Route Optimization Strategies Part 1

Developing route optimization strategies has the potential to improve customer experience all while reducing overall operational costs.

Currently, as customer expectations intensify and competitive pressure to differentiate service offerings increases, distribution-oriented companies face the challenge of executing deliveries at unprecedented levels of efficiency and service.

It’s pretty obvious to mention that as the world becomes more dynamic, many logistics companies are, and will keep struggling to stay up to date with the ever-evolving digital reality.

Source: Envato

In this article we’ll be going over best practices for route optimization strategies, how strategic routing and regular re-routing of the delivery network can increase distribution efficiency and reduce costs, all while keeping both customers and drivers satisfied.

Transportation route optimization strategies

For most managers seeking a comprehensive solution; transportation, distribution, and freight route optimization software entails more than just identifying the best delivery routes for various modes of transportation. It must also leverage real-time traffic, historical data, roadworks, and any traffic collisions. With that many variables, keeping up with delays, without AI-driven route optimization can pose as a significant challenge for manually planned delivery routes. 

The most common route optimization strategies you can implement when planning transportation routes are: 

• Static routing,
• Dynamic routing,
• Real-time dynamic routing.

For almost every logistical operation, fleet operational costs begin at the fundamental level of route management. By executing routes using less time and fewer miles, you can immediately reduce daily fuel and maintenance costs.

Static Routing

Transportation route optimization strategies

Static routing involves planning transportation routes based on geographical areas on an annual or semi-annual basis. The goal is to forecast the best truck routes to frequented depots. It’s the most commonly used method of route planning systems in logistics for fleets that make deliveries to the same locations on a recurring timeline.

The biggest challenge in creating a strategy to optimize static routes is that it’s based on consistency. When drivers can follow the same routes every day with the same volume and stops, it may work well, however, this method lacks flexibility.

With that being said, static routing is changing due to the use of GPS tracking for delivery drivers. Most fleet companies have made the switch to GPS tracking and have been able to adapt to different routes as needed. Establishing static routes is a good foundation for fleets with constant delivery locations.

Dynamic Routing

Transportation route optimization strategies

The allocation of dynamic transportation routes is established on a daily basis, using historical and projected traffic patterns. The strategy for optimizing dynamic routes allows you to make changes up until the truck is loaded.

If there are sudden anomalies within the route, necessary adjustments can be made. Unlike static route planning, you’re not limited to a predetermined route and may discover on the day of delivery that there’s a better route that takes less time.

This strategy for optimizing dynamic routes has many benefits for businesses. It can increase customer satisfaction, expedite delivery time, and reduce mileage. It can even improve equipment utilization due to reduced wear and downtime.

Real-time Dynamic Routing

Transportation route optimization strategies

Real-time dynamic routing is akin to dynamic routing in that both adapt to sudden changes. However, companies utilizing real-time route optimization software focus on consecutive daily orders. 

This is typically applied to those providing services in local areas; as new orders come in throughout the day, they’re added to the route in logistical order to reduce execution time and expedite delivery.

This strategy for optimizing dynamic and real-time transport routes entails the use of algorithms that run on artificial intelligence and machine learning technology to optimize routes.

Transportation route optimization techniques

Thus far, we’ve gone over a few strategies for route optimization that use algorithms and route management systems. Adding onto that, here are some techniques to consider during delivery route planning.

Source: Envato

The technique you choose for optimizing transportation routes depends greatly on your company's objectives and KPIs; you can select the appropriate technique based on the commercial objectives of your business.

Reduction of fuel consumption and costs

Transportation route optimization techniques

The shortest distance to your destination typically results in the lowest fuel consumption, but if there is an accident or interruption, traffic and downtime come into play. Any strategy for optimizing transportation routes must take these factors into account.

Fleet reduction

Transportation route optimization techniques

Once you’ve incorporated route optimization software to help manage your transportation routes, it’s vital to use historical data to make sure the fleet optimization is accurate. Once done, it’s possible to considerably reduce the amount of trucks or cargo vehicles to complete orders due to the new and improved routes available. 

For example, you might start off with ten trucks when manually planning routes, and cut down to seven once the optimization software kicks in. 

Service windows

Transportation route optimization techniques

Service windows pose a challenge for the majority of fleet companies and create constant pressure for logistics operators. 

Incorporating fleet management software, such as Drivin's, can help your company meet those deadlines, as the use of route optimization algorithms can be customized to suit your operational needs.

Adapt to customer expectations

Transportation route optimization techniques

Customer expectations are constantly changing. Now, more than ever, customers have more options when it comes to delivery methods and timing. Therefore, it’s imperative to keep up with their expectations, being able to do so through the use of top-notch technology. 

Keep reading for Route Optimization Strategies, Part 2