Route Optimization: Definition

In simple terms, Route Optimization refers to the process of finding the shortest and most cost-effective route between any two points on the earth. However, there’s more to it than just finding the shortest route between location A and location B. The best routes for a business usually depend on a lot of different factors – where the customers are located, when they want to be serviced, or which driver or vehicle is needed to do the job.

Why use Route Optimization (RO) for Logistics?

It’s not quite that simple to find the shortest distance between two locations on earth, especially when there are a number of touchpoints. The number of possible ways to travel between different locations grows exponentially, as the number of places to be visited increases.

The below infographic shows the magnitude of the problem:



9 locations

The grains in 1 kg of sand



22 locations

Atoms in 20 grains of sand. Also,grains of sand of Earth, including deserts



60 locations

Atoms in the known universe



102 locations

Replace each atom in our Universe with a universe the size of ours. The number of atoms in all those universes put together is approximately this number.

With just nine locations to visit, the number of possible ways of traveling equals the grains in 1 kg of sand. When you increase the number of locations to 22, the possibility of routes increases to the number of grains of sand in the entire universe. Take the number of stops to 102 and the possibilities of the ways to travel become incomprehensible.

The route optimization software market is expected to witness a growth at a CAGR of 10.9% over the forecast period of 2020-2025. Route optimization helps drivers to complete day-to-day tasks in less time and eliminates the daily manual hours of planning with automated multi-stop route planning ability.

What does a Logistics Route Planning Software do?

Broadly defined, Route Optimization (RO) is the process of finding the most cost-effective route, given a set of specific business parameters. However, it is more complex than simply finding the shortest distance between point A and B.

What does a Logistics Route Planning Software do?

Logistics Route Optimization software can quickly test various ‘what-if’ scenarios and consider business constraints such as vehicle availability, traffic congestion, suitable rider, etc. to provide the best possible route.

Some modern decision-making platforms are using AI-based technology to solve the RO problem. Route Optimization takes historical data and real-life road constraints into account to provide optimal routes for businesses all over the world.

To get an in-depth understanding of Route Optimization and how it can help you optimize your logistics, Read More!.

With proper route optimization tools, your business could save up to 20% in mileage and improve your order capacity by as much as 100% without increasing your fleet.

Gain better ROI from your business.

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Route Optimization Constraints

Here is the list of constraints your Route Optimization solution should consider:

Real-Time Traffic Consideration

A Route Optimization software should ideally consider real-time traffic conditions to save your logistics costs, ensure on-time delivery and better adherence to key SLAs for increasing customer delight.

Order-Vehicle Constraints

Often software tends to focus on cold, hard data and ignore real life order-vehicle constraints. For instance, different categories of products such as electronics and perishables cannot be shipped together. Sometimes, a specific kind of product, say medicines can only be dispatched in a special fleet. An ideal RO software considers these order-vehicle constraints and has a better chance of helping businesses in real-world scenarios.

Data Inspection

Inspecting historical data to offer logistics insights for better decision making

Historical Data Inspection

Your Route Optimization software should also examine historical data on three levels- Riders, Customers and Time of the day.

Rider Preference Consideration

A major challenge in implementing a route planning software is resistance from the on-ground staff such as drivers and delivery agents. These teams are used to working in a traditional manner, and to change their entire operating system is a huge transformation for them. To ensure smooth implementation of AI-based routing solutions, it is important that the software takes preferences from on-ground resources to phase out the traditional system gradually rather than trying changing the entire procedure on a single go.

Importance of Geocoding

Geocoding, in layman’s terms, is the process of converting raw input data such as names of buildings, landmarks and complex addresses into precise latitude/longitude coordinates on a map.

Locus’ proprietary geocoding engine distills and converts even the most ambiguous addresses into precise geographic coordinates that can be easily identified on a map. Powered by Artificial Intelligence and Machine Learning algorithms, the geocoding engine is capable of distilling the most useful parts of the address and creating a geocode that represents each individual address correctly on the map.

To learn more about Locus’ advanced geocoding engine and make your logistics simpler with an easy address verification tool (AccuPin), click here.

Simple Route Planning

Some businesses simply assign a certain number of jobs to a rider, usually based on geography, or customer visit frequency, and need software that can figure out a route for that rider to finish their assigned work.

This kind of route planning software, i.e navigation, and turn-by-turn directions, has been traditionally used by companies. The basic form of simple route planning is built into almost every digital device that has a global positioning system (GPS)-based navigation system.

However, it lacks the ability to interact with on-ground restrictions and real-time traffic conditions to suggest the shortest journey from a time or mileage perspective.

Scheduled Route Optimization

Scheduled Route Optimization on the other hand has the ability to accept operational dynamism and complex business constraints to determine an optimized route.

