What Is Route Planning In Logistics: A Detailed Guide


What Is Route Planning In Logistics: A Detailed Guide

We often hear about the “changed shopping behavior of consumers”, but do we really know what constitutes this behavior? Apart from getting the right product, a customer wants a lot more, including order tracking, visibility, multiple delivery and payment options, and above all, free and fast shipping of their products. This puts additional pressure on businesses to accelerate the delivery process without increasing the shipping costs. However, it is possible only with efficient route planning in logistics.

What is route planning in logistics?

Route planning determines the delivery sequence and routes for the orders to be delivered. Here is another answer to “what is route planning in logistics?” It is computing the most cost-effective delivery route, after which a driver can cover the maximum number of stops in the minimum time possible. For example, if an eCommerce company has to deliver 50 orders on a particular day, then an advanced route planning tool will provide the sequence and route for delivery.

Importance of Route Planning In Logistics

To understand the importance of route planning in logistics, let’s take an example. A parcel has to be delivered from location A to location D. There are two other parcels with delivery locations B and C, respectively. Both B and C locations are in the way of A and D. Now, instead of assigning the deliveries to three different vehicles, the right approach is to assign the same to a single vehicle and driver to make all these three deliveries. That’s what route planning does.

Without route planning, the delivery cost would be high as it would need three delivery vehicles and three drivers. Moreover, it would also need a business to spend a significant amount of time making a list of the orders, finding suitable vehicles and drivers, and then designing delivery routes for each order. The aim of route planning is to design efficient delivery routes to decrease fuel consumption, improve vehicle capacity, minimize overall delivery expenses, and deliver a superior customer experience. 

6 Types of Route Planning

1. Multi-Stop Route Planning

Multi-stop route planning is considered for the route with more than one stop. It includes planning the delivery route covering the destinations where the driver has to stop and deliver the order. 

2. Dynamic Route Planning

To understand this type of planning, let’s take an example. A delivery driver has been assigned five deliveries in one trip. After the trip starts, one of the customers cancels the order. In a normal situation, what will happen is the driver will make a delivery attempt for the order that the customer has already canceled. It would waste not only time but also effort. Dynamic route planning saves time, effort, and cost by immediately updating the order cancellation status in the driver’s app along with the new delivery route.

3. Open Path Routing

 This routing type allows a driver to cover the maximum number of stops within the minimum time possible. 3PLs that don’t have to report back to the depot using open path routing.

4. Closed Path Routing

In closed path routing, a driver begins the trip from the depot with its final stop close to the depot. Distribution centers are the best example of this type of routing. Delivery vehicles that are loaded at the distribution center head back to the same place at the end of the run.

5. Reverse Open Path Routing

Reverse open path routing starts from the furthest stop from the distribution center or depot. The route is generated for a driver to return to the depot.

6. Depot-to-Depot Routing

This type of routing generates an optimized path from one depot to another.

How is route planning different from route optimization?

Route planning and route optimization are often used interchangeably; however, both terms are different. The former uses a pre-existing list of orders to find the shortest delivery routes cost-efficiently. It doesn’t include dynamic route planning. Route optimization takes this process to the next level by allowing fleet managers to decide multiple parameters for planning the most efficient delivery routes. These parameters could be vehicle capacity, vehicle type, driving hours, shift patterns, road restrictions, real-time traffic and weather conditions, driver performance, and more.

7 Common Route Planning Challenges

Traditional route planning approaches can make it difficult for businesses to cope with changing customer expectations while ensuring operational efficiencies. Moreover, route planning is needed in all three legs of logistics, including the first, middle, and last mile. So, now that you know what route planning is, let’s check out the problems associated with it:

1. Manual Route Planning

Route planning requires considering multiple factors, including delivery time window and delivery location. Also, for better planning, it is necessary to study past routes, measure drivers’ performance, and analyze other critical aspects. Manual route planning is inefficient, expensive and prone to human errors. Moreover, it consumes a significant amount of time.

2. Poor Visibility

Lack of visibility on consignments may result in mishandled deliveries, increased operational costs, and poor customer experience. For a business following traditional route planning practices, it is pretty challenging to have visibility on multiple parcels.

3. Increased Fuel Consumption

More vehicles on the road mean more fuel consumption, which happens with inefficient route planning. It further increases empty miles, idling time, and fuel costs. A delivery truck consumes 0.84 gallons/hour when idling.

4. Delayed Deliveries

Lack of real-time visibility on the fleet and weather and traffic conditions may result in late and untimely deliveries. Delay in deliveries directly impact customer experience and brand reputation. Approximately 17% of the customers will not purchase from a store again after one delayed delivery.

5. Planning Multi-Drop Deliveries

Consolidating different delivery orders into one is multi-drop delivery. Planning multi-drop deliveries requires a lot of time and expertise, especially when it has to be done in densely packed cities.

