Logistics Route Planning and Optimization: Most Important Aspects

Updated on August 08, 2024 by Alisa Cvilij

If you work in logistics, route planning should be your number one priority, along with customer satisfaction. Without planned routes, it’s not so easy to keep track of your trucks, and you may find that your delivery schedules are not as efficient as they could be.

Of equal importance is route optimization. But surely planning and optimization are one and the same, you may ask? Well, not quite. 

In this blog article, we will discuss route planning in logistics and explain how to optimize and plan your routes. We also suggest some simple changes in your logistics environment to enhance your delivery operations. 

Some of the points that will be discussed:

• Logistics route planning and optimization are also essential to saving costs and increasing revenue. Implementing the right route optimization technology should improve customer retention.
• The importance of implementing an effective routing strategy allows businesses to provide smooth and efficient services. Operating an entire fleet can be challenging. You need to ensure that the vehicles are in good condition and readily available when needed. Well-maintained vehicles improve delivery times, saving fuel and maintenance costs. 

Table of contents:

- The difference between route planning and optimization
- How does route planning and optimization work?
- Route optimization
- Route planning

Some fleet managers and business owners still plan their routes manually using pen and paper, while others use spreadsheets to speed up the process. All of those are inefficient strategies that are time-consuming and involve a lot of human error.

The difference between logistics route planning and optimization

• Route planning is the process of preparing detailed instructions for drivers to execute multiple deliveries and collections.
• Route optimization ‘fine-tunes’ the route by taking other factors into account, like roadworks and bad weather.

What is route planning in logistics?

• Effective route planning involves plotting multiple delivery points on a map. The result is the most efficient route for drivers to follow. It empowers them to avoid unnecessary detours and repeat trips. Planning routes also saves time and fuel costs and, ultimately, improves customer satisfaction.
• Planning efficient delivery routes begins with having the correct destination names and addresses. The salesperson may manually capture these or, ideally, keep them in a database. Either way, they need to be confirmed for accuracy.
• When planning a route manually, the planner needs map visibility. Using GPS technology aids the process. You can also share the GPS coordinates with the drivers as a useful tool to prevent getting lost.
• Route planning software automates this process, using satellite technology to provide destination coordinates.

Using route planning software, here would be the steps you need to plan the routes:

1. Upload your orders with order details, such as addresses, contact details, estimated ETA, and more if needed.

2. Entering driver information, drivers' availability, contact details, and working hours

3. Adding vehicle information. That could even involve vehicle capacity for efficient load planning. 

See the Track-POD example below on how easy it is to build routes! Moreover, you get single dashboard delivery management software that is easy to navigate. See some of the information that is being presented and considered within the software below.

What is route optimization in logistics?

When optimizing routes, the planner considers external factors. This includes:

• Weather and road conditions that slow down the vehicle’s progress.
• Avoiding peak hour traffic times in busy areas. 
• Using smaller vehicles for easier maneuverability on busy or narrow roads.

With automated route planning, you enter the truck capacities in terms of size, volume, and weight. This data combines satellite technology and traffic management data for optimized routes. The software automatically produces a delivery schedule for each vehicle. With improved route scheduling, you maybe able to cut down on the number of vehicles needed. And you can still deliver an excellent service to your customers. You may be able to take on more work or redirect those vehicles into another area of your business. 

Track-POD software, as an example, goes far beyond just considering order information with route optimization; it also can reflect your order types and special route parameters:

- Route optimization for pickup and delivery orders or any other delivery type;

- Reflect and build routes based on the load capacity of the vehicles;

- It allows you to build map zones to avoid any traffic, closed roads as well as reflect drivers' convenience;

- A delivery driver app that is synced with software will get your drivers the new routes INSTANTLY.

To get an in-depth view of what you get with Track-POD route planning and optimization software, check the video below:

Is route planning the most important part of logistics?

In our opinion, route planning is essential to the success of your logistics operation! Moreover, it is just not possible to handle deliveries without route planning in some sort of way. Here’s why.

Logistics management involves moving goods from their place of origin to their destination. The organization ensures a smooth operation, with customer satisfaction as the end goal.

An outbound logistics process usually involves the following:

• Receiving the stock.
• Packaging and labeling.
• Generation of paperwork.
• Loading of vehicles.
• Delivery of the goods. 

All of these play an important role, and without proper organization, things can go wrong.

The last leg of the process is the delivery of the goods. It is the leg that carries the most expense and is often disrupted by unexpected problems that are out of our control.

Yet, this is the most important part of the process. If the parcel is delayed, lost, or damaged, the customer is directly affected. Many customers take their business elsewhere if they have a bad delivery experience. 

