The Complete Guide to Route Management Systems

Most delivery businesses in 2022 are using route management systems.

But are they right to do so? What are the benefits? What problems do they solve? And what should you be looking for when selecting the best one for your needs?

That’s what we’ll explore in this blog.

TLDR

• Route management is more than just route planning. It encompasses many different aspects of making the delivery process as efficient as possible
• Using a route management system has the potential to save delivery businesses huge amounts of money and create new revenue opportunities
• While there are individual tools that cater to certain aspects of route management, a comprehensive, integrated system will almost always be more efficient
• When choosing between route management systems, pay attention to functionality in respect of route planning, optimisation, customer experience, and interactive improvement

What Do Route Management Systems Do?

“Route management” actually encompasses several related but different activities:

• Route planning
• Route optimisation
• Driver and vehicle tracking
• Performance analysis to improve future activities

So when it comes to the business of getting deliveries to customers, route management involves “before”, “during, and “after” phases.

And what do these activities have in common? They’re all about making the delivery process as efficient as possible.

“Efficient” in this sense doesn’t just mean quick and cheap (although those are two very important considerations). It also touches on customer experience, because while bad customer experiences will cost you money in the long run, good ones will win you more.

Route management systems are solutions for generating those efficiencies in delivery activities. The best-in-class route management solutions are fully integrated, all-in-one offerings that bring all these elements under one roof. However, it is possible to put together a bespoke route management system using a variety of tools that each address one piece of the puzzle.

Why Do Businesses Need Route Management Systems?

Businesses need route management systems because, for all but the smallest delivery companies, route management is extremely complex.

And as Direct To Consumer (D2C) eCommerce has taken an ever-greater share of total retail sales, the number of businesses managing deliveries at scale has exploded.

A multi-stop route for wholesale deliveries may have taken in anywhere between 5 and 20 depots, distribution hubs, and stores. D2C drivers can expect to make 100 or more stops every day.

Even for small numbers of deliveries, the Vehicle Routing Problem - the challenge of finding the shortest (fastest, cheapest) way around multiple stops - is challenging.

Start adding in real-world variables like traffic conditions and road closures, multiple vehicles with different capacities and fuel consumption rates, deliveries that have to be made between certain hours, etc, and it’s easy to see how the seemingly simple matter of planning the most efficient route becomes extremely difficult.

Why does finding the most efficient route matter?

• Longer routes mean higher fuel costs. Even before fuel prices reached the record highs being seen in 2022, last-mile delivery accounted for 53% of the total costs of shipping. According to Logistics UK, 71% of logistics businesses reported year-on-year cost increases in Q1 of 2022
• Longer routes also mean more driver wage costs. ATRI found this to be the single biggest cost element in trucking in the USA in 2019

• Shorter routes mean shorter waiting times for customers - which means happier customers and even potential extra revenue (McKinsey has found that 25% of US, German, and Chinese shoppers would pay more for same-day delivery)

And yet there are still plenty of delivery businesses that rely on pen-and-paper or spreadsheets for route planning. They’re wasting huge amounts of time and money on tasks that can be done better and much, much faster with software.

Can Businesses Build Their Own Route Management Systems Using Free Tools?

It is just about feasible to piece together a complete route management system out of miscellaneous tools, but it’s time-consuming and inefficient.

Take Google Maps, for example, which many people use as a basic route planning application. It has some significant drawbacks:

• Google Maps only allows you to enter up to ten stops per route on the free version
• It will produce a route based on the order you key the stops in - not the most efficient route
• As its a standalone application, you would need either a massive amount of manual work or developer time to use it in conjunction with eg dispatching tools, GPS tracking, customer notifications, etc

There are free versions of paid-for tools that will optimise short routes for lone drivers - for example, Road Warrior (8 stops per route) and Circuit (10 stops per route).

But for multi-vehicle fleets undertaking large numbers of daily deliveries, the efficiency gains of using comprehensive route management systems will quickly outweigh the costs:

• Using route management systems to optimise routes can save between 20% and 40% on companies’ fuel bills
• According to ABI Research, they can also improve profitability by up to 12%, reduce vehicle use by up to 13%, and cut time on the road by 15%

With state-of-the-art route management solutions like eLogii starting from as little as $359 (£270) per month across an unlimited number of vehicles, it’s easy to see how much many delivery businesses have to gain. Book a demo today to find out how much eLogii could save you.

What To Look For When Selecting Route Management Systems

All route management systems are not equal. Each of the options available today provides slightly different functionality via different user interfaces.

They also vary widely in price - although the vast majority follow one of two pricing models:

• A monthly or annual charge per vehicle or driver
• A monthly or annual charge for a certain number of “tasks” (collections or drop-offs), spread across any number of drivers or vehicles

The former works better for smaller companies with a fixed capacity. The latter works better for larger businesses that need flexibility to meet demand in the most efficient way.

We’ve written about route management system pricing a lot before, so for the rest of this blog, we’ll discuss what you should be looking for in terms of functionality.

#1 Route Planning

All systems use slightly different proprietary algorithms for optimising routes. Most are based on Clarke and Wright’s 1964 “savings algorithm”, which is a heuristic for simplifying the overwhelming computational challenge the VRP represents.

