Strategic & Dynamic Route Planning

How to Better Respond to Fluctuations in Demand and Your Distribution Network

As business slowly stabilises in the new normal, distribution-oriented companies are finding that their business is in one or other of the following situations: volumes are up but costs have risen faster or, volumes are down considerably and they don’t appear to be coming back any time soon. In both cases, distributors need to re-evaluate and possibly resize their operations to drive down costs and dramatically improve their productivity. Now is the right time for distribution companies to consider current fleet strategies, tactics, and their use of technology in order to make a step change to operational performance. 

Here are two ways fleet operators can make a difference.

Strategic Route Planning

Whether demand is up or down, whenever there is change the distribution network can get quickly out of balance and does not run optimally or cost-effectively. Fleet operators need to reset their distribution network and even consider changing their distribution policies. 

Strategic Route Planning (also called Reroutes) is different from daily route planning and has the potential to deliver greater productivity because it concentrates on fundamental changes. In daily route planning, the strategies, policies and even the territories, frequencies and routes are already defined. The goal of daily route planning is to do the best with those restrictions already in place. In a strategic route plan, all restrictions can be treated as variables; policies, practices, capacity etc. are flexed in order to see what new or changed routing strategy or tactic will best address the change that is required. 

Implementing Strategic Route Planning can apply not only to those fleets that run static or master routes, but also to those operating dynamic routes, because strategic route planning is about the policies and practices that dictate the daily routing parameters. Route planning will also be important because, as demand changes and distributors look at new markets, so they will need to use this method to help predict the costs and capacity required and to move forward.

Dynamic or Hybrid Route Planning

Far too many distribution-oriented companies have relied for too long on fixed or master routes. With volatile demand and the need to dramatically reduce operating costs, fleet operators need to challenge the assumptions of the past that have kept them from adopting dynamic routing. Dynamic route planning will be a critical strategy for many fleets going forward, as it produces greater productivity, this is because it is not constrained by fixed territories, sequences, or demand assumptions. 

The biggest challenges to making this change typically come from the sales force as they are concerned that customers expect a fixed delivery schedule or want the driver to be familiar with the customer. With today’s cost pressures and the fact that customers currently no longer want interaction with drivers, these assumptions need to be challenged and, in the dynamic route planning case, CFOs could end up being the biggest advocate for change once they see how much can be saved through its adoption. 

Dynamic route planning does not mean that key customers cannot have fixed delivery schedules. Using the hybrid approach, key customers can serve as “anchors” receiving fixed deliveries and the remaining customers can be dynamically inserted into the route schedule. Hybrid route planning increases productivity while allowing stability for selected high value customers.

Dynamic route planning should also make planners more productive. In today’s fluid and demanding environment, planners and schedulers are struggling to constantly adjust the “fixed” routes, which can result in lost productivity and poor customer service. Dynamic route planning is better suited for this kind of fluctuating demand and allows planners to become more proactive, focusing on the exceptions and areas of continuous improvement. 

Read more about Route Optimisation

In Closing 

For the foreseeable future there is no “business as usual” for distribution-oriented companies and their route planning with customer service strategies, tactics, and technologies. Dramatic improvement in productivity needs to be at the top of management’s business agenda, especially for distributors who wish to emerge stronger after the COVID-19 pandemic. Instead, fleet operators need to take the lead and show the value that strategic route planning and dynamic route planning can bring to the bottom line. Senior executives need to be willing to adopt new strategies, tactics, and technologies. This could be the opportunity to try new things and take fleet performance to the next level.

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Further reading:

5 reasons why now is the time to invest in strategic route planning

Eight ways to improve your productivity with delivery route planning software