With e-commerce business escalation, the last-mile logistics sector is currently growing at an annual rate of 23.38%. This has placed a huge emphasis on the last leg of the parcel’s journey. Last-mile delivery is relevant not only to the e-commerce sector but also to the principles of efficient delivery that apply to all areas of business. Logistics businesses must keep up with the latest trends in last-mile delivery processes to retain their market share.

• This is why careful route planning is essential for your business.

Whatever your environment, the final delivery process must run smoothly, and here is what you need to consider:

• There will always be unexpected events. But by planning the route and ensuring that the vehicles are in good driving condition, you can almost guarantee a safe and timely delivery. Validate the customers’ address details and confirm their availability to sign the POD. This will provide that extra assurance for a smooth delivery process.
• Unexpected events such as flat tires, bad roads, traffic accidents, and strikes may still disrupt the delivery schedule, impacting all subsequent deliveries. Route planning software combines with modern technology to identify unexpected incidents and circumstances.
• It will preempt many unexpected events, such as weather and road issues. Mobile phones and apps enable dispatchers and drivers to manage routes proactively. 
• The importance of route planning in building delivery schedules.

All about delivery schedules

Delivery schedules are a set of instructions that are handed to the drivers. 

Without a delivery schedule, drivers may get lost or take a slower route, wasting time. Without a schedule, there are no ETAs, and customers waste a lot of time waiting for their deliveries. This makes them irate, and they may look around for a better delivery option the next time they make a purchase.

A proper route plan makes drawing up a delivery schedule much faster. It provides all the information needed for the schedule and more. Route planning software will even compile your delivery schedule for you. It will insert the GPS coordinates automatically, along with accurate ETA estimates.

A delivery schedule contains the following information:

• Name and address of the customer. 
• A contact number for the customer.
• GPS waypoints for the addresses.
• Expected time of arrival (ETA) at the destination.

The deliveries are listed in the order in which they must be carried out. 

Managers set a list of orders along with their destinations by their services. By mapping out the potential routes, businesses can anticipate the job’s complexities. This can help boost drivers’ confidence and productivity.

It helps them determine how many customers they can handle in a day. Route planning also aims to minimize downtime and increase productivity.

Overall, the ultimate goal is to have full control of routing operations from start to finish. The planning tool allows managers to address customer concerns and improve their experience.

It can also help businesses manage their employees’ workflow, ensuring that they stay productive without compromising their well-being.

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How does logistics route planning and optimization work?

Businesses in the delivery sector can benefit from using route planners. The more they optimize the destinations their drivers pass through, the more they can save.

• These savings come from fuel costs, labor costs, and, more importantly, the increase in deliveries per day. Route planning and optimization take several parameters into account when determining the most cost-effective route. The process might seem simple on paper, but creating a route sequence is more complicated than that, especially if no technology is utilized.

It is not as simple as picking the route that has the shortest distance from points A and B.

Route managers often analyze potential scenarios. The scenarios must account for unexpected events and business limitations like vehicle availability. Advanced algorithms take business constraints, historical data, and business insights into account. Businesses also opt for outsourced providers to gain access to industry experts. This is significantly more cost-effective and guarantees optimal routes. Here are the best solutions for logistics route planning and route optimization.

Check analytics possibilities of Track-POD software, which we are sure will also make your life easier when managing all the delivery organization.

Route optimization

• Optimizing multiple stops: The route planner should display outstanding orders and notify customers about the updated ETAs.
• Setting optimization priorities: Route planners should take priority-level orders/customers into account.

Route planning

• Providing notifications: Most customers prefer notifications via text message instead of email. Either way, the planner must circulate notifications a day or two in advance.
• Sending a live-tracker link to the client allows them to monitor the progress of their order.
• Don’t provide time slots that are too vague, but do not take more than an hour per slot. It is not advisable to have customers wait half a day for delivery and miss the promised delivery window.

It is possible to administer routing and optimization manually. However, the task becomes more complicated as the business grows. It may become necessary to stay updated and then modify routes and pit stops promptly based on the latest information.

In addition, changes in the environment can affect the route sequence. In time, increasing fuel and transportation costs will necessitate route optimization automation.

Industries where route planning is necessary

Planning a route always makes sense. However, there may be exceptions. Large distribution companies that have specific retail clients make regular, large deliveries. In these cases, they don’t necessarily require a delivery plan. In this type of industry, the drivers know the routes well, and often, their truck is dedicated to one or two destinations per trip.

At the other end of the scale, e-commerce businesses deliver multiple parcels to customers daily. In this case, a delivery schedule is essential. It relieves the pressure on the driver to work out the best route and improves customer satisfaction.

Most industries can improve their delivery times with a route plan. Cold trucks, in particular, take the shortest route possible to avoid long periods of exposure to perishable stock.

In summary

Route planning and optimization are undeniably the crux of efficient logistics operations. Automation of these processes is also an important consideration if you want to remain competitive in the market. Why not give the Track-POD route planning demo a try today and take it from there?