A Route Optimization Primer

If you need to plan a simple route, navigation apps such as Google Maps, Waze, and Mapquest can give you turn-by-turn directions from Point A to Point B. But, if you’re planning a day’s worth of deliveries from point A to point Z, with multiple stops in between, you’re going to need a more robust solution to get it right. That’s where route optimization comes in. 

At its most basic, route optimization helps find the most cost-effective route, providing drivers the shortest distance or fastest travel time. But it’s more than that, too. Fleets can also use route optimization software to factor in several other variables, such as customer drop-off or pick-up windows, vehicle capacities, hours of service, driver schedules, average stop times, and more.

“Without the use of a routing algorithm, a route probably can’t be considered optimal, simply because there’s too much math involved for a human to do,” said Marc Kuo, Founder and CEO of Routific. “For example, for one delivery van and 57 destinations in any given metropolitan city, there is already quattuorvigintillion (that’s a 1 with 75 zeroes) possible route solutions. As you add more delivery vans, the math gets even harder.”

When Routific customer Peter Levitt, CEO for IDSAutoshred, merged three companies to form his New-Jersey-based mobile paper shredding company, the business grew exponentially. Normally, you’d expect that growth to come with increased fuel and toll costs. But Levitt made a move that ultimately defied that logic: he implemented Routific’s cloud-based software. 

As a result of improved routing, he was able to grow the business 30% but with a zero increase in fuel and toll costs. Levitt has also been able to use the software to improve customer satisfaction by meeting delivery windows, reduce labor costs by reducing driver overtime, and improve profitability by performing more stops per day. 

“I’d be dead in the water without this software,” Levitt said. “It has a great user interface and you can add and control the variables. I can drill down to a fine level of detail and I can fine-tune a route to see how it impacts overall mileage. Without the software, I don’t know if I’d go out of business, but I’d be in a whole world of hurt.”

Frequently Asked Questions

What are some of the questions trucking fleets ask most about route optimization? Software providers offer this list — and the answers:

1. How does route optimization work?

Route optimization software takes business data such as depot location, number of vehicles, working hours, and pay rates, combines it with vehicle information, such as load capacity, speed, start/end location, and fuel burn rates, and adds in information about the jobs to be completed, including location, start time windows, and job duration. 

“Route optimization is the process of finding the best routes to get your vehicles to the right places at the right time and meet a business outcome i.e., fewest miles, least fuel consumed, shortest travel time, lowest cost, and on-time arrival rates,” said Paul Miller, global product success for Verizon Connect.

As if that’s not enough, the software can also layer in information about conditions such as available roads, traffic, and accident data. 

“Route optimization takes all of these requirements and constraints and factors them against each other in many combinations until ‘better’ routes start to emerge,” Miller explained. “In just a few minutes, the system has found further improvements to identify the most optimized route for the desired outcome.”

2. How many stops per route does route optimization software support?

The answer to this question depends on which software you select. Steve Milroy, president of OnTerra Systems, developers of RouteSavvy, said the software could factor in up to 300 stops per route, with easy support for dozens of routes — and quickly. 

“It only takes a few minutes to optimize up to 300 stops. But we generally recommend that users break down their stops into smaller groups, at which point, the route can be optimized in seconds,” he said.

If you’re talking about a routing project — scheduling routing for an entire fleet of vehicles at once — Kuo said Routific could handle upwards of 2,500 stops per project. But it’s important to note that the more constraints involved, like time windows and vehicle capacities, the harder the problem gets, and the longer optimization can take. 

“We have a team of engineers and data scientists who are constantly improving the speed and performance of our routing algorithms,” Kuo said. “Many of our customers have scaled from small delivery fleets with just one to two vehicles to larger ones that have five, ten, fifteen vehicles, and we have to make sure that our software can grow with these companies.”

3. Is my fleet big or complex enough to warrant route optimization?

Jim Endres, Paragon sales manager at Aptean, said the answer to this question has evolved over the years, and it’s not just for large or fleets with complex operations anymore. 

“Nowadays, the efficiencies that can be gained compared to the cost of investing in routing software have become so compelling, it means any fleet size can benefit from routing and scheduling optimization software such as Aptean’s Paragon, even if they’re operating on a fixed schedule,” he said. 

IDSAutoshred is an example of how a small fleet can benefit from route optimization. With just eight trucks, Levitt has vastly improved the way drivers’ routes are organized. 

“By controlling the route, organizing our stops by town, and using the software to avoid certain areas at certain times to avoid congestion, we’re making more stops in less time. Before, drivers would crisscross and overlap. Now we’re organizing it and avoiding overlap,” he said. “I’m small with eight trucks, but if someone has a large fleet with multiple depots, Routific can do stuff they’d never imagine.” 

4. Do I need an IT professional to use route optimization?

While having someone on your staff with IT skills certainly won’t hurt; it’s no longer a requirement to implement route optimization. 

“Modern route optimization products are much easier to use than legacy products from the past,” said Casey Crawford, senior manager, product management for Omnitracs. “Most software-as-a service products are built with ease-of-use in mind. While IT skills are certainly helpful, having routers with detailed knowledge about delivery and service operations is generally the path to take.”

Levitt handles all the route optimizations on his own at IDSAutoshred but said an IT professional could allow a fleet to integrate Routific with other software. 

“You can use API interfaces to tie route optimization to other software, like traffic management,” he said. “Companies with an IT staff can develop those types of integrations.”

More important, perhaps, than having a wealth of IT skills on hand is committing to feeding quality data into your route optimization platform. 

