What Is Route Optimization Software and the Benefits?

MercuryGate Blog - Freight Category

Route optimization software enables shippers, carriers, and logistics service providers (LSPs) to understand operations, reduce inefficiencies, and gain additional ROI when the capability is embedded within a transportation management system or platform (TMS or TMP). Effective route optimization programs rely on data and offer actionable insights that go well beyond the limitations of manual route optimization, building additional competitive advantages through automation in TMS functions.

Is Route Optimization Software an Advantage or a Basic Shipping Requirement?

An organization’s use of route optimization software was once viewed as a competitive advantage. For those shippers, LSPs, and carriers who had the resources to optimize routes, they had access to more information and better tools to plan trucking schedules, manage docks, and generate estimated time of arrival. However, the necessity to optimize routes more efficiently grows increasingly important due to the rise of e-commerce and fierce retail competition. The use of route optimization in and of itself is now not enough. Route optimization capabilities within a TMS must enable transportation professionals to proactively work to identify new opportunities to speed shipping, reduce costs, and continuously optimize operations in real-time. According to SupplyChainBrain, route optimization capabilities can save up to 30% on fleet expenses, allowing users to leverage optimization to increase profitability. In addition to reducing costs, there are additional benefits realized through route optimization software.

Advanced, Route Optimization Empowers Shippers, LSPs, and Carriers With Strong Benefits

Advanced route optimization considers internal and external data to continuously manage freight from origin through the destination. Route optimization users no longer need to hope that freight moves according to plan, as the route optimization capability within the TMS will validate freight’s location, identify potential risks, generate reports to uncover insights, and provide analytics that allows the user to proactively manage or prevent risks. In other words, freight self-optimizes, and self-optimization is the quantum advantage of modern route optimization.
Anyone could look at a series of trucks and figure out if winter weather will affect lanes. But, imagine the possibilities of letting a computer, powered by the latest-generation machine vision technology, analyze potential lanes, identify patterns in weather, isolate the risks, notify supply chain partners of potential delays, and even generate a new order for fulfillment to prevent the order from missing an on-time delivery. That’s a powerful capability.

How Does Route Optimization Play Into In-Transit Changes to the Route?

Route optimization allows for the changing of orders while in transit to avoid missing a delivery—a critical component of the omnichannel, everywhere supply chain. The diverse capabilities of artificial intelligence mesh well with route optimization software protocols.

For example, UPS is preparing to roll out dynamic routing on parcel deliveries, providing a real-time means of interacting with drivers to reduce delays due to weather, traffic, changing customer orders, available drivers, construction zones, and loading docks not visible from the street, says Paul Sawers of VentureBeat. This level of dynamic optimization provides for ongoing improvements in freight management while in transit.

The potential for improvement goes beyond just delivering packages on time. According to Martin Jacobs via Medium:

“Artificial Intelligence (AI) and its cognitive domain Machine Learning (ML) are expected to be leading technologies in the mitigation of climate change[…] Particularly the logistic sector, which has its most substantial emission factors within Scope 1 and Scope 3 via upstream and downstream activities and that accounted to 27% of the total EU-28 GHG emissions in 2017, is under pressure: If the 2050 target for this sector (Decrease of emissions from 1990 standard by two thirds) shall be fulfilled, more efficient (technological) solutions for carbon neutrality need to be introduced. Especially, because Transport & Logistics is the industry with the most negative development of carbon emissions since 1990.”
Consider that route optimization software may also be defined as the process of using advanced technologies to understand freight movements and reduce its total costs. Therefore, the effects of route self-optimization software are applicable to reducing the carbon footprint of a TMS user. The takeaway is simple: route optimization allows the user to totally leverage all resources.

Deploy an Advanced TMS With Route Optimization Capabilities by Partnering With MercuryGate

An advanced TMS must include route optimization software functions. With companies around the globe looking to differentiate their services and deliver more freight, faster, and without any exceptions that cause a missed delivery, TMS users need dynamic routing capabilities that leverage real-time information.

Find out more about MercuryGate delivers on that promise

Jim Davis
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5 Responses

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