Table of contents
- Coping with rising logistics costsÂ
- Finding the best transport route: approaches    Â
- How route optimization software helpsÂ
- Reduced yet improved planning
- Delivery route optimizationÂ
- Enhanced fleet useÂ
- More reliable transport
- Predict the implications of business growthÂ
- Final thoughtsÂ
Coping with rising logistics costs
In 2024, logistics costs account for up to 20% of product prices and up to 45% of total costs, depending on the business type and activity. They can make up as much as 30% of delivered costs. This is where route optimization software becomes useful.
Your goal is to deliver products on time while increasing profit and efficiency. With driver shortage and the rising cost of fuel, this is no easy feat. Route optimization software considers several factors to provide drivers with the best route.
The optimization software market is expected to reach $6.99 billion in 2024. It is predicted to increase by 14.7% a year to $13.87 billion by 2029.
Finding the best transport route: approaches
When the number of locations to visit increases, so do the routes. There are three approaches to solving this problem: by brute force, the “nearest neighbor,” and the “branch and bound.”
The first approach involves searching for and determining all possible routes. It finds the best route associated with a lower cost or the highest benefit.
The “nearest neighbor” is based on an algorithm that chooses the nearest unvisited node as the next stage in finding a solution.
Finally, the third approach revolves around “divide-and-conquer.” It divides the task – finding the best route – into subtasks, eventually finding the best route and rejecting the path with unwanted results.
How route optimization software helps
Route planning software finds the best route among all those available, choosing the one that comes closest to achieving the company’s customer service and financial goals.
It assesses customer orders, operational constraints, and the road network. The simplest optimization approach would aim to make sure items are delivered regardless of the cost or at the lowest possible one. More complex route optimization involves delivering the most profitable orders in the face of limited delivery resources, such as same-day delivery. The value of this market is expected to exceed $13 billion in the US by 2025.
Reduced yet improved planning
Route optimization software increases route accuracy while reducing the amount of time spent on planning transportation, sometimes even from hours to minutes. You can connect your vehicle tracking systems to this software and other real-time routing services to examine data on actual and planned activities. This draws attention to areas where planning parameter adjustments could cut costs.
Delivery route optimization
Route optimization software establishes a viable route sequence that guarantees the lowest fuel consumption and mileage while still meeting all of your customer, regulatory, and driver requirements. It does that by comparing the distance between the warehouse and each delivery location.
Enhanced fleet use
Scheduling and routing software utilizes the full potential of your fleet’s resources, reducing logistics costs. With this software, you can increase the number of drop-offs on each trip by streamlining their order. This does away with extra miles and reduces empty running.
More reliable transport
Advanced route software places the focus on ensuring you execute your delivery plan. You can use one fewer truck by adding three more drops to each route, for example. Route optimization algorithms determine the specific timings and distances between each delivery, which also account for driver meal breaks, the additional time needed to unload products and the vehicle’s maximum speed.
Predicting the implications of business growth
Route optimization software can help you evaluate the financial implications of business growth or use alternative logistics strategies with historical scheduling and routing data. What’s more, the software uses your business’s data to form projections, making sure that cost and operational reductions are unique to your company, not based on industry averages.
Final thoughts
Route optimization software makes various aspects of transportation planning easier, and an increasing number of businesses are using it. You can customize your software of choice based on your company’s goals and needs.