“Route optimization is amazingly effective, but it requires a diligent effort to gather accurate and detailed data,” Endres said. “The first step is to measure what’s going on in your delivery operations now, so you can both drive and measure improvements.”

5. How can route optimization benefit my business?

The most obvious benefit of route optimization is reducing the number of miles driven, which in turn reduces a fleet’s most significant expense: fuel. But Milroy said major gains also come from increased productivity. 

“Route optimization allows businesses and non-profits to get more work done in an 8-hour workday. This reduces the other biggest expense of a fleet: labor costs and overtime labor costs for drivers,” he said. “Route optimization can help businesses shoe-horn extra deliveries or service calls into their schedule.”

Kendra Ensor, VP of marketing for Rand McNally, said the benefits don’t stop there. 

“Beyond fuel savings, don’t forget the soft costs that optimizing routing provides: Happier customers due to more accurate delivery times and happier drivers since they are not wasting time and precious HOS,” she said. 

This was the case for IDSAutoshred, which saw savings on labor and improved both driver and customer satisfaction. 

“Drivers used to do routing and were driving 12-14 hours per day. With Routific, I’m optimizing their route and now servicing 25% more stops in fewer hours a day. Because we’re better organizing the routes, we’ve dramatically cut down on overtime,” Levitt said. “Drivers aren’t getting frustrated by routes that don’t make sense, and by building routes that avoid left-hand turns and avoid parts of town that are busy at certain times of the day, it makes it safer and easier for them to do their job.” 

Customer satisfaction has improved, too, allowing IDSAutoshred to meet service windows and keep customers informed of a driver’s arrival time. 

“If a customer says I can only service them between 10-2, I can enter that in as a variable. I can also enter the customer’s cell phone number, so they receive an alert that notifies them of upcoming services,” Levitt said. “These features have helped us improve customer satisfaction dramatically.”

Kuo said another benefit of route optimization is the time it saves. 

“Leading delivery businesses spend just minutes planning their delivery routes, freeing up business owners and fleet managers to focus on growing their business and not having to do advanced mathematics in their head — something that should really be left to routing algorithms to do in a fraction of the time,” he said. 

Avoid Common Mistakes

While route optimization software is designed to make it easy for fleets to plan efficient routes, they should be careful to avoid these common mistakes:

Reluctance to Switch Routes

Milroy said some fleets invest in route optimization but then try to force their product to produce results that align with the routes they already run, but doing so means they miss out on the benefits of the tool. 

“By allowing the routing algorithm to do what it does best, many fleet managers find they can drive down costs by more than 10% while meeting customer expectations,” Crawford said. “Implementing new routes does require operational change, but the cost impact is often substantial.”

When fleets struggle to make the switch, Miller suggested a three-part fix: 

“First, stay focused on the outcome you’re solving for; if that metric is going in the right direction, you’re on the right path,” he said. “Second, commit to a period of implementation with a review at the end, and lastly, prepare to fine-tune the settings to achieve daily incremental improvements.” 

Adhering to Strict Appointment Times

Milroy said another common mistake is letting customers dictate strict appointment times, which is another action that can negate the advantages and savings of route optimization. Why is that the case? 

“Routes are set for specific customer arrival times with no thought for the most optimal route that reduces drive time and miles driven,” he explained. “What businesses and non-profits should do is optimize the route without those constraints, then advise customers when they’ll arrive. Businesses and non-profits are still able to tell customers an arrival time, but they’ve done it in a way that allows them to maintain the benefits of route optimization.”

For fleets focused on customer satisfaction, like IDSAutoshred, a happy medium is to factor in service windows (e.g., arrival between 10 a.m. and 2 p.m.). 

Overlooking Available Data

The more data available, the better a route optimization platform will perform. For that reason, Sean McGee, director of product management for Samsara, said it’s essential fleets not overlook critical data.

McGee said one example is a fleet’s historical data. 

“Items such as a Route Analytics report can be used to ensure whether or not your drivers are on time,” he said. “Arriving too early or too late can cause problems for passengers and customers that are counting on you to stay on schedule. Let historical data show you what adjustments are needed in your routes to maintain consistency for your riders.”

McGee said that climate is a crucial factor, too. Fleets that operate in difficult climates may not be planning their dispatch and routing in a way that considers weather and road conditions. 

“With the right routing tools, dispatchers can see live traffic and weather information overlaid on a map view of your vehicles’ locations,” he said. “They can then use this information to more efficiently route drivers to avoid road congestion or snowy and icy roads so they can get to service outages faster.”

On the flip side of the coin, when fleets fail to input data, they may be missing out on route optimization capabilities. 

Ensor said that factoring in as much information as possible will help fleets make the most of their route optimization solution. 

“Since routing can be complicated as it is dependent upon load type, truck specification, road conditions, and more, it is important to include all variables when routing,” she said. “A simple interface that asks all the right questions helps with this.”

At the end of the day, route optimization is only as good as the data available. 

“A recurring issue is the lack of data governance, such as maintaining customer service windows, latitude/longitude, and service times at the service locations. To get the most out of your route optimization software, it relies on the data being solid,” Crawford said. “Companies should invest in their data governance processes, which pays great dividends when it comes to optimization and cost savings.”

Not the Same Old Software

In the past, route optimization may have seemed overly complicated or inaccessible for smaller fleets. That’s no longer the case. With advancements in route optimization platforms, they are easier to use, more affordable, and maybe even…fun?

“People who have been in this industry a long time have come to accept that routing and logistics technology is clunky and hard to use. That’s not the case anymore,” Kuo said. “There are now modern routing solutions available to businesses that are focused on ease-of-use, and if you can believe it, some are even designed to make route planning fun.”