What Is Route Optimization?

Route optimization is the process of finding the best route for visiting multiple destinations. But what is the “best” route? In this post we’ll explain route optimization in more detail, look at some real-life examples, briefly explain the traveling salesman problem for deliveries, and talk about when and why it’s a good idea to use route optimization software.

What is an optimal route anyway?

The best route around a series of stops is just the shortest one, right? Not quite. It’s true if you’re trying to draw the shortest line that joins all the dots on a piece of paper – but the real world is not a piece of paper!

In the real world we travel along roads, not in straight lines. And roads come with traffic, bridges, tunnels, tolls, one-way sections, speed limits, parking restrictions, and many other factors that affect how suitable they are for traveling and stopping.

For a delivery business, an optimal route also needs to work with constraints like:

• Delivery time windows: for example, customer A needs their delivery before noon while B doesn’t want it before 3 pm.
• Vehicle capacities: how many units can each vehicle take?
• Vehicle types: for example, some loads are only suitable for refrigerated vehicles and cargo e-bikes may be able to use bike-only routes.
• Driver territories: do your drivers need to stay within particular areas? 
• Driver schedules: when and where do drivers start their routes, when do they get breaks and how much overtime is allowed?
• Driver acceptability: Routes need to look efficient as well as be efficient. Drivers often resist routes that overlap or criss-cross.

All this means an optimal route is not just the shortest route, but the shortest one that works in the real world and meets all these business needs. 

So the best definition of route optimization would be:

‍Route optimization generates the shortest routes possible, while still meeting real-world needs and constraints.

The problem with manual route planning

As you can see, with all these constraints route management and route planning are extremely complex. And yet, up to a point, humans are remarkably good at solving routing problems, especially experienced planners who know their city, their fleet, and their drivers well. 

A human planner will be able to juggle business priorities, make tough decisions when there are conflicting priorities and work with information that’s not in the routing database.

But there’s a limit to what humans can do. The more stops you need to make and the more vehicles you have, the more difficult and complicated it gets to plan a route:

• With 10 destinations, there can be 3,628,800 ways to connect them all. 
• With 15 destinations, the number of possible routes exceeds 1.3 trillion.
• With 57 destinations, the number of possible routes is a ridiculous number – 10⁷⁵ or a quattuorvigintillion. To put that into context, astronomers estimate the total number of stars in the universe at between 10²² to 10²⁴. 

In the real world, of course, the real number of possible routes is less than the theoretical number — but it’s still a lot! Now add in all the constraints we mentioned earlier, and humans quickly hit their limit. Planning starts to take too many hours, routes become expensive, and customer service may suffer.

For example, Marché Second Life rescues “ugly” produce and other perfectly edible but rejected food from landfill, and distributes it to customers. At first, they used maps and manual calculations to re-plan their routes every time they added a new pick-up point to their network – but it took an hour every time. When the pandemic struck and they needed to pivot to home deliveries, manual calculations became impossible.

If you’re a delivery business that is just starting to grow beyond your start-up phase, this is a great time to add route optimization to your toolset.

How route optimization works

Route optimization is different from route planning. Route optimization software uses computer algorithms to rapidly compare different routing options and choose the best one. At Routific, we also use machine learning models and artificial intelligence to optimize more stops, faster.

On average, Routific users cut their route planning time by 95% and the resulting routes are up to 40% shorter.

💡 Fun fact: Route optimization is a good example of how solving abstract mathematical problems can have real-world benefits. The two most famous problems in route optimization are the Traveling Salesman Problem (TSP) and the Vehicle Routing Problem (VRP).

Route optimization in the real world

Route optimization is for any organization that needs to visit many destinations in a single day. The most common users are:

• Couriers and last-mile delivery services
• Businesses and non-profits that make deliveries
• Organizations that make sales or service calls

Here are some examples of real businesses using route optimization to boost their growth:

Optimizing farm-to-customer deliveries

Terra Firma Farma small livestock and poultry farm in Connecticut, USA, used route optimization to help them grow through the pandemic. Starting with just 80 deliveries on one day a week, they’ve expanded to six days a week and over 1,000 deliveries a month. 

