Why Do 3PL Companies Need Route Optimization Software?

May 26, 2024 by
Why Do 3PL Companies Need Route Optimization Software?
ABI-VNM - Abivin Vietnam, Phạm Nam Long
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Third-party Logistics Providers (3PLs) can significantly shape the supply chain landscape in 2019 as well as the future logistics. Meanwhile, Route Optimization Software is proven to boost operational efficiency by solving vehicle routing & scheduling problems which thousands of 3PL companies are struggling with.

Have you wondered what exactly can route optimization software do to make it attractive to 3PL companies? This article will show you 6 main reasons why 3PL companies should use route optimization software.

1. Reduce Overall Cost Of Logistics

Reduce overall cost of logistics
Reduce overall cost of logistics

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In reality, there are many kinds of fees in logistics & supply chain affecting the overall transportation cost, which prevents managers from optimizing their business. Route optimization software can use machine learning and AI to help 3PL companies effectively cut down logistics cost by allowing driver to get to the right customers at the right time, delivering the right products. Basically, 3PL companies can reduce 4 main types of costs as followed by using route optimization software:

  • Reduce Fuel Cost: Fuel cost is said to take up more than 30 percent of overall expenses. In simple term, this software yields more efficient routing which reduces kilometers driven, thus, reduces fuel costs for small, mid-sized to big fleets.
  • Reduce Vehicle Maintenance Cost: Less time spent on the road will reduce the need for maintenance of vehicles so that they can stay in active rotation for a greater number of trips. As a result, the loss of functional time will also be reduced as vehicles spend fewer hours undergoing maintenance and more hours in service.
  • Reduce TCO (total cost of ownership): Route optimization software reduces overall operational cost by reducing the wear-and-tear cost of vehicles.
  • Lower Violations, Accidents, and Associated Costs: While optimizing the route, this software uses smart algorithms to suggest the most suitable route which avoids restricted roads for each type of vehicle and each time slot. That, in turn, means less exposure to violations, traffic, and safety risks, thereby positively impacting the fleet’s insurance premiums and cutting expensive liability costs. Less time on the road is also a safety benefit for the fleet since the safest miles are the miles never driven.,

2. Save Time To The Minimum

Save time to the minimum
Save time to the minimum

The right routing software can satisfy numerous constraints (traffic conditions, time window, temperature constraint, average speed, etc.) to calculate routes taking the least time and kilometers. This software only takes seconds to analyze and give out an accurate number which saves hours & days of number-crunching. Route optimization software also suggests the optimized route instead of showing a long list of destinations. If drivers follow the route, so much time of transporting will be saved.

In addition, this smart tool is said to reduce transportation delays for drivers by helping dispatchers & drivers to plan routes that avoid congestion, shortening transportation times without costing more for a longer route. Moreover, route optimization allows dispatchers to provide real-time assistance and alternative routes for drivers who find themselves in an unexpected traffic delay.

3. Manage Multi-Task More Effectively

Manage multi-task more effectively
Manage multi-task more effectively

In Google Maps, you have to manually input each stop, whereas in Route Optimization Software, a list of daily tasks is already available for delivery men to follow.

Route optimization software demands clear input from dispatchers to assign clear tasks, requirements, and guidance for drivers ranging from the exact location of each customer, the time window of the destination, goods types, volume, weight, notes & bills… to ensure that the drivers deliver the precise consignment and collect the exact invoice, which is outstanding compared to Google Maps. For example, Google Maps can only show the route to a specific address and drivers need to input the next destination at every hand-off point, while routing software can integrate all the destinations and calculate to give out the best sequence.

Routing software will ensure that the optimized routes are efficient both in term of distance travelled and time to the destination. This leads to shorter service times, allowing a company to increase productivity & save time for other tasks.

4. Increase Satisfaction Of Customers

Increase satisfaction of customers
Increase satisfaction of customers

The key to the happiness of customers in logistics lies in the on-time arrival rate which has been maximized by computing power. Route optimization software uses AI (Artificial Intelligence) to ensure that the right driver gets to the right customer at the right time.

In addition to allowing dispatchers or customers to keep track of the delivery process, this software also uses high technology to help dispatchers or customers oversee their orders by using different methods of making sure the receipt of goods, such as sending an OTP (One-time Password) to the customer's mobile phone, signing on mobile app or photo check-in at the delivery point.

5. Apply Easily To Different Delivery Models

Apply easily to different delivery models
Apply easily to different delivery models

3PL companies offer outsourced services which contained many procurements & fulfillment activities involving different delivery models. Nowadays, things are much easier since route optimization software can effectively support all those sophisticated processes.

A good route optimization software like Abivin vRoute can be applicable to 3+ models of 3PL Logistics including Container Freight Transportation, Distribution Center (DC) & Long-haul Pick Up and Delivery.

  • In Container Freight Transportation model, this software helps dispatchers manage transportation process of containers, using trucks or barges.
  • In the Distribution Center (DC) model, dispatchers can use route optimization software to solve the Vehicle Routing Problem, in which vehicles start from a Hub and deliver to Spokes (Delivery points) around the city.
  • In Long-haul Pick Up and Delivery model, dispatchers can manage multi-day transportation process for Full Truckload and Less than Truckload orders.

6. Improve Profit

Improve profit per shipment
Improve profit per shipment

The ultimate goal of a business is not optimizing the route, but optimizing profit. This is also the key role of an effective route optimization software.

With route optimization software, inefficient drivers and possible revenue leaks can be easily spotted before they turn into major problems. This digital tool helps transportation moderators to meet their goals of making deliveries in the shortest amount of time and with the lowest costs. As a result, a large amount of extra expense will be reduced which leads to a significant increase in profit.

Abivin is a premier provider of AI Platform to Optimize Logistics, including route optimization capability, trusted by many multinational corporations such as Procter & Gamble, FrieslandCampina, Kospa Logistics, Saigon Newport Corporation.

Click HERE and let us optimize your business today! 

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