Most transporters constantly try to improve their efficiency and productivity as they grow in order to maintain or reduce their costs and expenses. In order to grow and gain more customers, many transporters would choose to increase the number of vehicles and the amount of manpower available by hiring more people, only to realise that it is highly unsustainable as a growth strategy, considering the tight labour market and high costs involved.
Not only that, there will come a point in time, where increasing manpower and resources like vehicles slows down growth as the current resources are not optimised properly and that there is a lot of redundancy. When this happens, vehicles end up underutilised and excess manpower doing nothing. One of the many ways to improve efficiency and productivity is to maximise available resources by using route optimisation.
Route optimisation is the process to determine the most efficient and productive route. For the last mile logistics, this is done through taking into consideration various factors like delivery time slot of the job, job quantity, number of drivers, number of vehicles, types of vehicles etc.
There are many route optimisers in the market that are readily available to help process and calculate the most efficient route for a transporter. However, it is not always clear what logic the route optimisation is based on or how it calculates the most efficient route. Most route optimisers are based on complex mathematical problems which have been researched on extensively like the Travelling Salesman Problem (TSP) or the Vehicle Routing Problem (VRP).
In this article, we will be simplifying one of the famous route optimisation problems, Vehicle Routing Problem (VRP), why it is important to productivity and how it can be solved.
To conclude, there are many solutions in the market that can help solve VRP. A company should best choose the one that suits them best. The three solutions presented in the article are not mutually exclusive. It is common practice for many companies to pair a Route Optimisation software with a Transport Management System which enables them to calculate the most efficient route but also allows them to execute on that route through efficient job and driver management.