Route optimization is one of the clearest ways to improve productivity. If, on a personal level, when we want to find the best way to get to a certain destination, it is common to use specialized software to choose how to get there in less time; On a professional level, when there is a set of destinations to serve, it is undoubtedly a necessity.
Although some ERPs provide some functionality for route management, this work is often carried out by a more or less integrated specialized module. In this article we will see the basic concepts of route optimization and how an ERP can help in the task.
Types of routes
Within route optimization there are three different problems to solve.
- Optimize the number of destinations between various vehicles . If, for example, we have a company that is in charge of maintaining automatic snack dispensers, this would be the case to know how to optimize the workload among the delivery people that I need to serve a fixed number of dispensers.
- Optimize the order of visit of the destinations of a single vehicle . This would be the case of a delivery person who has to fill the automatic dispensers with products this day. That is, how to optimize the work day.
- Optimize routes to a single destination between multiple vehicles. This would be the case of deciding among all our distributors which one is the least detrimental to reaching a specific dispenser.
The first type is an optimization that occurs during the planning phase . It is much more complex since the combinations and possibilities are much greater and also the requirements. The other two types occur during the execution of operations , representing option 2, planned development and option 3, contingencies or changes.
The concept vehicle and destination may have a different meaning depending on the industry. In addition to the example described, it could be thought that the vehicle could be a doctor and the destination a patient, a salesperson and a customer, a fiber optic installer and a home or a carrier and a delivery.
The basic route optimization process
In any case, the route optimization process can be broken down into the following steps:
1. Select destinations.
Among the possible destinations, you have to select the ones you want to serve on a specific route.
The ERP is always responsible for making the first selection from the order book, the status of each one of them in the supply chain and their contractual conditions. The more information we have, the better planning we can do since in addition to the dates we can include other information such as the competences [(for example, this type of patient [destination] cannot be served by any doctor [vehicle])
2. Place destinations on a map.
It is the task by which the selected destinations are located on a map.
Locating the position can be much more complicated than it seems, so it is a point where an ERP can help a lot by validating that data. The most natural way to do this is by address, but conflicts can occur such as locations with more than one address, name changes, use of multiple languages, or even no name.
A more direct way is to have the GPS location. Here locating the point on the map is immediate. The risk is that if the coordinates are wrong, you provide a point with no path.
The best thing would be if the ERP system has some mode of automatic validation with the route optimizer map , so that it can verify through an integration that the location is valid.
3. Choose the parameters to optimize, their relevance and their restrictions.
Normally the aim is to optimize the travel time, but other variables such as cost, load or fuel consumption could also be included. The restrictions can be geographic (limited areas), temporary (delivery commitments, maximum route times), type of cargo (dangerous goods, fragile, dimensions, weights), etc.
Here the ERP can help consolidate information that can be interpreted by the optimization system. For example, you can provide different km costs per vehicle, based on available data.
4. Execution of the optimization algorithm.
This is the brain of optimization system. The algorithm will take into account all variables to propose the best solution to the problem. Any algorithm worth its salt today must have a certain Machine Learning component to learn from past results and be able to more accurately predict travel times and estimated arrival times, which are very important for customers.
5. Visualization and validation of the result.
The optimization results are displayed on the map. The stages of the route are provided and the route map is detailed for its validation.
Once the optimization proposal is accepted, the ERP should integrate the results so that they are available in other modules.
6. Monitoring of progress.
If a mobile terminal updates the progress status of the route, the optimization system can recalculate new arrival estimates at each of the destinations and predict deviations with the time necessary to proceed with corrective and, where appropriate, informative actions.
7. Adding / removing destinations.
The optimization system must be in permanent contact with the ERP to be able to include new destinations or exclude some that will not be served. A common example of new destinations is in maintenance routes where at any time a customer can call for a new incident. Examples of removal could be either at the customer’s request or due to unexpected delays.
Dynamic update can be very profitable when destinations are spread out.
Route optimization seeks to improve operational productivity by reducing the costs generated by travel.
Although an ERP system does not directly manage route optimization, it can improve its efficiency by providing correct data, excluding non-feasible variants and providing alternatives when incidents occur.