Farmer Brie Casadei says route optimization has saved her not only “unreal” amounts of time, but also 35% on the farm’s fuel costs. 

Read more about Terra Firma in our customer story.  

Route optimization for couriers

Dutch delivery company Trunkrs started in 2015 with a vision to take the pain out of e-commerce deliveries. Co-founder and CTO Hidde Stokvis spent 18 months working on his own routing algorithm, but “then we started growing really fast, and we saw that our in-house solutions weren’t fit for our growth.” As delivery volumes scaled, the algorithm was getting so slow that drivers were left waiting around with no scheduled deliveries, even as orders piled up.

In 2017 Trunkrs integrated Routific’s Engine API and saw rapid improvement. Routific was able to give better, faster routes in a shorter amount of time, giving Stokvis and his team time to focus on building other parts of their tech stack.

You can read more about Trunkrs in our case study.

Signs you need route optimization software

Our experience is that route optimization software starts to add value once a business needs to plan for around 20-30 stops a day, or needs more advanced delivery management features like customer notifications.

Some signs that it’s time to try a route optimization solution are:

• You’re spending hours each day planning and dispatching your routes.
• You only find out about late or missed deliveries when a customer contacts you to complain.
• Your customers keep contacting you to ask about the status of their delivery.
• You’re concerned about how much you’re spending on fuel and driver wages.
• You want to reduce carbon emissions from your vehicles.
• Your delivery operations feel messy and inefficient.

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Route optimization software will allow you to handle complex scenarios that include:

• Multiple routes with many stops on each route.
• Planning for delivery time windows, driver schedules, vehicle capacity, and more.
• Easily adjusting routes to use fewer vehicles, take less time, or reduce the distance traveled.
• Re-optimizing fast when last minute changes happen.

What to look for in route optimization software

There are many route optimization solutions in the market, so it’s useful to know what to look for when you’re evaluating the options. You can also read our detailed review of individual delivery route planning software, if that helps your research.

The most important things that route optimization software needs to deliver are:

1. Flexibility

As we’ve noted, the optimal route for your needs is the one that works with all your business constraints. Last-mile delivery businesses have different needs than those that make sales or service calls, for example. Choose an option that caters to your particular use case.

2. Accurate ETAs

If deliveries run late, you need to deal with angry customers as well as possible driver overtime payments. Route optimization software needs to deliver accurate travel time estimates based on factors like historical traffic data.

3. Ease of use

Route optimization software should be easy to use, with a map view that makes it obvious which stop is allocated to which driver, and how each route is progressing through the day. A driver mobile app that makes it easy for drivers to receive their routes has also become a must-have feature. 

4. Speed

As Trunkrs discovered, having a route optimization algorithm doesn’t help if it takes too long to do the optimization. The right software for your business needs to be able to optimize all the stops you need, fast, every day — and to handle more stops as your business grows. It should also allow you to re-optimize to accommodate customers who place last-minute orders. 

5. Efficient routes with high driver acceptability

You want routes that are not only efficient, but also clean and non-overlapping. If the routes don’t make sense to your drivers (for example, if two stops on the same block are allocated to different drivers) they won’t be eager to drive them. You may lose efficiency gains as a result.

6. Accurate geocoding

Geocoding is the process of converting an address to a map location. If it’s not accurate, drivers are sent to the wrong place, causing frustration, hassle, and extra cost to everyone.  Software should be smart enough to flag any uncertainties for you to review before dispatch. 

7. An easy-to-integrate API

If you’re a courier company or other business that prefers to build its own delivery management platform, you’ll need a route optimization API. In addition to all the features we’ve already mentioned, look for something that comes with good documentation and is easy to implement. 

See our review of delivery route planning software to learn more about how different options stack up.

The bottom line: Humans are great at optimizing routes, until they aren’t. When the size of the routing problem gets too big for the human brain to handle, route optimization software can help to keep a business running smoothly. It can also save a lot of time and money: with a good routing algorithm, you can expect savings of 20% to 40% on fuel and drive time.