What is the vehicle routing problem (VRP) in logistics? It’s about designing the least cost delivery route to deliver the goods and services to customers in different locations, given a fleet of vehicles and other constraints.
In logistics distribution network, along with cross docking, blockchain technology, addressing vehicle routing problem is a widely applicable method to reduce operational costs. The key to solving this problem is the best route optimization strategy so a truck can deliver the highest amount of products to the most customers, in the shortest time, with the least miles driven, and in the quickest operation.
It’s not easy at all. But can you do that? Hunker down, we’ll help make it simpler for you!
Determining Vehicle Routing Problem
Example of vehicle routing problem solution for 15 customers with 4 trucks
Vehicle routing problem is a challenging combinatorial optimization problem. However, solving VRP doesn’t necessarily mean you need to solve all the problems related to each constraint.
Depending on the results of VRP you desire, you will put these constraints on your priority:
Time and distance constraint: vehicle needs to deliver products within a pre-imposed maximum time and distance
Pickup and load capacity of vehicles: the vehicle’s capacity needs to be enough for all products requested from customers
The number of available vehicles: you need to minimize the number of vehicles needed to serve your customers
Quantity of labor: similarly, there should be a minimum amount of labor needed to deliver products to customers
Quality of service: minimize the customer’s penalty for low-quality customer services
And many other constraints: the number of depots, road conditions, type/size of goods...
Why is it important to have an effective solution for VRP?
In real life, route planning has many uncertainties such as changing demands, traffic accident, or unexpected weather conditions, etc. All of these uncertainties can lead to more costs in logistics management if not taken to consideration properly.
Solving VRP is one of the survival tickets of one business who wishes to have sustainable growth in their industry, especially FMCG, food industries, etc. There are huge benefits an effective VRP solution brings about:
In 2014, a research carried out in shipping farmers’ organic product to the largest organic market in Istanbul, Turkey with 62 suppliers, revealed that vehicle routing solution helped reducing the transportation cost by almost 50% .
The same result was found in the application of VRP in improving the transportation performance of a Quebec based company, Ameublement Tanguay Inc., operating in furniture and electronics industries. Thanks to applying vehicle routing model, the company witnessed an efficient decrease of daily routes and distance while the weekly improvements are up to 23.7%. It also helps saving more than 500,000CAD annually .
What is the best answer to VRP?
Finding the answer for VRP is notoriously difficult due to the fact that it’s a combinatorial optimization problem so it cannot easily be tackled down by merely reported numbers, predictions or simple tactics.
Ideally, you still can do all the math, use algorithms, check reports or base on your experience and insights to manually pull off a vehicle routing plan. However, it’s a PILE of nerve-wracking tasks to do. And it will be very time consuming. Not to mention that there’s high chance of mistaking data during the manual process.
Another option is to use preset solvers like Google Optimization Tools which provide constraint programming solvers but they are very basic and limited in solving just some basic constraints. These preset solvers are only good references for your in-depth research, not for real practice. Apparently, your complicated VRP won’t be solved thoroughly with just basic preset solvers.
The alternative choice is to use a Transportation Management Software (TMS) or a Fleet Management Software. However, as mentioned above, VRP is a combinatorial dilemma which comes with many different constraints to solve, not just how to optimize the transportation performance. A TMS alone can’t support you with route optimization.
So, what is the perfect choice here?
Using route optimization software minimizes time and effort to create the best route plan
With smart algorithms, it only takes you a few minutes to consume all the data input and then solve the giant route optimization puzzle. When comparing to the manual work, it’s much faster to produce different optimal route solutions – not to mention the 100% accuracy of processing data.
Using route optimization software allows real-time adaption of different preferences
With the help of route optimization software (plus a detailed, user-friendly visual map), you can easily change your route preference and the tool will provide you in an instant with an alternative optimal route when needed.
No matter how experienced you are, you can’t always anticipate with what are happening on the road nor change your plan instantly to meet your customer’s unanticipated demand, without the help of digital tools. With a good route optimization software, re-optimizing route is a piece of cake.
Abivin vRoute – The best route optimization software you might need
Abivin vRoute in action
Abivin vRoute is not only an excellent all-in-one route optimization software with state-of-the-art optimization algorithms to bring you an optimized route plan within seconds, but it’s also a smart fleet management with real-time delivery updates that can help save up to 40% of your logistics cost.
Perfect combo for VRP
It’s no doubt that using the best route optimization software is the fastest and most efficient way to get your VRP job done. However, don’t forget to put this amazing tool in the hand of an experienced route planner who can use his expertise to adapt and re-optimize in real-time the optimized route options given by his best route optimization software. We call it the “perfect combo” for VRP!
What have you been doing to optimize vehicle routing problem? What do you think of route optimization software like vRoute? Share with us!
 “Vehicle Routing Solution Reduces Transportation Costs for Organic Farmers Serving the Domestic Market in Turkey”, A. Yonca Demir, 2014
 “Solving A Real Vehicle Routing Problem In The Furniture And Electronics Industries”, Jean-Philippe Gagliardi, 2013