Don't leave money on the route planning table
Posted by Dieter Roman on 02/12/2016
You, as a C-level executive, are always trying to find ways to make your company more efficient. Here is a possible quick win.
A lot of organisations still depend on and have trust in their highly competent and experienced planners, who make daily route plans based on experience and best guesses.
We see that a lot of logistics companies are leaving money on the ‘planning’ table by blindly following this daily routine.
But combining your planners’ expertise with route optimization algorithms is by far more efficient and will end up in significant cost savings. Sounds interesting, no?
What’s your business model? Are you picking up and delivering orders to several customers on a daily basis with a fleet of trucks? Then your logistic quest is clear: which locations have to be visited by which truck, and in which sequence, in order to optimize transport costs.
Sounds pretty easy. But as always there is a (big) gap between the theory and the reality. In the real-world route planning a lot of additional constraints arise and should be taken into account when planning your routes. Some examples:
- Specific pickup-and-delivery requirements
- Accessibility of locations
- Variable time windows for specific locations
- Consideration of stop and service times.
- Multiple cost drivers
- Dynamic rescheduling
So is your companies’ route planning still a manual process, where your planner designs routes based on customer knowledge, experiences and gut feeling?
This could work of course and it apparently it does (to a certain level) as you are still in business. But...
How is your logistics department performing in comparison with the competition?
- What savings could be realized?
- Can you compare different route scenarios?
- Do you meet your customer service levels ?
- Are you savings checked in daily basis?
The number of choices and business specific constraints that need to be considered while puzzling to make a route plan is huge, making it nearly impossible for any human being to solve your daily routing puzzle close to optimal.
“Humachinize” your planning
Route optimization software is a powerful tool for automatic route planning, but let’s be realistic: it seems unlikely that they can fully replace your planners’ experience and expertise. The synergy arises by using a combination of both: an interactive planning process, with the possibility to manually adapt an optimized plan and to re-optimize after adjustments have been made. This is what this may look like:
- The route optimizer provides an optimized plan, where your giant route puzzle is solved automatically within minutes, using state-of-the-art optimization algorithms.
- The planners assess the optimized plan and make minor adjustments based on expertise.
- The route optimizer continues optimizing, accounting for the changes the planner has made.
The majority of the planning effort is done automatically by a route optimization tool, and the planners expertise is called in only when needed. This will allow your planners to save time, that in turn can be invested in improving other planning aspects, e.g. informing customers timely when a delivery is late, coordinating with warehouse and production planning, tackling last-minute customer requests…
When companies swap from a manual planning to a route optimization tool double digit savings could be realized. Savings that give you chances in reinvesting and growing so you will be ready for a bright future and for the pole-position in your industry.
We strongly believe in the combination of the best of both worlds:
a state-of-the-art route optimization tool and human expertise.