How fast is fast? In the last-mile delivery world, fast can mean a huge competitive advantage (think Amazon). Alternative delivery locations are beneficial, but various studies suggest that home deliveries are still the most preferred method of receiving packages.
Adding people and vehicles to speed up the last mile is certainly helpful, but optimizing routes by implementing technology solutions is the way to go in terms of cost savings, efficiency, and improvement in times.
Route optimization uses analytics and computer algorithms to identify the most efficient delivery route possible based on such variables as traffic congestion, distance, weather conditions, number of packages in a given area, and more.
A number of companies offer such tech solutions. So, how do you decide? A few general tips to get you started:
1. Understand what and why you need the solution
2. Clearly state your needs and requirements in an RFP
3. Ask lots of questions and check references
4. Pick a partner, not a vendor
5. Establish and measure KPIs
6. Maintain regular updates and communications
7. Test, tweak, and then implement either all at once or by specific region
The results, or return on investment, one can expect by implementing route optimization tech solutions will vary from one company to the next. Perhaps one of the biggest undertakings in this space has been by UPS. On-Road Integrated Optimization and Navigation (ORION) began its rollout in 2012 and fully completed deployment in 2016.
According to the company, ORION helps UPS drivers to determine the optimal way to deliver and pick-up packages within a set of stops defined by start time, commit time, pick-up windows, and special customer needs.
UPS states that the system has saved around 100 million miles per year since its inception, which translates into 10 million gallons of fuel and 100,000 metric tons of carbon dioxide emissions. Moreover, reducing just one mile each day per driver can save the company up to $50 million annually.
According to transportation management system (TMS) provider, MercuryGate, route optimization capabilities can save up to 30% on fleet expenses, allowing users to leverage optimization to increase profitability.
Like all good adopters of technology, UPS did not stop innovating its route management tool once ORION was implemented. For example, in 2019, UPS added UPSNav functionality to ORION, which provides detailed turn-by-turn directions to guide drivers to specific drop-off locations such as loading docks or entrances that may not be immediately visible from the street. Most recently, Dynamic Optimization was added. Dynamic Optimization recalculates individual package delivery routes throughout the day as traffic conditions, pickup commitments and delivery orders change.
Taking advantage of route optimization solutions has never been easier. Thanks to software-as-a-service (SaaS) solutions, a number of tech companies have entered the route optimization space, including FleetZoo, Wise Systems, and Urbantz. Within many TMS, route optimization is part of the offering as well.
These companies, as well as others, are introducing such capabilities as artificial intelligence and machine learning to further improve optimizing routes. UPS’ Dynamic Optimization takes advantage of artificial intelligence whereby the system is constantly ‘learning’ based on regular data.
Redwood Logistics describes it best in a blog post on the topic, “Route optimization is about finding the most efficient, fastest order for stops while minimizing drive time and mileage. Artificial intelligence is always evolving, and with it, route optimization is becoming a streamlined process.”
Cathy Morrow Roberson is President of Logistics Trends & Insights LLC, a logistics market research firm. Cathy can be reached at croberson@LogisticsTI.com
This article originally appeared in the March/April, 2020 issue of PARCEL.
