What is Route Optimization: How it can make managing your business 10 times easier

Written by Kingsuk Bhowmik on November 17, 2021

In business, where transportation costs alone can take up to 59.8% of the total operational cost (American Transportation Research Institute, 2019), route optimization can only be a wise way out.

Imagine if one car could cover 10 stops within the same time it used to cover 5, that way, you can double your deliveries by just using route optimization, which will majorly contribute to your bottom line. Hence, route planning and optimization are essential to cut planning time, save up on mileage, and improve capacity. All this can be done while using your existing resources. Meaning without adding expenses on human capital or fleet.

Here is all you need to know about route optimization and what software can lead you up to your desired goals.

What is Route Optimization?

Route optimization is the process of computing the most cost-effective and efficient path of transportation. It isn't only about finding the shortest route from node x to node y but also choosing the most optimized way taking everything into account, including the type and size of the carrying vehicle and their emission factors.

The Benefits of Route Optimization Software

Route optimization software benefits and assists a company in -

  • Picking out the best route for multiple stops in order to improve coverage without the hassle of multiple vehicle routing and scheduling.
  • Maximizing the gains such as completing orders and delivering them with time efficiency.
  • Saving money in payrolls by complete digital transformation of route management
  • Taking necessary criteria into account like driving schedules, the total number of stops, driving hours, and estimated target to effectively draw out ideal routes using computer algorithms and ai routing.
  • Helping establish and fulfill annual and monthly business goals and estimation by providing foolproof data of transportation costs.
  • Performing to its full potential using existing resources.

In business, time is of the essence. And route optimization not only utilizes your time perfectly but also spares you of the tiring and lengthy process of routing your drivers and technicians according to your business type (DTC or service industry). And most importantly, customers are kept notified with dynamic status updates and ETAs of their deliveries. This drastically reduces their need to do follow-up calls which enhances their overall user experience.

How is industrial route optimization different from what you can do on your phone with Google Maps?

Simply speaking, volume. You are planning for hundreds of orders in hundreds of different locations in 5 to up to 50 routes a day. That is a lot of calculations. Hence a route optimization system is required in place of these hundreds of calculations simultaneously.

What is the importance of software in route optimization?

Now, in this age of DIY, anyone can think of doing route optimization without software which means manually optimizing the routes per your demands. But to keep up with the pace of a growing business, manually optimizing every route should be done without affecting the accuracy, flexibility, configurability, and productivity.

If one tries to manually plan or optimize the route of one or two trucks, it might be possible with several hours of planning. But if you try to manage a fleet of trucks by optimizing and mapping out routes, then inefficiencies are bound to emerge because the human brain is incapable of managing the multitudinous factors that this scenario involves. Manually optimizing your routes can only be manageable with a few drivers. Also, ensuring that the route plans were carried out perfectly without a monitoring system is almost impossible.

It can even affect the flexibility of the routes due to people's limited knowledge of routes which can cover multiple stops and fail to provide optimum results. Therefore, failing to provide accuracy by manually optimizing the routes.

Additionally, manually optimizing the routes can take up several hours of your day without even a guarantee of affirmative results. And crisis management is close to impossible while doing everything on your own. Last-minute orders or just a sick driver can become a dire nightmare and end up causing your company losses from time to time.

And lastly, the time consumed by confused drivers and unplanned routes can have a major effect on a company's production. And if production lags behind, the possibility of reaching your distribution goals can become questionable.

Whereas having a route optimization software helps you map out ideal routes in accordance with criterias like managing multiple stops within the shortest time so drivers can deliver more and increasing your company bottom line, providing real-time solutions and ensuring utmost efficiency.

Furthermore, accuracy is always guaranteed by using computer algorithms and AI. There are multiple algorithms for multiple use cases and objectives. For instance, to measure and reduce travel time and to ensure optimum productivity of the staff. The most used algorithms are the Travelling Salesman Problem (TSP) and Vehicle Routing Problem (VRP). Mostly, the application varies depending on the type of problem that is being faced. For example, one objective could be to reduce travel time while the other objective will be to ensure optimum productivity of the field staff. A third objective would be to get time-stamped information of every event on the field regarding every delivery.

Also, digitizing the whole process saves human effort and doesn't require the need for extra staff,this helps avoid excess lag in the process. More people means more process and hence more lag in the decision making of stakeholders.

Is route optimization necessary in small businesses too?

Route optimization for small businesses isn't just necessary; it's essential for small businesses in order to reach its full potential by being very cost-effective.

Route optimization spares you of the additional fuel costs, operational costs and even helps by saving the company thousands of dollars in payrolls by significantly reducing manual work for operations staff. Such cost reduction is critical to allocate extra resources for growth in small businesses. Proper route optimization allows you to reduce your non-performing assets. For example, a manufacturing company should only have manufacturing units in its plant. It negatively affects their balance sheets when they have non-revenue-generating assets such as vehicles. And needless to say, the time that can be saved by only using route optimization software is impeccable and of great benefit for small businesses. Also, route optimization brings off amazing out-turn in production by preventing potential delays, which reciprocates by increasing response time and major rise in manufacturing. And as production increases, profit takes flight.

Route Optimization Software

Nuport's delivery planning and route optimization solution helps companies by utilizing their time and resources to get optimum results. It doesn't only map out perfect routes but also provides adequate support to track and harness the growth with the help of geolocation-based order management and live insights. Which will help you to get a better understanding of your ascending business as well as achieve maximum results.

Using Nuport optimization tools, clients can save up mileage costs by 15%, increase order capacity by up to 30%, and reduce their distribution planning time by up to a whopping 85%.

Nuport provides every service with utter transparency and helps you reach your goals of increased revenue by making your company cost-effective while ensuring continued excellence with customer experience.