Route Optimization Logistics: A Guide With Best Practices

Picture this: Your driver leaves a warehouse with an important shipment of items. They start heading out on their route, but there’s a massive accident ahead, and they have no idea. Traffic is at a standstill for miles in both directions—and the driver is heading right toward the jam.

In such a scenario, is your business capable of rapidly rerouting this driver to make sure they avoid the accident and complete the delivery on time? Or will the driver sit in traffic for hours, delaying the shipment and angering the customer?

It all depends on whether you’re using a route optimization solution—and, if so, how sophisticated it is. Very simply, a route optimization solution enables your company to ensure your fleet is taking the most efficient routes possible.

What Is Route Optimization?

As the name suggests, route optimization takes into account the various factors—roads, tolls, times of day, and more—that need to be considered when transporting items to their individual destinations.

An effective route optimization strategy pulls together insights from a variety of sources to give teams the insights they need to make shipments arrive in a safe, timely, and efficient manner.

In the past, safe, timely, and efficient delivery weren’t always guaranteed. In the next section, we’ll learn from history to see why route optimization is so important to the future of logistics.

The Evolution of Route Planning

In the early days of shipping, companies would manually plan routes using paper maps. Managers would outline specific routes for drivers and instruct them to follow them as closely as possible. The process was dreadfully slow and inefficient. But there was no other way to handle this incredibly important task.

Over the past few decades, the evolution of route planning has evolved considerably, particularly with the advent of GPS connectivity and the cloud. Fast-forward to today, and many systems are utilizing artificial intelligence (AI) for rapid decision-making and maximum effectiveness.

Truth be told, it’s an exciting time to be involved with shipping, as powerful new technologies are coming to market that make it easier to move people and products from point to point.

The important thing to note is that route optimization is no longer just about determining the shortest routes between two points. A variety of additional factors also need to be considered, like weather and traffic patterns, operator habits, and the type of cargo that’s being transported. By bringing multiple data points together, teams can gain better visibility into the shipping process—reducing overall risk while increasing profitability and customer satisfaction.

Why Route Optimization Is so Important

At this point, you may be wondering why fleet managers need to look for ways to improve shipping times to begin with. There are several reasons, which we’ll briefly examine next.

Avoiding Displacement

One reason companies are increasingly investing in route optimization is Amazon. The e-commerce juggernaut has gotten so good at shipping and logistics that there’s now a new standard of excellence.

In other words, customers expect items to arrive on time, all the time—with no exceptions. This trend is called the “Amazon effect.”

Amazon’s hyperefficient approach to route shipping and logistics is challenging other shipping providers to keep up with the competition. Failure to keep pace could cause them to risk going out of business altogether.

As such, companies have little choice but to invest in systems that can guarantee route optimization. In fact, survival now depends on this.

Reducing Shipping Costs

Effective route optimization is also necessary for reducing shipping costs. When drivers sit in traffic for long periods of time, it costs money. It also costs money when drivers travel excess miles en route to a customer location. What’s more, it also adds unnecessary wear and tear to vehicles, ultimately leading to more maintenance costs.

Route optimization can drastically lower operational costs while helping shipping providers maintain top-line revenue and avoid unnecessary expenditures.

Preventing Accidents

One of the most surprising benefits of using route optimization software is that it can help reduce accidents during transit.

For example, certain routes may contain areas that are highly accident-prone, with busy intersections, tight turns, or a lack of signage, for example. Companies can identify such areas in advance and strategically route drivers away from them in order to reduce the chances of an issue occurring. Companies can also use this reporting system to avoid sending drivers through areas that have high crime levels.

Add it all up, and it’s an easy way to keep the people that power your operations safe while mitigating operational risks.

How Route Optimization Supports JIT Transport

One of the key trends to watch out for in shipping and logistics is just in time (JIT) manufacturing, which is a core element of lean production.

In a JIT framework, items arrive at a warehouse or shipping port “just in time”—right when they are needed. By leveraging a JIT model, companies can prevent shipments from sitting in warehouses. This can reduce storage fees, theft, and damage. At the same time, it can lower the amount of staff that a team needs to have on hand in a warehouse environment while ensuring that companies don’t stockpile too much inventory.

So, what’s the link between JIT and route optimization?

It’s simple: JIT frameworks require highly advanced route optimization in order to work properly. After all, companies that rely entirely or even partially on JIT frameworks can’t afford to have late deliveries. This can severely disrupt an entire supply chain—angering customers, leading to negative reviews, and driving up the total cost of delivery, among other things.

As such, companies that choose to leverage JIT models should be using the latest route optimization technology. Any way you slice it, route optimization is one of the core components of a JIT model. Without it, businesses cannot successfully implement JIT methods.

Route Optimization: A Key Aspect of Contactless Fleet Management

Ultimately, navigation is just one piece of the puzzle when thinking about route optimization. There are a variety of additional factors to consider besides GPS navigation. Some include vehicle performance, digital document management, and transportation management.

The trick is to look for a platform that integrates metrics across all of these points, providing clear and seamless access for teams.

With a contactless fleet management in place, all stakeholders—including drivers, back office teams, warehouse managers, and customers—can work together to collaborate and move items across a supply chain.

A true contactless fleet management solution can enable a variety of game-changing benefits. Let’s take a look at a few of them.

Digital Transformation

By implementing contactless fleet management, companies can evolve beyond manual, paper-based processes and leverage modern digital workflows. The result is a system that is far more operationally efficient, resilient, and cost-effective—and one that’s more environmentally conscious.

Data Sharing

By collecting, processing, and analyzing data, companies and partners can have an easier time recognizing trends and improving shipping practices. For example, data can be fed into AI models to learn better routes. At the same time, companies can use onboard telematics to understand vehicle performance across entire fleets or to compile sustainability data.

Profits

Ultimately, a contactless fleet management system will optimize and enhance a shipping operation. It’s that simple.

Shipping companies like yours can use contactless fleet management solutions to identify areas of weakness and work to make things better. With the right approach, you’ll end up with happier drivers, happier customers, and a healthier bottom line.

Learn more about Vector’s approach to contactless fleet management.

This post was written by Justin Reynolds. Justin is a freelance writer who enjoys telling stories about how technology, science, and creativity can help workers be more productive. In his spare time, he likes seeing or playing live music, hiking, and traveling.