Scheduled Route Optimization software accepts daily planning related data, not limited to, order details, location details, fleet details, volumetric data, etc along with operational constraints such as workload balance, rider preferences, tribal knowledge and skills, etc. to suggest the most efficient way to successfully execute the deliveries.

Why do you need Route Optimization?

Enterprises in the 21st century supply chain need technology to automate logistics activities from end-to-end in order to save time, improve efficiencies and reduce human dependency. Using advanced Route Optimization software also helps in streamlining delivery processes and optimizing on-ground operations, including shipment, transportation, last-mile delivery and reverse logistics.

Route Optimization is the method of using Artificial Intelligence technology to figure out the shortest and most efficient route to all your stops and destinations. By testing multiple ‘what if’ scenarios, Route optimization engine gives various route options according to the cost involved and the resources available. It allows you to cut down operating costs, save time, and improve workforce productivity.

Why do you need Route Optimization?

Why Locus DispatchIQ Is the Solution to All Your Route Optimization Issues?

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What to look out for in a Route planning software?

Autonomous Route Planning
Autonomous Route Planning

AI-driven route planning that can reduce errors caused by human negligence and minimize human intervention

Accurate Geocoding
Accurate Geocoding

Advanced geocoding abilities that can convert fuzzy addresses into precise geographic coordinates on the map

Intelligent Vehicle Allocation
Intelligent Vehicle Allocation

Smart vehicle allocation based on traffic, shipment, vehicle type, etc.

Cost-based Route Optimization
Cost-based Route Optimization

Considering multiple cost variants to offer the most economical route.

Optimal Fleet Mix
Optimal Fleet Mix

Offering a best-fitting fleet mix based on consumer preferences.

First Attempt Delivery
First Attempt Delivery

First Attempt Delivery is ensuring deliveries in one go, saving you storage and re-delivery costs.

Single Route Plan
Single Route Plan

Intelligent forward and reverse logistics in a single route plan by clubbing returns along with regular deliveries

Automated Escalation
Automated Escalation

Notifying authorities in case of route divergence or contingencies

Historical Data Inspection
Historical Data Inspection

Analyzing historical data such as riders’ tribal knowledge, delivery preferences, customers’ preferred time slots, etc. to plan routes effectively

Rider Preferences
Rider Preferences

Taking into account rider skills, expertise, and preferences for a smooth transition from traditional routing to AI-based route planning platform.

Powerful route automation for the smart business

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What is Real-Time Dynamic Routing Software?

What is Real-Time Dynamic Routing Software?

Rerouting on the go is a feature that is being increasingly preferred by businesses. Real-time dynamic routing software optimally handles on-demand orders along with scheduled orders. In case the orders/preferences of the customers change while the rider is out to deliver, it can change and create new routes for the rider instantly.

With routing requirements of companies becoming complex, it is of prime importance that companies choose Vehicle Routing solutions according to their needs. Solutions that operate in real-time can help plan routes intelligently to improve delivery efficiency and reduce costs.

Better results with better routes

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How route optimization helps solve the last mile problem?

How route optimization helps solve the last mile problem?

Last-mile delivery is the end-point in the supply chain, and perhaps the most important one, because this is the point where the customer and your brand interacts in person. Customer experience is therefore a top priority for businesses in the supply chain, above and beyond cutting down logistics costs and improving productivity in operations. Route Optimization helps in improving this last-mile experience and solves two of the most challenging computer science problems: the Traveling Salesman Problem (TSP) and the Vehicle Routing Problem (VRP).

However, many RO solutions don’t consider on-ground restrictions and lack the knowledge of regional elements. Advanced RO solutions follow global standards in terms of performance while incorporating local constraints, and help companies in creating a differentiating factor for their customers.

Last-Mile Delivery Challenges and Solutions

Route Optimization can help in improving last-mile delivery operations and cutting down logistics costs in the following ways:

Best-fitting fleet mix recommendations

considering business as well as ground restrictions such as traffic, complex geographies, etc.

Smart clubbing of orders

based on factors such as preferred delivery time slots, priority orders, location preference, and order specifications

Predictable and convenient time windows of delivery

for customers thereby increasing first attempt rates and higher customer experience

Electronic Proof of Delivery (EPOD)

for reducing friction with customers and digitization of last-mile delivery processes

Smart and easy-to-use mobile application

for logistics managers to monitor logistics operations, send predictive alerts on delays, vehicle breakdowns, idle time, live tracking, etc to improve both customer experience and efficiency of delivery executives

Geocoding and accurate address detection

for automated sorting processes

Reduced turnaround time for the customer

by optimizing first-mile operations, sharing locations of warehouses/distribution centers in real-time, reducing sorting times at fulfillment centers and last-mile distribution centers

How to Map Multiple Stops Using Routing and Scheduling Software?

