Dynamic routing is the latest innovation in the last-mile space and, if you believe the hype, everyone’s doing it. But what I see and hear from our clients and my colleagues is quite different; many teams are interested in the possibilities that dynamic routing holds, but approach the topic with caution. Understandably. The truth? Dynamic routing can have immense benefits for your company, in both efficiency and fleet utilization, but only if it’s the right solution for your business.
Borrowing from the eponymous Clint Eastwood movie, let’s break dynamic routing into three buckets — the good, the bad, and the ugly. But first, let’s align on what, exactly, we mean by dynamic routing.
What is Dynamic Routing?
Using machine learning and AI within modern route optimization software, dynamic routing instantly calculates highly complex routes with multiple constraints (time windows, traffic, load capacity, driver shift times/availability). For most organizations, dynamic routes are built daily with the understanding that there will not likely be many similarities between routes from day to day or week to week. Instead, each day, drivers receive a new route plan that’s based on the orders in the system at that time. Given the number of orders and variables, dynamic routing is typically far beyond the capacity of human dispatchers.
The Good – The Benefits of Dynamic Routing
When routing dynamically, your drivers receive new routes daily rather than following a fixed schedule day after day. At its essence, dynamic routing is the ultimate strategy for balancing the needs of the fleet with the needs of the customer. When implemented correctly, the benefits are massive, including:
- Improved fleet utilization – By considering constraints like load capacity, dynamic routing algorithms ensure that each truck is being used to its full potential.
- Reduced fleet mileage – Dynamic routing minimizes the number of vehicles on the road and looks for the most efficient order of stops, reducing overall fleet mileage.
- Reduced driver hours – In addition to adjusting for driver shift times and driver availability, with dynamic routing, you can help your drivers avoid traffic jams and round-about routes.
- Increase in on-time deliveries – Clients using dynamic routing see a higher number of on-time deliveries due to real-time updates to routes.
- – Since routes are being monitored and updated on an ongoing basis, dynamic routing allows you to provide more accurate ETAs to your customers.
The Bad – The Shortfalls of Dynamic Routing
As with many technologies or strategies, dynamic routing is touted as “disruptive.” It’s definitely different, especially if you’re coming from decades of static routing. The question is whether your business is a fit for dynamic routing in the first place. If there’s variability in your customers’ orders, dynamic routing is worth considering. If, however, you have fixed orders on fixed days with very little variation, dynamic routing may not be a fit for your business model.
The Ugly – Consequences of Moving to Dynamic Routing Before You’re Ready
For an effective shift to a dynamic operation, keep a few things in mind:
- Preparation is key for a successful shift in your routing process. This includes your team and your customers, so build that into your plan.
- Order cutoff times become more critical since your routes will be planned daily.
- Vehicles for routes aren’t assigned until the routes are built each night, which means that vehicles can only be packed once the route is built.Consider the timeline implications for picking and packing.
- Cross-team communication is key to success, including with drivers, warehouse operators, and routing and dispatch teams.
Dynamic routing is a phenomenal solution for many businesses with the power to bring incredible savings and efficiencies for organizations in industries where it makes sense. And, if that’s the direction you’re headed, keep in mind that a gradual transition, involving a hybrid static + dynamic solution could be the perfect onramp, providing a balance of flexibility and reliability. If you’re looking for a good place to start, take a look at our Choosing the Right Routing Strategy for Your Fleet White Paper.