What is Route Planning?

Route planning is the process that determines which orders get delivered on what routes and the sequence of delivery. It may or may not include route optimization.

For example, the planning process may involve manual assignment or sequencing of stops on a route where the goal is to simply get orders on routes. Route optimization is the process of evaluating the potential combination of options and constraints to produce a plan that makes the most effective use of the fleet resources.

Today, the process involves using route optimization technology because of its ability to more extensively and quickly determine the most effective route plan. Route optimization technology employs algorithms and other techniques such as artificial intelligence or machine learning to create the best results.

Route planning using route optimization software reduces planning time by automating the route creation process. Rather than manually creating routes and assigning deliveries to routes, algorithms take over the process.

As a result, routes that may have taken hours to build are created in minutes or even seconds. Planners can then review the routes that were automatically created for exceptions – a much less time-consuming task than manually building them.

Reducing planning time has many benefits. The shorter the planning time, the longer the order acceptance cut off can be.

For example, if the planning time was reduced from 3 hours to 15 minutes, order acceptance time for deliveries on the routes to be planned would be increased by 2 hours and 45 minutes.

Less time spent planning can also result in less resources required to plan or changing the role of the planner to focus more on analyzing plan performance and working on continuous improvement of the planning process resulting in greater productivity.

Planning routes is critical to improving financial performance and the customer experience. The planning process not only improves daily delivery performance but helps to determine the best delivery strategies to implement and the potential impact of changes to the business.

Many organizations also use routing software as part of their continuous improvement programs to identify areas where changes to processes, policies and driver behavior for example, can lead to significantly reduced costs and dramatic improvements in customer service.

Static routes, also called master routes, have fixed schedules where the sequence of stops on a given day remains the same regardless of order mix and volume. Dynamic routes are created based on the order mix and volume.

The route path and stop sequence will be unique to that order mix and volume. Many companies have customers with fixed visitation schedules and therefore use static routes. Companies where the customer and order mix vary use dynamic routes.

Dynamic route planning is the process of creating delivery routes and stop sequences based on the customer and order mix. Dynamic routing will create a unique route plan based upon that customer and order mix.

The goal is to ensure that the orders are delivered and that the routes used produce the best financial performance for the company (e.g. lowest cost). Dynamic routing requires the use of route optimization software as it is humanly impossible to review all the combinations of route path and sequence to come up with the financially optimal choice.

Strategic route planning differs from daily planning, also known as operational planning, and has the potential to deliver significantly greater productivity by addressing more fundamental changes. In daily fleet planning, the strategies, policies, and even territories, frequencies, and routes are already defined.

The goal of daily routing is to do the best with those restrictions already in place. In strategic planning, all the restrictions can be treated as variables.

Policies, practices, capacity etc. are flexed to see what new or changed routing strategy and tactics will best address the change in demand. This approach applies to not only those fleets that run static or master routes, but also to dynamic routes because strategic route plans are about the policies and practices that dictate the daily routing parameters.

Strategic routing is also important because, as demand changes and companies look at new markets, they will need to use the solution to help predict the costs and capacity required to move forward. Daily planning supports the fulfillment process by creating routes based on the orders that need to be delivered in the same, next, or several days.

Daily planning is important because it helps ensure delivery commitments are made, minimizes costs based on the order mix, helps to address disruptions that can impact delivery (e.g., out-of-stocks or vehicle or driver unavailability). Daily planning is also important in improving delivery responsiveness (e.g., same-day delivery) and precision (e.g., one-hour time window).

Dynamic routing will produce the greatest fleet productivity and lowest operating costs. Key assumptions are that there is flexibility to assign deliveries to routes ad hoc based on the order mix and if possible, determine the delivery window on some, if not all, of the orders.

This way the route optimization software used can evaluate the greatest combination of the delivery route options to maximize delivery productivity or minimize delivery cost. Dynamic route optimization can also increase delivery capacity by increasing the orders delivered and the revenue produced per route.

Dynamic planning will produce more fleet operations cost savings versus manual or static methods. Dynamic planning creates routes that are unique to the orders to be planned.

Manual planning cannot effectively evaluate the possible combinations to create the most cost-effective plan. Static routes do not consider variations in order volumes that make static routes less cost-efficient.

Dynamic planning will increase fleet productivity because it will minimize the driving distance – and time between stops resulting in the ability to have more stops on a given route or need less vehicles thereby creating additional delivery capacity.

Dynamic routes provide the best benefit when there is a significant degree of variation in customer, order mix and size and few if any fixed customer delivery times. Dynamic routes take advantage of the variability and flexibility to maximize route productivity while minimizing route costs.

Dynamic routes are used for instance retail and other consumer service businesses and distributors of products such as building materials, electrical and automotive parts and heating, ventilation and air condition products.

Dynamic routes can reduce fuel consumption, drivers, overtime pay, vehicle maintenance, and vehicles. Because dynamic routes address all these areas, they reduce distance per stop and improve route productivity.

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