Make Your Route Optimization Strategy 10X More Efficient
November 27, 2018
This article was original posted by Jason Green, CEO and Principal Product Manager at Greenlight, SmartRoute, a complete optimization and order management solution for shippers and carriers.Republished with permission.
When evaluating, selecting, implementing and measuring a route optimization solution, don’t forget that increased efficiency is the outcome of an optimization tool that will drive (pun intended) your business forward.
We're going to start this blog with our most important piece of feedback. We lead almost every discussion with the phrase: "we're not here to optimize your data, we're here to help you become more efficient".
This phrase may seem obvious, but its execution is a lot more nuanced than you'd expect. We're going to break down how you can think about efficiency when it comes to evaluation, selection, implementation, and measurement of an optimization solution.
Evaluate your business to see where you can be more efficient.
First, let's start with evaluation. When we say evaluation, we aren't referring to the evaluation of an optimization tool (more on that later), rather, we mean evaluating your business to determine where you need to become more efficient.
Here's an example for context, quite often our initial discussion with a potential customer will go something like this (highly paraphrased):
Us: How can we help your business?
Them: We need optimization
Us: Great, do you have any areas you are trying to target for greater efficiency?
Them: No, we just know we need to optimize...
These discussions often include VPs or owners at a logistics company, meaning that the participant in question has strong knowledge of their business and a stake in a positive outcome, but despite all of that, they don't really know where to begin when it comes to selecting and deploying an optimization solution.
This, of course, is perfectly reasonable because optimization is really just a narrow aspect of running an overall efficient operation. Typically, when we redirect the conversation towards the path of efficiency we get a wealth of information and knowledge from our prospect, as they have heaps of knowledge about the good and bad parts of their operation.
Now that we have the context, we can share our advice on the approach. If you are beginning your search for an optimization solution, take one step back and say: "where do I need to become more efficient?" The simple act of having an idea about where you'd like to improve can really help steer the process of selecting, implementing, and measuring the results of an optimization tool.
Secret weapon to select the right tool: your data.
Okay, so now you have an idea about how you'd like to become more efficient, with that we can take the steps towards selecting the right solution.
You can start to look at tools to see how they line up against your goals for increased efficiency. Maybe you want to find incremental savings across your current body of work, or maybe you're looking to pilot a tool that makes it much easier to bid and integrate new business. Either way, there's a critical element that will help you determine whether a tool is going to get you to where you want to go: data.
Having data in hand makes the selection process so much more effective. Not only can it short-cut conversations because some solutions are simply just not going to be able to work with your data, but it can also help you by establishing a control variable between your current operation, and the potential impact of various optimization solutions.
Ideally your data would meet the following criteria:
Real executable orders, not dummies or test accounts.
Orders are in the format that it was received or entered, not cleaned or prepped.
Backed by historical results, with accurate milage and time spent to execute the orders.
Includes the time and effort required from an overhead standpoint to execute the orders.
Contains any other limiting factors that may limit an optimized solution (such as: limited time to sort at a warehouse level, or driver zoning/schedule restrictions).
We know the above can be fairly difficult to achieve, and we often work with data that meets only a limited subset of our own criteria. What we have highlighted above represents the best data we have seen. The value is that the data is highly actionable and measurable. Everyone involved in the conversation can see the potential positive outcomes for themselves, without having to be sold on the generic benefits or "potential" for optimization.
With your data and results in mind, you can now select an optimization tool that helps your business to become more efficient! When doing so, be sure to look beyond just the features and into the results. While it is certainly important that the tool in question can handle the specific requirements of your data (such as cargo capacity, driver schedules, time windows, etc.) it's equally important that the tool can generate reliable, high quality results, with your data, in a reasonable time frame.
Implementation and change management.
Implementation is where rubber meets the road, figuratively and literally. It also represents another potential roadblock in your path to gaining efficiency. Here's why: it's one thing for an algorithm to tell you how to fulfill your orders, it's another thing entirely for your operation to follow that output.
We've seen enough deployments stumble operationally that we have now built operational process change management into our on-boarding process. We recommend that you think about implementation all the way up into the evaluation phase for maximum results. It's important to consider what efficiency you can gain outside of the drivers and routes. What can you do at an admin level? What about at an operational level? Could you improve your sorting and loading, or do you have restrictions that need to be factored into your optimizations?
A good system can not only create efficiency on the road, but in the office, and on the warehouse floor. The system should be able to create an optimization that reflects what you can accomplish most efficiently with your operation. You also should be ready and willing to implement opportunistic changes that can help you access a more optimal solution. It is entirely possible that a small change in the warehouse can lead to a huge increase on your routes, or vice-versa, so be open to those possibilities as you move into implementation.
Measure results, learn, and repeat!
Now we get to the payoff for the time you spent evaluating your business, and building up the data to make a quality solution. You've implemented your solution carefully, now you measure. The results are binary, but the next step is always the same. The goal of measurement is not to count how much money you've saved, it's to improve.
If you want your business to be successful, you do it by relentlessly trying to get better, and letting financial success be the outcome of that effort.
Not every step in your deployment is going to be a success. You may try different ways to be efficient and ultimately find that they just don't work for one reason or another, but what you can do is continue to learn and measure. In doing so you'll guarantee that you end up finding the valuable efficiencies you need to become a better business.
We hope this guideline was useful for those considering the use and implementation of an optimization solution. If you have any questions please feel free to reach out by clicking the blue icon in the bottom-right of the screen to start a conversation.
Marc Kuo is the Founder & CEO of Routific, a route optimization platform for growing delivery businesses. Our mission is to green the planet by reducing the mileage and fuel consumption of delivery fleets. With over a decade of experience in the last-mile industry, he has advised hundreds of delivery businesses on their route planning and delivery operations.
Frequently Asked Questions
No items found.
Liked this article? See below for more recommended reading!