Distribution and Consumer Goods
Route Optimization
Transport and logistics

The Role of Route Optimization in Modern Supply Chains

Are you wondering whether route optimization software can help resolve problems in modern supply chain management? This blog answers your question and helps you asses whether route optimization software is the solution to enhance operational efficiency. 

The supply chain is an entire network of companies involved from the beginning to the end, meaning from the processing of the raw materials for the product to delivering it to the customers. Supply chain management is an essential process to optimize the entire production and delivery process. An efficient supply chain leads to lower production costs and higher profits. 

If we look closely, the area that needs to be worked upon while optimizing the supply chains is the transportation required to transport the raw materials or finished products from one place to another. This is where most of the time, resources, and energy are invested, and it can make the entire production process extremely long or perfectly efficient. 

For logistics managers who believe in this, then supply chain route optimization is a perfect solution. It can help you consider various aspects to ensure timely and effective delivery, like multi-stop deliveries to handing the parcel to the right customer. 

Understanding Route Optimization in Supply Chain

Supply chain route optimization is the process of planning and executing the most efficient route to deliver the product from one place to another, like from supplier to customer. 

It is software that provides the best route to the driver after considering all the real-life factors. These factors include delivery time windows, driver schedules, traffic conditions, fuel costs, and the shortest path. 

Before the introduction of route optimization software, dispatchers had to create routes with pens, papers, maps, whiteboards, spreadsheets, and their acquired business knowledge. Things have been extremely simplified after the introduction of route optimization software. 

With the introduction of route optimization in supply chains, managers can minimize delivery costs and time, improve last-mile delivery efficiency, and increase customer experience by delivering the product quickly within the estimated deadline. 

How Does the Route Optimization Software Works?

Route optimization software in supply chains utilizes a bunch of complex algorithms that examine all the potential routes to reach from one place to another. From all the available options, it considers the real-time factors and chooses the best and shortest path to reach the destination. 

Let’s see how it works: 

  1. The optimization process begins with gathering information about the delivery locations, delivery windows, and number of orders to be delivered. 
  2. After the information is fetched, the software develops an initial plan with a path with reduced distance and travel time. 
  3. The plan is enhanced by modifying the sequence of stops, vehicle assignments, and routes. 
  4. The software provides a route plan that describes the sequence of stops, expected arrival times, and optimized routes that each vehicle can take to complete the deliveries. 
  5. In case of unexpected events, changes, or circumstances, the route is reoptimized to enhance the last-mile delivery process. 

The Role of Route Optimization in Solving Supply Chain Problems

Route optimization, like Nomadia’s TourSolver, utilizes 150 parameters for the AI optimization engine to create a suitable route. Let’s see what role an optimization route plays in improving the supply chain by looking at the challenges: 

Inefficient Use of Resources  

Ineffective route planning can lead to inefficient resource use, such as increased fuel consumption, driving work, and equipment utilization. All of these factors can increase operational costs and decrease the efficiency of the supply chain. 

Route optimization software predicts the shortest, most direct, and most efficient route, which helps optimize resource utilization. It reduces the fuel consumption and wear and tear of the vehicles by creating the best path comprising all the stops a driver has to make. 

Besides, it can even lower driving hours, eliminate the need for working overtime, and reduce driver fatigue. 

Routing Complexity 

As we progress to a larger scale, routing complexity significantly increases. A manager has to oversee and manage a large number of vehicles or delivery fleets and delivery networks. Besides, a manager has no control over sudden traffic, weather, and other challenges that could affect the delivery. 

However, routing optimization software can handle everything seamlessly. Whether you have a delivery fleet of 10 vehicles or over 100 vehicles, it can easily scale up as per your demand and craft an optimized route for every vehicle with reduced costs and maximum coverage. 

The sophisticated algorithms are designed to assess all the real-time conditions and then optimize the routes. Besides, they are capable of re-optimization if anything suddenly comes up. It will redirect the route and ensure safe and secure delivery. 

Lack of Visibility 

Another common problem that supply chain managers face is a lack of visibility. The managers do not have complete knowledge of the transportation network, which can lead to unexpected delays, missed opportunities, and higher logistics costs. 

However, this isn’t the case with routing optimization software. It serves as a manager’s right hand to provide the visibility they require and even simplifies their work to the greatest extent. Besides, it can even inspire managers to improve operational efficiency and profits. 

Rising Transportation Costs 

This is one factor that increases the cost of products. Fuel, maintenance, and other operating costs pile up, and they can sometimes cause businesses to report losses. Rising transportation costs aren’t something we can control, but we can control how we utilize all the resources that can reduce the overall transportation cost. 

This is where supply chain routing optimization comes to the rescue. The software predicts the shortest route with less crowd or traffic, which automatically leads to less fuel consumption and lower transportation costs. 

Increasing Customer Demands 

Customers’ demands for shipping and delivery have significantly increased with the introduction of eCommerce and other digital advancements. Customers in both the B2B and B2C sectors expect deliveries to be faster, better, and more secure. Besides, they want real-time updates about the shipping status and easy package tracking. 

Meeting the customer’s expectations is essential to keeping the business afloat during highly competitive times, and investing in route optimization can prove to be a smart move. The software can provide the best possible route by considering all the real-time constraints. Besides, with real-time monitoring and tracking, businesses can provide their customers with an estimated time of arrival (ETA) and improve their customer service. 

Shortage of Drivers 

Another significant problem the supply chain faces is a shortage of drivers. Most of the drivers have left the industry due to the introduction of stringent regulations, and this scarcity can affect the delivery schedules. It can lead to delays, which customers don’t like, and increase the logistics cost, which businesses don’t like. 

Unlike usual, the software cannot resolve the driver shortage. However, it can significantly improve the productivity and working conditions of drivers. You can utilize this to increase the number of drivers in your team and seamlessly plan deliveries to meet the rising demand. 

Wrapping up, 

Route optimization software can significantly improve efficiency and lower logistic costs in your supply chain operations. However, having any route optimization doesn’t work; you need reliable, robust, and advanced supply chain route optimization software. A that can evolve with your business needs and help you achieve your goals. Like Nomadia’s route optimization software, TourSolver. 

TourSolver is supported with advanced features, like an AI optimization engine, automated scheduling according to real-time slots available, visualization of onboard mobile stocks, and decision-making assistance. The software can easily configure responsibility transfers, such as from warehouse to warehouse, multiple deliveries, and return management. Schedule a demo and experience the advantage of robust software in your operations today.