Modern Multi-Stop Route Planning and Optimization Solutions are a lot more than chaperones for guiding shipments from one location to another. Advanced Route Optimization solutions help companies in the supply chain manage fleets better, improve driving directions, add multiple stops if required, improve workforce productivity and increase SLA adherence. RO can thus lead to saving fuel costs, additional pick-up/delivery stops, reduction of labor overtime costs and minimizing human dependency.

Route Optimization software allows supply chain players to add multiple stops on the route and cover as many delivery locations in the vicinity as possible in a single go. The software takes input data of all the locations one has to deliver in a day and sends an efficient dispatch and delivery plan, with multiple stops between point A and B for faster and more planned deliveries, making lives easier for drivers and delivery agents. Know more about Multi-stop route planning and why is it important for enterprises?

Locus’ Advanced Route Optimization Software - Dispatcher

Locus’ AI-based RO solution, Dispatcher, provides supply chain enterprises with an automated route planning solution that considers multiple real-life constraints and distribution models. It is a comprehensive solution in logistics that enhances fulfillment operations and increases consistency in transport planning, with nearly no human intervention. The cloud-based tool also facilitates GPS tracking for monitoring vehicles and providing clients with accurate and real-time ETAs.

DispatchIQ optimizes delivery routes based on three different metrics - geography, time and vehicle, offering a single screen view of the distribution plans. The software considers real-life constraints and distribution models and offers the shortest and most effective delivery routes, ensuring optimization across freight costs, time on-road, distance on-road and compliance with SLAs.

Top features that differentiate Locus DispatchIQ from any other RO solution available in the market:

Locus’ Advanced Route Optimization Software - Dispatcher
What are the benefits of an online route planning tool?

Immediate Return on Investment (ROI)

Investing on RO is one of the best financial decisions a company can take. Even though the solution can cost a little money in the beginning, the immediate savings on fuel & labour costs usually result in the route planning software paying for itself within the first month of purchase.

Reduced Fuel Costs

Industry research confirms that the fuel spend is usually 60% of the fleet's operating expenses. An optimum route will mean less distance covered and thus, less fuel required. Also, better vehicle utilization means less number of vehicles required which results in saving fuel costs.

Reduced Labor Costs

With Locus’ route planning software providing the most efficient routes for operations, industries can count on their work getting wrapped up quicker than before. This means no overtime costs for staff and less requirement of manual labour.

More Productivity

With automated and optimized routes, it is possible to add that extra stop, make that additional delivery or receive one more return from the customer. This improved productivity translates into better overall revenue and directly impacts the bottom line.

Data-driven Recommendations

Dispatcher allows you to allocate orders based on historical data, priority, rider skills, and on-ground constraints such as traffic. Locus also takes rider preferences into consideration when routing jobs to them.

Territory-based Route Planning

This new feature allows logistics managers to plan delivery routes not just dynamically, but also based on territories and zonal specifications. Territory-based route planning eliminates the problem of multiple riders going to the same vicinity, and makes it easy for logistics planners to allocate orders to particular riders who know the vicinity well.

Real-time Tracking

Using the live tracking feature and predictive alerts, you can monitor drivers and compare their actual route to the planned route if drivers go off track. Managers can re-route drivers in real-time and benefit from dynamic ETA calculations. Customers can also track their delivery status with live updates.

Less Carbon Emission

The use of Dispatcher results in lesser miles driven, less number of vehicles used and reduced fuel consumption. All of this results in lower carbon emissions and less pollution for the environment.

Customer Experience

Locus’ RO helps immensely in increasing the efficiency of the last mile delivery. Servicing customers at the choice of their time means an increase in customer delight.

Increased Transparency, Efficiency and Consistency in Operations

Automated decision making in operations for a flawless work-flow and reduced scope of human errors.

How to analyze route optimization results

Route optimization can have the following business impacts:
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    Increase in productivity of sales and service executives and delivery partners

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    Improved sales and service revenue with Dispatch Automation

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    Increase in operational efficiency

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    Reduction in sorting time

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    Reduction in operational costs

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    Reduction in dispatch planning time

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    End-to-end omnichannel fulfilment

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    Increase in serviceability ratio and OTIF Deliveries

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    Reduction in beat lengths using Sales Beat Optimization tools

Why Geocoding matters and the tech behind it
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The History, Evolution and Future of Reverse Logistics
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Impact of Route Optimization in Different Business Sectors

Let us have a look at how RO can help different industries:

Enterprises across different sectors need RO to serve different purposes. The retail industry is trying to fight the e-commerce players by having an omnichannel presence. On the contrary, the e-commerce sector is struggling with increasing customer expectations with respect to deliveries. There are a number of industries in the supply chain such as retail, 3PL, FMCG and home services that still rely on manual, time-consuming logistics processes. Many logistics activities involve human decision making, the processes are time-taking and prone to human errors and there is clearly a lack of visibility of logistics across these sectors.

