No matter which sector your company belongs to, there is always logistics involved. It is inevitable for a business to use vehicles (or a huge fleet of them) to move things — whether it’s picking up things from suppliers, delivering products to customers, or transporting company-owned belongings from one office to another.
The so-called vehicle routing problem (VRP) is one of the things addressed by the mathematical formula, routing optimization algorithm. VRP refers to the issue concerned with coming up with optimal routes from at least one point to a number of customers, given a specific set of constraints (e.g. Amount of vehicles and drivers available). The economics behind routing revolves around reaching the target customers and transporting all the deliverables while incurring the least amount of cost possible.
If your business doesn’t plan on reducing the size of its fleet anytime soon, resorting to route planning is a wise option if you want to economize logistic operations. Here we tackle seven ways how this method can help your company save money.
Decreased fuel expenses
One of the most obvious and most immediate advantages of taking route planning seriously is the decrease in fuel costs. Bear in mind that as your company’s drivers spend more time on the road, whether because you’ve chosen longer routes or the road they need to travel can’t be easily navigated, the more fuel they are wasting.
Once you pinpoint and employ better routes, less driving — and subsequently, lesser fuel — will be needed.
Decreased maintenance expenses
Traditionally, fleet managers subject their vehicles to a regular preventive maintenance (PM) every 3,000 miles. This holds true only for automobiles that are used for “severe” duty. By cutting miles traveled by your vehicles via routing optimization algorithm, you can now do PM practices less frequently, therefore lowering maintenance expenses.
Several accidents happen along the road. The driver’s unfamiliarity with the thoroughfare he is traversing, and the presence of people driving under the influence are just a few of the factors that may lead to unfortunate incidents. Lessening the driver’s time on the road by optimizing the route plan will contribute to increasing their safety.
Decreased overall expenses
Not only can your company benefit from route planning through decreased fuel and maintenance expenses, but other costs will also be reduced leading to a significant decline in your overall expenses. These “other costs” include insurance claims, incident-related expenses, and wear and tear among others.
Increased driver productivity
As already mentioned in the previous items, clever route planning can ultimately lead to decreasing the time spent by drivers on the road. With this situation, you can guarantee an increase in their productivity level, given that the time and energy they spend driving vehicles and delivering or picking up goods are optimally used.
Increased company morale
When a department or a company reaches its target and fulfills its obligations successfully, there will definitely be an increase in the morale of the employees. By simply using a routing optimization algorithm, you can accomplish the tedious task of transporting goods without incurring too much cost. Ticking this item off your business’ to-do list will leave a great impact on your employees.
Route Optimization Consultants offers access to routing optimization algorithm that can help your business save money. Contact us and find out how!