SMEs that depend on transportation, such as last mile delivery, supply chain, rental/leased vehicles, school buses, taxis/limos, etc., face many day-to-day challenges. Among the most complex ones — shoutout to fleet managers — is the ongoing struggle for fleet route optimization. Indeed, managers need to juggle driver schedules and vehicle availability, with time-efficient multi-stop route planning; in order to minimize costs and keep clients happy.
Thanks to advances in Telematics and fleet tracking systems with routing capabilities, managers can easily plan effective route optimization strategies. But, before we go to that, let’s first see what is route optimization, how it works, and how it benefits your business.
What is fleet route optimization?
In simple terms, fleet route optimization is the process of detecting the most cost-effective route for a given destination point; while taking into account all the interim stops, as well. Although it may seem easy at first glance, it’s more complicated than just finding the shortest distance on the map. That goes to say, fleet managers have to include many different factors, when they go for route optimization. These (factors) may include:
- The number of customers that are to be served, on a given day, and their locations
- A detailed plan of in-between stops
- Service windows (deadlines)
- Driver and vehicle availability/capacity
- Freight management (for supply chain and delivery companies), etc.
How does fleet route optimization work?
Typically, fleet route optimization follows an algorithmic approach. Why algorithms? Because there are too many parameters and variables to consider for the short amount of time available; at least, for the average human brain’s computational power. Simply put, one needs computer science to determine the optimal route — among different routes, and across multiple destinations.
The most difficult routing problem algorithms aim to solve is probably the Vehicle Routing Problem; usually, calculating various constraints, like traffic congestions, weather conditions, etc., to find the best way around them.
What are the benefits of route optimization?
Fleet tracking software with an integrated route feature, allows fleet managers to find the most optimal routes. In this respect, fleet route optimization not only helps improve fleet management; but it can also improve the company’s profitability by:
- Minimizing administration tasks/costs
- Increasing Return on Investment (ROI)
- Saving on fuel costs
- Decreasing maintenance costs
- Eliminating downtime
- Improving driver productivity
- Reducing the number of vehicles and drivers on the road
- Increasing the number of vehicles and drivers available
- Improving customer satisfaction
- Increasing customer retention
Strategies and techniques to optimize fleet routes
Two key routing optimization strategies
All in all, there are two key strategies fleet managers can implement when optimizing a route; yet, it’s important to choose the one that best corresponds to your fleet’s operations and, of course, customer needs. This core strategy will serve as a stepping stone to build various route optimization techniques, based on business goals. A thing to keep in mind though, is that without an integrated vehicle tracking system, fleet route optimization becomes tricky.
1. Fixed or standard routing
According to fixed or standard routing, each fleet vehicle follows the same routes, with the same set of stops, every day. Although fixed routes are all about consistency, at the same time, this consistency poses the biggest challenge for the company. Put differently, this strategy lacks flexibility and, strange as it may seem, predictability, too. As to the latter, human error is probably the most unpredictable factor of all, often causing bottlenecks in operations.
2. Dynamic routing
Dynamic routing involves planning new routes and stops, arising from different daily requests and needs. This method may include a few fixed routes as well, depending on the company; moreover, it can also include traffic data — both historical and forecasted.
If anything, dynamic routing leaves room for managers to make adjustments, whenever sudden incidents occur during the route. Therefore, fleet managers have the opportunity to leverage optimal alternatives, while avoiding cul-de-sac routes.
This especially stands for fleet companies that use a GPS tracking platform, which enables real-time dynamic routing planning. This type of software uses complex algorithms to constantly identify, analyze and present the optimal route at a given time. As a result, fleet managers can handle on-demand customer requests, streamline dispatching, and increase the bottom line.
Four basic fleet route optimization goals
As mentioned, there are some basic techniques to keep in mind, which must depend on the company’s goals. To choose the right ones, fleet managers must take into account a number of criteria, first; such as the nature and type of the business, the operations department size, the area they serve, etc. However, best practices based on common fleet business goals are as follows:
- Reducing fuel consumption by considering not only the shortest distance, but also any unexpected anomaly (traffic jams, road accidents, etc.)
- Determining the optimal number of vehicles for a certain number of jobs, thus, increasing availability to take on more jobs
- Improving service windows
- Adapting to changes in customer needs and demands
En route to profitability
Opting for fleet route optimization can have a profound effect on streamlining fleet operations and reducing costs; hence, increasing the company’s profitability. And with fleet tracking software up and running, managers can easily plan the most profitable route strategy for their fleets.