, dynamic routes are not predetermined. Changes are made along the way as needed. Dynamic routing is best for businesses that want to reduce transportation costs or exist in business sectors where changing customer needs are met daily or real-time route optimization.
If your business requires both static and dynamic routing, an option is cell routing. Cell routing is where a cell of customers is created by grouping a series of service locations. It allows the route planner to leverage a hybrid of standard and dynamic routing, allowing drivers to provide service to customers consistently and minimizes costs by using dynamic routing for other route stops.
Planned vs. Actual Routes
This technique compares the planned route to the actual route, as things don’t always go as expected. Fleets often use telematics to gather information, including the exact course taken, vehicle speed, time to reach the destination, and pick-up/delivery/service time to make the comparison.
This information is put in the route planning system to identify discrepancies between the planned and actual route, such as the driver didn’t take the planned route or circumstances popped up related to the path that was not anticipated in the plan. With this information, fleets can redo or update the scheduled course, which improves efficiency and productivity and cuts fuel costs.
Routing systems also have real-time monitoring that can report when drivers check-in and begin their route or if they do not check-in at all. Real-time tracking allows fleets to develop a Plan B more quickly if necessary and continue with business as usual. Many fleets find the most significant value and the best results with a bit of both — leveraging real-time monitoring and comparing actual and planned routes.
Determining What Technique and Software is Right for Your Fleet
Deciding which routing optimization technique and software is right for your fleet depends on various criteria, including:
- Operation size (vehicles, drivers, staff, etc.)
- Service area (local or over-the-road)
- Scheduling (changing or consistent)
- Delivery dispatch (spot loads, hot shot loads, static routing, dispatch, live dispatch)
- Type of company (service or freight)
Selecting the best technique and software also depends on your business goals. Common goals for fleets include:
Reduce Fuel Consumption and Cost
Typically, the shortest distance to a destination uses the least amount of fuel. But if there’s an accident, construction of other disruption along the route, traffic, and idle time become factors. Route planning and optimization software can help steer you around to reduce fuel waste and increase efficiency.
Right-Sizing Fleet
When you plug your route into software, it will determine if your data is optimal. For example, if you have determined a job needs 15 trucks, the software may determine you only need 10. The additional vehicles you thought were required can be put to work on other jobs, increasing productivity, improving efficiency, and bringing in more business.
Meet Delivery Windows
Meeting specific service windows for deliveries is a tough challenge for any fleet throughout the day. Routers can fine-tune an algorithm to pay more attention to meeting service windows on time, as route optimization algorithms adapt to your needs and can focus on a specific aspect of your business. It ensures greater customer satisfaction, as the routes produced will meet service window challenges again and again.
Having an understanding of your needs helps you better decide what software would work best for your fleet. You may only need GPS with optimization integration. Or you may need more sophisticated technology. Doing your homework and discussing your route optimization needs with your provider will get your fleet headed in the most efficient and cost-effective direction, which is a win-win for you and your customers.