Route Optimization Meaning and Benefits for Last Mile Delivery

It takes a lot of effort to plan a delivery route. And when you don't have the right tools, it's nearly impossible to plan dozens or hundreds of delivery routes. Manual route planning takes many hours, and even when it’s done correctly, you can’t guarantee optimal and efficient routes. It begs the question: is it worth the effort?

In contrast, a more effective route plan would save fuel by ensuring the shortest routes between stops and most optimal distribution of stops along routes. 

But what exactly is the route optimization meaning for modern shippers, and what’s the best way to plan delivery routes effectively?

Route Optimization Meaning

In route optimization—meaning route planning via smart, digital processes—the goal is to have delivery drivers take the most efficient and cost-effective route to deliver orders as fast as possible within your given constraints. The process goes beyond merely finding the shortest distance between two delivery drop-off locations. In general, it is geared toward reducing the time spent driving and ensuring optimal capacity usage, taking into account a number of variables, including:

• Delivery time windows
• Driver schedules
• Distances between each stop
• The locations of the hubs and warehouses
• Vehicle load capacity in weight or volume
• Traffic congestion
• Driver speed and skill sets
• Service times for different delivery types. 

The process of manually identifying the best routes is a time-consuming one especially since it is possible to design millions of routes using just a few vehicles that each have ten stops.

Instead, you can compute the best routes in seconds with route optimization software, thus increasing the number of deliveries delivery drivers can complete each day and saving huge amounts of back-office time. 

The Importance of Route Optimization Software

For a small business with just one or two vehicles, manual route planning might be doable, though it comes with a risk of human error. If you have more vehicles than that, the process becomes much more challenging. As you add more routes and stops, it takes exponentially longer to figure out the routes.

On the other hand, a route optimization app can do the work for you by calculating every possible route for you within a short period.

Apps such as Waze, Google Maps, and similar navigators aren't the solution either. Why? because these apps are designed to provide simple point-to-point directions, rather than complicated multi-stop routes that consider a variety of factors and constraints.

Daily delivery routes involving hundreds of destinations cannot be effectively planned with tools that aren’t designed to handle complex delivery constraints and to interoperate with other enterprise systems. To begin with, all addresses would still have to be manually entered, a process that takes time and can also be error-prone. 

The Benefits of Route Optimization Software for Fleet Productivity and Efficiency 

Now that we’ve gone over the route optimization meaning, we can talk a little bit more concretely about its uses and benefits. Simply put, you can increase efficiency in your business by using the right route optimization software. It lowers operating costs, saves you time, and ultimately increases revenue.

How does it do that exactly? Here are a few of the ways? 

Delivery route execution

An efficient route planner takes into account multiple factors such as location, time, vehicle capacity, and traffic patterns when determining the best routes for your drivers. But you know what they say about the best laid plans. Should anything unexpected happen, routes need to be adjusted immediately, and drivers need to be kept informed.

That’s why smart route optimization software generates a visual representation of delivery routes, showing dispatchers, fleet managers, and drivers where deliveries are going, who will be making specific deliveries, and what updates need to be made due to real-time traffic conditions. When you’re able to visualize your routes as they’re unfolding, you can be agile and flexible when it comes to ensuring effective route execution. 

Auto dispatching 

Route optimization software eliminates the need to print out and hand off paper maps and manifests to each driver before their shift starts.

Instead, everything can be done digitally. Ideally, your software would automatically dispatch drivers on your behalf during the routing stage, giving them turn-by-turn directions as well as any instructions they’ll need to complete each delivery assignment. Drivers should also be able to capture proof of delivery via signatures, notes, and photos using their smartphones.

Reduced delivery times

Optimizing your delivery route can result in fuel savings of more than 10 percent. Route optimization means less driving time for your drivers, which results in lower fuel costs. You can also power an increase in the number of stops per day and a decrease in the amount of time taken between deliveries.

Once the routes have been optimized, the best routing solutions allow you to manually adjust routes as necessary. Human domain knowledge sometimes can't be fully incorporated into an algorithm, so manual adjustments are usually necessary. But the right system will ensure that you don’t lose efficiency by adjusting the routes. 

Continuous improvements

Optimizing routes isn't a one-and-done process. To stay as efficient as possible, delivery operations must be tracked and continually improved.

Reporting features are built into most route optimization software, allowing you to see which areas require improvement in order to reduce costs and increase revenue. Using a robust solution, you can track key performance indicators (KPIs) on service times, on-time rates, successful deliveries, idle time, customer feedback ratings, and more.

Advanced route optimization solutions enable fleet managers, executives, and dispatchers to track these metrics and run customized reports on them as needed. Having these insights can help determine where delivery process bottlenecks occur. 

Customer experience enhancements

You want to know where your drivers are just as much as your customers want to know where their orders are. That’s why route planning and optimization software should also serve as a real-time driver tracking and visibility tool, so you know wherever your drivers are at any given time.

For example, should a driver experience a delay, you and your customers should be able to see the delay in real-time and visualize the new ETA for the driver's arrival. This will reduce the number of support calls since you will be able to automatically send status updates to customers, reducing their need to reach out to your customer support team.

Businesses will continue to face increasingly complex challenges as consumers expect more from them. Without route optimization software, fleet managers will have no choice but to guess where operational inefficiencies lie and might end up operating at a loss. Thus, there’s no better time to invest and implement a robust solution than now.