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Route Optimization Software: The Complete Guide – Part 3

Route optimization software has capabilities that can go well beyond the functionality of "planning today for tomorrow's deliveries."

Let's look at a few strategies that can pave the way for drastic cost savings and improvements in customer service.

Integrate route design software with a telematics system

The integration of logistics distribution software with a telematics system to compare planned activity with what's happening live on the road allows you to automatically identify discrepancies between planned and actual performance, and adjust accordingly.

route optimization software Source: Envato

Benefits include:

  • Improved customer communication.
    • Live ETA updates and arriving alerts allow you to update customers on scheduled deliveries. This can lead to customer retention and increased benefits for your business.
  • Continuously improving routes.
    • When live GPS data is input into route design and logistics distribution software, exceptions to the plan are flagged that help identify issues such as regular delays at a particular customer delivery, or regular traffic jams at specific times and in specific areas. With that information, you can update the data to make future plans more accurate.
  • Model hypothetical scenarios
    • Modeling hypothetical scenarios to determine the value of strategic changes before implementation in a route optimization software allows you to explore any number of changes using real data to accurately evaluate the precise implications of the change on cost and services.
    • Often, fleet operators don't explore strategic issues because they lack the time and resources to manually perform the analysis. But if you decide to invest in route design and logistics distribution software, this’ll allow you to run hypothetical modeling exercises to explore strategies that can generate significant cost savings.
  • Evaluate the profitability of a new customer
    • Sometimes, in an effort to close a deal, overly enthusiastic salespeople can make costly promises to new customers before understanding the real cost of serving that customer. What do we mean by this? It's a difficult analysis to perform without logistics software designed for this purpose. That's because no Excel spreadsheet can handle the complexity involved.

Where exactly are the new delivery points? When are they open to receive delivery? What’s the normal size of the order, and how will it vary? How do these deliveries fit in with existing deliveries? 

Route design and logistics distribution software models these and other factors to develop the best routing plan for the new locations and measures the impact of the changes on margin.

route optimization software Source: Envato

Beware: not all new business is good business. Sometimes it takes a careful analysis to make that decision. Beyond these efficiency-boosting optimization strategies, the data it collects from your delivery operation can provide a constant stream of intelligence that makes your business smarter. The data answers questions that help with decision-making at almost every level, from customer service to the central office.

What’s the ROI of route optimization software?

According to our experience, ROI (return on investment) can take up to three months. The actual cost of route optimization and design software can vary from simple installations to hundreds of thousands for very large fleets with sophisticated routing requirements.

ROI calculation will depend on whether the software is an installed solution with an upfront cost or a Software as a Service (SaaS) solution with ongoing monthly payment. 

Some savings are clear and measurable for ROI calculation. Others, not so much. If you complete routes in less time and fewer miles, you can, over time, reduce the size of the fleet and driver force while reducing fleet fuel and maintenance costs.

The valuation of a route optimization software

In today's economy, route optimization and design is an often underestimated strategy for business success. From the customer service perspective, expectations for more frequent and accurate deliveries have never been higher. It has become increasingly difficult for companies to differentiate themselves in terms of product and price, but excellence in delivery is a highly valued and attainable competitive lever.

From a cost perspective, private fleets represent a large percentage of total operational expenses and a tremendous loss of profits if not well managed. For companies that continue to rely on manual methods for planning delivery routes, there has never been a more opportune moment to automate the route design process.

This effort requires a partner to assist with route optimization and logistics process planning for your business. Companies like Drivin offer Software as a Service and are able to effectively reduce route panning times of up to 30% (from manual planning).

Hopefully, this holistic look at route optimization can help you achieve your business goals. Are you ready to take the first step towards achieving your objectives? Contact us to help you!