7 Profitable Outcomes of Route Optimization
If you are a logistics and supply chain professional, you can’t ignore the word “optimization”. And of course, there are various profitable outcomes of optimization. Supply chain optimization is essential for companies that want to improve operational efficiency, reduce costs, and increase customer satisfaction. This process starts with identifying the high-spending areas in the supply chain. And transportation takes the first place on that list. Various strategies can be implemented to save on these higher, avoidable transportation costs and the most effective one is Route Optimization.
What is Route Optimization?
Route optimization is a technique that uses mathematical algorithms to calculate the most efficient routes for a given set of locations. It considers various factors such as traffic conditions, road networks, product types, priority orders, delivery time windows, etc. In the ideal sequence of delivery planning, route optimization is done after load consolidation & vehicle allocation. So, it’s the final input that goes to the driver & vehicle before they get on the road for shipment deliveries.
With the growing demand for e-commerce & q-commerce, the quantum of daily deliveries has reached its all-time peak. The urgency of faster, on-time deliveries tends to create chaos at the back end leading to situations like delayed deliveries, underutilization of delivery vehicles, etc. Route optimization can help you streamline these daily deliveries and bring in increased efficiency and cost savings.
What are the outcomes of route optimization?
Various industries, including transportation, logistics, and delivery services, use route optimization to plan & manage their daily operations. This technique can be implemented across, line-haul & last-mile logistics, helping companies better plan their delivery routes and save on their logistics costs. Here are a few other quantifiable advantages of implementing route optimization in your logistics operations.
(i) On-time deliveries
Route optimization software takes into account the traffic conditions and other infrastructure developments from the delivery region before defining routes for deliveries. These optimized routes provide a proper schedule for delivering shipments in the defined sequence on a particular day of delivery. This strikes out any foreseeable reason for delivery delays. As a result, the adherence to on-time deliveries increases to almost 99% (1% deviation due to unavoidable factors).
(ii) Minimum empty runs
Oftentimes, vehicles had to return empty after their deliveries adding up to the logistics costs due to the increased driver and fuel expenses. In case of multiple pickups and drops, empty runs can be minimized by properly consolidating the orders & planning the routes to ensure the same vehicle can either pickup up or drop off the orders in one complete trip on road.
(iii) Improved driver productivity
Companies usually handle logistics and transportation planning operations manually, and they often do not communicate with drivers regarding deliveries. Thus, optimized & planned routes, when shared with the drivers give them the clarity of work that needs to be done within the defined time frame. Drivers, too feel confident and energetic to finish their deliveries for the day, helping them maximize their productivity.
(iv) Asset utilization
The route optimization technique aims to deliver the maximum number of products using the minimum amount of assets. Even in the case of urgent or priority deliveries, optimization solutions will first try to allocate the orders to the vehicles already delivering on the route. This avoids the unnecessary costs of allocating another vehicle for deliveries.
(v) Logistics cost savings
Transparent and streamlined processes tend to increase the operational efficiency and productivity of the assets involved. Route optimization does just that for you! It gives you increased visibility and control over your delivery process, avoiding the possibility of any unnecessary deviation from the defined routes. It works on maximizing asset utilization and on-time deliveries, without compromising on the basic requirements. Thus, the companies implementing route optimization see considerable cost savings in the long run.
(vi) Happy customers
As a customer, it always feels great to receive orders on time. And it’s an even better feeling when you receive it before the delivery date. Route optimization can help logistics personnel work towards the goal of timely or before-time deliveries and achieve increased customer satisfaction. Indirectly even customers get the benefit of implementing route optimization in the transportation process. Happy customers tend to purchase more, keeping up with the company’s increased profitability.
(vii) Greener logistics and transportation
A lot of e-commerce companies are now offering sustainable delivery options and charging a premium for such deliveries. While planning deliveries, it is important to incorporate other sustainable options as almost 30% of customers now prefer them. Optimized routes are often the shortest ones, consuming lesser fuel, and resulting in lesser pollution. It provides greener and more efficient logistics solutions that considerably reduce the carbon footprint of the company.
How to Start with Route Optimization?
An efficient software solution can easily implement route optimization by seamlessly integrating with the order management system and generating the best possible routes for deliveries. Both shippers and logistics service providers can use this solution to manage their deliveries cost-effectively.
Elixia’s Planning solution offers load, space, and route optimization to help you efficiently plan your deliveries, and improvize the operational efficiency of logistics processes. This solution analyzes the delivery requirements, consolidates the load, selects the most suitable truck type, and defines an efficient route sequence for deliveries.
Want to gain these 7 profitable outcomes of Route optimization?