 6. Inaccurate Delivery ETAs

Customers’ expectations have now changed; they want to be informed about delivery ETAs, visibility on their orders, and more. Achieving this goal with a traditional route planning approach is a bit difficult.

7. Increasing Cost

Poor route planning increases utilization of resources and reduces the number of deliveries per vehicle, which contributes to increasing the overall delivery costs.

7 Benefits of Route Planning Software

Route planning, when done manually, cannot deliver accurate outputs. Moreover, it also requires a considerable amount of time and human resources. Therefore, most businesses prefer choosing route planning software for this purpose. Here are some of the benefits route planning software renders:

1. Facilitates Smart Resource Allocation

Route planning software uses technologies like AI and ML to facilitate the intelligent allocation of resources. It plans deliveries in an order that ensures maximum work in the least amount of time. Moreover, fleet managers can also interact with delivery personnel in real-time, further improving communication.

2. Contributes to Reducing Carbon Emissions

Route planning ensures more deliveries can be done using fewer vehicles, which means low fuel consumption and CO2 emission. 

3. Reduces Manual Intervention

Looking into new orders, segregating them based on delivery location, delivery time window, and other factors, and then planning delivery routes consumes a lot of time. Moreover, it also requires huge human resources. Route planning software automates the complete route planning process to save time, costs, and effort.

4. Data Driven Planning

Route planning software helps in making data-backed decisions to improve the planning process. Better planning strategies result in improved delivery productivity, driver performance, and superior customer experience.

5. Reduced Transportation Costs

An automated route planning system minimizes fuel consumption by utilizing a vehicle’s capacity completely and minimizing empty miles, vehicle idling time, and fuel consumption. All these together decrease the overall transportation costs.

6. Includes Location Intelligence

Most route planning software is backed by artificial intelligence, machine learning, and other top technologies. ML has the ability to analyze delivery success/failure to a particular location, and based on that analysis; it can auto-correct the address. With accurate address mapping, it can shrink miles per delivery which further reduces the overall delivery costs.

7. Monitor Driver’s Performance

Route planning software offers real-time tracking. You can track the driver’s exact location and ensure that they follow regulations and are on the correct schedule. With complete visibility, the software also helps in keeping drivers safe.

When Do You Need Route Planning Software

You can implement route planning software if:

You are unable to meet delivery deadlines

Failing to deliver goods on the promised date or time directly impacts customer experience and your brand’s reputation. And one of the ways of achieving timely delivery is by planning the most efficient delivery routes.

The return rate is high

As a part of customer service, almost every brand offers free returns. However, returns are expensive as they create the entire product journey from scratch. The only difference is that it is in the backward direction. Returns impact profit margins and increase operational costs. Route planning increases order accuracy, i.e., orders are delivered to the correct address and on-time delivery.

You have limited resources

Route planning software eliminates hiring a big team to plan delivery routes, send delivery-related alerts to customers, and communicate with drivers. The software automates all these processes while bringing complete transparency and visibility.

Delivery route planning is taking too much time

If you are spending a significant amount of time planning delivery routes,  it is worth investing in route planning software. While human resources can take up to hours, the delivery route planning software can perform the route planning task within minutes.

Your drivers are facing difficulties in locating destinations

Route planning software uses machine learning, which self-learns from existing data, to correct incomplete addresses. Moreover, it includes a driver application that helps drivers to manage deliveries effortlessly.

The transportation cost is high

The transportation cost accounts for 50.3% of the total operational expenses; the prime factor behind it is the increasing fuel consumption and fuel cost. It happens when the routes are not well planned and optimized. Route planning software plans the most efficient delivery routes to save time and costs.

Shipsy’s Route Planning Software: Get Started With The Best

Route planning software facilitates intelligent route planning to find the most efficient delivery routes. However, for better optimization of routes, it is imperative to have route planning as well as route optimization software in place. Route planning and optimization software offer not only intelligent route planning but also dynamic route planning and multi-stop route planning.

With the software, you can effortlessly manage the fleet for the first and last mile. The software also comes up with an intelligent load planning feature based on predefined algorithms and parameters. It utilizes a vehicle’s capacity to the fullest to maximize deliveries per vehicle, reduce fuel costs, and enhance delivery productivity. Moreover, the software also helps to improve fuel efficiency, driver performance, and more by providing performance analytics and reporting. 

Some other key features of route planning and optimization software are effortless integration with your existing WMS/ERP/OMS, 50+ 3PL integration, real-time tracking, delivery alerts and notifications, auto allocation of drivers, and automated trip creation. Once you integrate an automated route planning and optimization system, you can be sure of the following:

  • 12% decrease in transportation costs
  • 31% increase in the vehicle capacity utilization
  • 18% savings in the route planning and optimization time
  • 24% increase in the deliveries per vehicle
  • 13% increase in adherence of planned vs actual

To know how Shipsy’s route planning and optimization software has been empowering businesses, request a demo today.


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