Route optimization is the process of finding the most cost-effective route for a set of stops. Many people think this means finding the shortest distance or fastest time between point A and point B, but this isn’t quite right. Route optimization is used when you want to minimize drive time for multiple stops, while also accounting for a range of complexities like customer time windows, vehicle capacities, driver schedules, and more.
How does route optimization work?
Route optimization typically uses algorithms. The reason for this is because the complexity of route optimization means that humans can’t easily compute all the different parameters to find an optimal route, especially in a short amount of time.
Ok, if you’re a non-technical person like me, here’s the breakdown:
You’re a salesman and you have to visit a bunch of cities. Let’s say 100 — because you are a very ambitious salesman. Now how would you go about doing that? What is the shortest possible route you can take between those 100 cities before returning home?
It’s actually a really difficult problem to solve — almost impossibly hard. Computer scientists call it a NP-hard problem. The Traveling Salesman Problem gets exponentially more difficult to solve the more dots, or cities, the salesman has to visit.
If you have 57 stops, there are already more than a quattuorvigintillion possible combinations. That’s one with 75 zeros. An algorithm can churn through every possible combination and select the best one. The same process would take you days, if not months without a computer.
Now if you thought the TSP was difficult, consider this: What if it wasn’t just one salesman you needed to plan routes for? What if you had multiple salesmen — a whole team of them? Now you need to decide how to split up the visits and optimally assign them to your team. That’s an even more challenging conundrum known as the vehicle routing problem or VRP.
Mathematicians and computer scientists have been trying to solve these problems for years. The closest we’ve come, albeit imperfectly, are algorithms.
Up until recently, only big corporations had the budget and resources to implement this type of technology. But now even small businesses can access complex algorithms via simple, easy-to-use delivery route planners or route optimization apps.
Can Google Maps or Waze optimize my route?
Think you can use Google Maps, Waze, or Mapquest as a free route planner with multiple stops to solve this problem? Think again.
Navigation apps like Waze, Google Maps, and Mapquest might be the tools of choice when it comes to planning a simple route and getting turn-by-turn directions from point A to point B. But what happens when you need to plan routes for point A to Z? What happens when you want to plan for an unlimited number of stops or have multiple stops to plan – 10, 100, or 1,000 destinations?
The optimization of stop order is one way in which delivery route optimization software separates itself as a category from Google Maps’ software, which functions as a route planner for multiple stops, but not as a route optimizer. In fact, Google Maps is actually referred to as a “web mapping service”.
Why is route optimization critical for delivery businesses?
Yup, we said it. Route optimization is critical for delivery businesses, especially as they grow. Imagine, if you will, the following scenario:
“My alarm wakes me up at 5am. Earlier than I would like. I have no choice though because my drivers are depending on me to plan their routes. It takes me about an hour with a strong cup of coffee every day. I’m using tools like Excel and Google Maps to help me, which I thought was already pretty good.
It used to be easy in the early days when I had only 2 drivers and 20 orders to worry about. But business is doing well. I should feel happy about this; instead I feel a headache every morning. Route planning is becoming harder every month as the volume of orders increases. These days I have 10 drivers on the road with 100 orders to plan!
On top of that, I haven’t taken a vacation in ages because no one else in the company knows how to plan routes. My workload keeps getting bigger, and I keep getting more exhausted... ”
Even if the above scenario seems a little dramatic, the idea is that as your business grows, route planning will inevitably become too complex to manage using tools like Google Maps. No human can factor in things like time windows and load capacity without some heavy mental gymnastics.
You end up spending too much time managing delivery routes. You also risk inflating your operational costs, often in the form of too many vehicles in your fleet, and/or wasted fuel and wages due to longer than necessary routes.
Delivery businesses face these types of problems every day. The best route optimization solutions help delivery businesses minimize wages, driving time, and fuel consumption by finding the most efficient route for the entire fleet in a matter of minutes.
How does route optimization software work?
Whether you call it route planning software or route optimization software, it’s going to help you lower your operational costs and increase your revenue-per-route. Not to mention save you a TON of time planning. But how does it work?
There are a bunch of different platforms out there; each of them have their pros and cons. But essentially, the best route planning software have these core functionalities:
Route plan visualization
Planning routes is a very visual process. Being able to see exactly where each stop is, which driver is going to serve it, and how updates to a stop impact the overall route makes delivery route planning much easier. Make sure to find a software that’s designed to make it quick and easy to understand your routes and make changes on the fly.
Route optimization algorithm
A routing algorithm is what creates the optimized routes. These routes should give you the shortest drive time considering all your constraints (ie. time windows, vehicle load capacities, driving speed, etc), plus accurate ETAs.
Now for those of you who have been planning routes manually for a long time, you might be thinking, “How can I trust an algorithm to do my job that I’ve taken years to master?”
Well, a good algorithm can model your business needs exactly and create routes that you trust, while saving 20% to 40% on fuel and drive time along the way.
The important thing to keep in mind is that you’re still in control of your routes! Think of the algorithm as a tool to help you do your job better – not a replacement.
Ok, so you have created a super efficient route, but unless you can get your route into the hands of your drivers, it’s pretty useless. The best route planning software let you dispatch your optimized routes to a Driver App. Typically, driver apps let your drivers know where to go, reference any special instructions for a stop, and collect proof-of-delivery.
You no longer need to print route manifests or hand your driver stacks of paper.
When it comes to deliveries, knowing where your drivers are gives most of us peace-of-mind. For example, if one of your drivers gets delayed, you can see in real-time how this will affect the ETAs of all his upcoming stops. You can update your customers or make adjustments to the route and re-dispatch to your driver instantly. This will help you with customer service as well as improving the accountability of your drivers.
Analytics & reporting
Ok, so you’ve been running your delivery operations for a while. Is there any room for improvement? Good route planning software lets you track your delivery operations over time and shows you where you can improve performance to lower your costs, which helps you to grow your bottom line.