Vehicle Routing Problem Decoded: What, Why and How

Vehicle Routing Problem Decoded: What, Why and How

Vehicle Routing Problem is a constant in the last-mile delivery business. It happens due to the delivery and resource constraints planners face while coming up with minimum-cost vehicle routes. Solving it helps them reduce operational costs and enhance the quality of delivery services. 

With the massive spread of COVID-19, delivery businesses are handling larger delivery volumes. The sudden increase in deliveries has made the Vehicle Routing Problem quite challenging to solve. 

What is a Vehicle Routing Problem in Logistics? 

Vehicle Routing Problem focuses on determining optimal routes for a fleet of vehicles given operational constraints like time window, route length, etc. It helps fleet managers plan routes that can maximize the efficiency of the fleet and minimize the last-mile delivery costs.  

VRP is a generalization of the Travelling Salesman Problem (TSP). TSP attempts to find the shortest route for the salesperson or vehicle to visit all destinations and return to the starting point.

Example: 

A delivery business has to complete 2000 deliveries with 40 vehicles a day. How do they assign the deliveries to drivers and plan the order of visits? They should plan routes taking into account various delivery constraints like fuel consumption, traffic jams, time windows, and so on. 

Improper handling of these constraints makes last-mile delivery operations complicated and costly. 

Why is it a challenge to solve the Vehicle Routing Problem? 

In real-life scenarios, Vehicle Routing Problem is not about providing the shortest possible route. There are many other factors that contribute to planning the optimized routes. The complexity in VRP arises due to the presence of multiple constraints and its unpredictable nature. 

Massive computational effort required 

Vehicle Routing Problem requires a massive computational effort. 

Even experienced dispatchers and drivers cannot solve it manually as various factors contribute to it. 

Unpredictable factors 

There are uncertainties attached to real-life route planning that makes VRP very hard to solve. They can be changing customer demands, traffic jams, unexpected roadblocks due to maintenance, and so on. 

Why is it crucial to have an effective solution for VRP?

The primary reason for an effective VRP solution is to reduce logistics costs. 

The other reasons are: 

  • VRP helps businesses attain sustainable growth 
  • It enhances the productivity and efficiency of the fleet
  • Beyond saving time, it increases customer satisfaction, thereby boosting profit rates  

What is the most effective solution to address VRP? 

There are three solutions to address VRP, but only one among them is the most effective. 

  • Manual solving: Manual solving is the most inefficient method to address VRP. Solving VRP is a nerve-wracking task and even experienced fleet managers find it tough to solve. 
  • Preset Solvers: Preset solvers cannot address VRP as it can only solve some basic constraints. It can suit academic settings that require in-depth research and is not ideal for real-world business settings. 
  • Route Optimization Solution: Route Optimization solution is the most effective tool to tackle VRP as it considers real-world constraints. 

What kind of route optimization software should you choose to solve VRP?

What kind of route optimization software should you choose to solve VRP

Businesses should prefer a route optimization solution that has the following features:

  • Ensures the safety of deliveries 
  • Has an updated and adaptable set of algorithms 
  • Is economical and scalable 
  • Enables multi-stop route planning and multi-vehicle routing

The next-gen solution

Negligible dependency on human intelligence: Using Advanced algorithms  

Make sure that you buy a route planning software that requires minimum human support. An effective route optimization solution provides automated route recommendations based on the type of vehicle, vehicle capacity, traffic, stop duration, delivery time, among other constraints. It helps fleet drivers save their fuel and reduce driving time. 

Intelligent allocation capabilities 

An accurate parcel sorting capability is essential for fleet route optimization. It helps fleet managers intelligently allocate orders based on their priority.

Automatic rerouting capabilities 

On-demand orders are testing the delivery capabilities of logistics businesses. New orders are added every second, minute, and hour, therefore rerouting is necessary to manage, reschedule and reassign on-demand deliveries. 

A capable route planning software dynamically reroutes orders as and when new orders are added. This automatic rerouting ability helps fleet managers in handling their on-demand orders optimally. 

Superior Geocoding capabilities

Confusion in addresses can lead to delayed deliveries. Competent geocoding capability refines and converts inaccurate addresses into precise geographic coordinates. This capability ensures on-time deliveries for fleet drivers.  

Real-time tracking

Monitoring drivers and their vehicles is important for delivery businesses as it aids in preventing delayed deliveries. A real-time tracking feature helps fleet managers to analyze the delays affecting the ETA (Expected Time of Arrival) of deliveries. It helps them re-adjust the routes instantly and also keep the customers informed. 

Proof Of Delivery

The current COVID-19 situation has increased the use of Electronic Proof of Delivery (E-POD).

Paperless and zero-human contact is essential to enable contactless deliveries, and e-POD does just that. Drivers need not handle stacks of paper and can instead verify deliveries quickly by taking photographs of the order.

How does route optimization software solve the Vehicle Routing Problem?

How does route optimization software solve the Vehicle Routing Problem?

Route optimization boosts the efficiency of delivery businesses in the following ways: 

Helps Manage resource limitations

Logistics businesses face resource constraints, especially during this COVID-19 situation. The best way for logistics businesses to manage this is by using route optimization software. It enables them to quickly plan optimal routes and accommodate more deliveries even if they have limited drivers or vehicles.  

Saves fuel on multiple routes and multiple vehicles 

Vehicles attending to multiple stops spend more time on the road, leading to increased fuel consumption. Route optimization helps fleet drivers save money, time, and fuel

Helps reduce last-mile costs 

The primary aim of all delivery companies is to reduce their last-mile delivery costs. Route optimization software helps reduce various last-mile delivery costs like idling and maintenance costs. 

Enables on-time deliveries 

An efficient route optimization solution helps fleet drivers to reach different destination points as quickly as possible. 

Enables better customer experience 

The efficiency of drivers determines the quality of the delivery service. Route optimization software helps fleet managers track drivers’ performance and suggest changes required so as to enable a better customer experience. 

Check out Casestudy : How Locus enable better customer experience through with route optimization.

Conclusion 

Route optimization software helps delivery businesses to adjust their routes instantly and meet unanticipated requests from customers. It efficiently solves the Vehicle Routing Problem and therefore enables a great customer experience. 

Locus’ Route Optimization software provides the best features that can solve the Vehicle Routing Problem effectively. It enhances customer experience and reduces your logistics costs.

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