Careers Business Ownership Route Planning for Logistics and Distribution Companies How can modeling create successful route planning? Share PINTEREST Email Print David McNew/Getty Images News Business Ownership Operations & Success Supply Chain Management Sustainable Businesses Operations & Technology Marketing Market Research Business Law & Taxes Business Insurance Business Finance Accounting Industries Becoming an Owner By Martin Murray Martin Murray Twitter Martin Murray is a former writer for The Balance Small Business, and the author of eight books on supply chain management and enterprise resource planning. Learn about our Editorial Process Updated on 09/04/18 Over the past few decades, the rising cost of fuel has prompted logistics and distribution companies to become more efficient in the way that they plan their transportation routes and schedules. The traditional methods of route planning do not address real-time events that affect businesses every day. To accommodate customers short-notice requirements, route availability, and vehicle issues, route planning has to be able to quickly respond to any event to ensure the lowest cost of transportation. Basics of Route Planning A logistics company or an LTL carrier may operate short-haul and long-haul routes. Short-haul may involve trucking or rail, while long-haul routes may involve ocean vessels or air transportation. With both types of routes, there are loading and materials handling complexities, such as the availability of equipment, and skilled personnel. There are also issues arising from the transfer of product between the different modes of transport and the subsequent consolidation of product in containers. Logistics firms that operate their own fleets tend to use a route plan that has the vehicles starting and ending at the same location. This ensures the minimum repositioning of vehicles and personnel. However, to develop routes that cover all deliveries and pickups to and from numerous customers is extremely complex and to develop the routes that are most efficient is becoming increasingly difficult. Many route planners can develop efficient routes but find that – due to rules on how many hours a driver can operate a vehicle, such as the regulations from the U.S. Department of Transport –they will be forced to use a less efficient route. Route Optimization The basis for route optimization is the use of models to describe the transport network that needs to be planned. When building a model, the scope of the overall network needs to be defined, ensuring that all the data is included, such as regulations or highway problems. The model has a number of components such as products, vehicles, and personnel. Products: The product moves from one geographic location to another, often described as the origin and the destination. The product will be defined by its weight and its volume, which are important factors for shipping.Vehicles: A transportation network within the model can be divided into a number of sectors which is represented by a vehicle, which moves between an origin and a destination location. Each vehicle may have different attributes such as volume or weight capacity, loading times, cost per mile, and vehicle limitations, i.e. speed of the vehicle.Personnel: The personnel assigned to the model have characteristics that are governed by the type of work they perform. For example, a driver has limitations on the amount of driving they can achieve based on regulations from the U.S. Department of Transport, which determines the length of continuous driving, length of mandatory breaks, etc. Using the Model The model allows management to analyze the most efficient use of resources while producing the most economical routes. By allowing management to alter the data in the model, the model will offer a variety of scenarios. Management can alter the vehicle data to allow them to select more efficient or larger vehicles to produce more economical routes. By modifying the personnel or modifying their start and finish times, the route can be altered to take advantage of less busy times of day on the freeways. By altering the variables in the model, the most efficient use of the company’s resources can be achieved. Manual route planning has been employed by companies for many years and despite the experience of the route planners, the ever-changing complexity of today’s transportation network can affect the financial validity of a route from day to day. By modeling the transportation network, management can constantly monitor the small changes that affect the network in a real-time environment allowing changes that keep the most efficient and economic route planning.