With route planning software providing the most efficient routes for operations, industries can count on their work getting wrapped up quicker than before. This means no overtime costs for staff and less requirement for manual labor.

Route Optimization in Retail

Route Optimization in Retail

  • RO software considers 18+ cost variables and multiple real-life constraints, and offers the shortest and most cost-effective routes, thereby cutting down fuel and labor costs significantly.

  • Automated decision making in operations for a flawless work-flow and reduced scope of human errors, thereby increasing productivity and consistency in logistics operations.

  • Complete omnichannel fulfilment with scheduled and on-demand routing, real-time customer interaction and efficient fleet utilization.

  • RO software helps in reducing the miles driven, number of vehicles used and limited fuel consumption, resulting in lower carbon emission and less pollution.

  • Increased efficiency of last-mile delivery and servicing customers at the choice of their time, improves customer satisfaction and loyalty for the brand.

Route Optimization in FMCG/CPG Industry

Route Optimization in FMCG/CPG Industry

  • RO can automate the dispatch process respecting real-life constraints to bring in efficiency, transparency, and consistency in fulfillment operations

  • Route Optimization allows FMCG businesses to scale from an existing retail infrastructure to an omnichannel distribution platform and offer same day doorstep deliveries to the customers

  • It enables in controlling business constraints around SKU bifurcation, outlet timings, regulatory constraints etc. for the dynamic dispatch planning

  • Recommends optimal fleet mix to choose (one-time & daily dynamic) for efficient fulfillment

  • Intelligent ranking of salesmen on skills, experience, familiarity, and preference for a locality or region.

  • Automated sales beat plans to ensure less on-road time and more in-store time spent by sales representatives to increase sales.

Route Optimization in 3PL

Route Optimization in 3PL

  • Geocoding and locality detection to automate shipment sorting processes inside delivery centers

  • Automated fulfillment operations and reduced secondary freight costs, for 3PL service providers and distributors.

  • Traffic prediction, road constraints, outlet timing for unloading, etc. considered for optimal daily dynamic route planning for 3PL fulfillment.

  • Real-time fleet tracking, ideal and executed route comparison and instant alert on delays to help with more visibility of the fleet.

  • Reduced dispatch planning time and easy accommodation of unplanned on-demand orders on the go.

Route Optimization in E-commerce

Route Optimization in E-commerce

  • Geocoding and locality detection to automate shipment sorting processes inside delivery centers

  • Optimized routes and automatic allocation to riders based on historical data and dynamic planning.

  • Improved vehicle utilization and balanced number of deliveries per driver to accommodate breaks in the schedule.

  • End-to-end visibility of all vehicles, riders and other on-ground resources in a unified dashboard.

  • Servicing when customers want by setting delivery windows and lesser number of failed deliveries leading to SLA adherence and better customer delight.

Route Optimization in Home Services

Route Optimization in Home Services

  • Analysis of historical data to understand traffic conditions, preferred service timings of customers and opening/closing hours of specific buildings

  • Overseeing operations on a single dashboard to get smart status alerts for delays, idle time, spillage, etc

  • Monitoring vehicles and tasks assigned on a single day and sharing real-time status updates with clients

How Route Optimization Can Help Different Business Segments?

Check Here


Multi-stop route planning and why is it important? Blog

Multi-stop route planning and why is it important?

Planning multiple routes manually is a burdensome and time-consuming affair. Fleet managers should factor in various route constraints while planning routes such as traffic congestion, roadblocks, and so on. There are likely chances of making mistakes, which can ultimately result in disappointed customers.

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Route Optimization is the need of the hour to improve logistics performance, streamline last-mile operations and stay ahead in the supply chain landscape. Get started with your logistics optimization journey now.

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How can Locus help manage your logistics?

  • Locus’ proprietary geocoding engine converts the fuzziest of the addresses into precise geographical coordinates thereby helping your on-ground executives locate addresses easily.
  • Digitize all your operational variables such as fleets, delivery persons, etc to come up with the best route plan every day.
  • Track your orders in real-time with the Locus Live Dashboard. Locus’ last-mile delivery app Locus On The Road (LOTR) helps delivery partners process orders.
  • Visualize and tweak your scheduled plans via three key metrics— geography, time, & vehicle(fleet)—with a birds-eye view of your entire operations.
  • Build your own reports and analyze important parameters that you need to make key decisions.

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$100 M+
Logistics costs reduced
100+ Years
Planning time saved
6300 + Tonnes
GHG emissions reduced

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