We can’t really comment on what’s going on under the hood of these algorithms, but it’s important to be aware that they’re all slightly different. Checking user reviews on platforms like G2 and Capterra is a good way to see if complaints about route accuracy are common.

Route planning features you should be looking for include:

• Uploading task lists to the platform, either via spreadsheet or by direct API integration with your order management platform. Without this capability, you’ll spend the first few hours each day keying in data!

• An API that can do more than just import tasks - but which can also upload other data and feed back to other platforms in turn via webhooks
• Planning routes with multiple depots or returns to depot, and custom start and end-points
• High-quality geocoding to ensure map data and street addresses correspond properly (eg to prevent drivers being sent to the wrong end of a trading estate)
• Downloading task lists to drivers’ mobile phones via a dedicated app
• Live tracking of drivers’ locations

#2 Optimisation

There’s a lot more to getting deliveries to customers as fast as possible for as little cost as possible than just vehicle routing.

We’re collating all of this under the headline “optimisation”. It includes:

• Matching packages to the most suitable delivery vehicles (eg those based nearby, those with specialist equipment for loading and unloading, those with refrigeration, by capacity, in reference to road access conditions, etc) and those most suitable drivers (eg those responsible for the territory, those with particular skills, like languages, device installation, etc)
• Auditing packages’ journeys, on the one hand, through the supply chain to the last mile via ERP software; on the other, to confirm Proof Of Delivery (POD) to guard against disputes

• Making provision for bespoke delivery conditions (eg contactless, kerbside, white-glove, etc)
• Incorporating driver breaks into delivery schedules
• Combining and coordinating deliveries that require multiple vehicles

This kind of customisation is critical. The requirements of a courier business differ sharply from those of a water delivery business, for example. A company that delivers pianos across the country has a completely different set of needs from one that brings groceries from the local store within the hour.

eLogii has perhaps the widest range of customisable variables of any of the route management systems currently available, including:

• Service time duration
• Delivery slow windows
• Vehicle type, capacity, and fuel consumption
• Driver skills
• Geofencing
• Driver speed factors

It also allows you to define custom variables so that eLogii can be tailored to suit every type of delivery business’s needs perfectly.

#3 Dynamic Responsiveness

A lot can happen once your fleet has loaded up and set off, and what was optimal at 9 am may no longer be suitable a couple of hours later.

What if there’s been an accident that’s blocking the only bridge in the town centre?

What if a driver got a puncture and is now an hour behind all his upcoming ETAs?

Your route management system needs to give you the ability to respond dynamically to changing circumstances, replanning routes, schedules, and ETAs on the fly where needed.

The necessary precondition of this kind of responsiveness is being able to track the locations of drivers in real-time via GPS. If you don’t know where they are, how can you reroute them?

The absence of GPS location services is a major problem for some solutions, like Workwave’s entry-level Route Manager product and Routific.

However, knowing where your fleet is is one thing. Your route management system needs also to enable you to take action:

• By enabling live communication between drivers and dispatchers
• By allowing tasks to be added and removed from drivers’ schedules while they’re in transit - and recalculating the optimal routes and ETAs
• By making provision for failed deliveries - and giving drivers alternative workflows to follow when a customer isn’t in or can’t be reached
• By notifying customers of any changes to delivery status and time. One study found that 93% of customers expect to be proactively notified about their orders’ whereabouts - and for 75%, this is an essential part of the overall delivery experience, not a “nice to have”

#4 Customer Experience

A few scary statistics for you that illustrate just how competitive the delivery business is in 2022:

• 70% of UK shoppers are less likely to use again a retailer after a bad delivery experience
• 60% of consumers have shared negative experiences with friends and family
• 22% have posted an online review after a single bad delivery experience

There’s no avoiding it. Customers are demanding more than just that their orders turn up eventually, and will take their business elsewhere if they don’t receive high-quality service.

The best route management systems take this into account and provide ways of ensuring that the highest standards are maintained. For example:

• A wide choice of POD collection methods, to suit the customers’ preferences (eg photo, esignature, barcode scan, QR code scan, etc)
• Accurate, dynamic alerts about ETAs - and the ability for customers to contact drivers directly
• A customer portal for tracking the location of packages in real-time (similar to the dispatcher’s view we discussed earlier)
• Provision for special delivery requirements (eg priority) and convenient time windows
• Clear workflows for what drivers must do if a delivery can’t be completed at the scheduled time
• Ways for customers to give immediate feedback on the standard of service provided

#5 Iterative Improvement

The route management system you choose needs to help you get more effective and more efficient, week in, week out.

That’s why it’s vital to select one that allows you to track actual performance versus planned and to incorporate insights from previous practice.

So, be on the lookout for the following features:

• Customisable dashboards that allow you to set the KPIs that matter to your business and track them visually
• Logging actual routes taken against planned routes
• Geostamped and timestamped PODs, for comparing planned and actual delivery times
• Driver behaviour tracking (eg speed habits, excess braking and idling)
• Customer review capabilities, to track satisfaction overall and per driver

Route Management Systems - eLogii Driver Tracking

Facilities for integrating your route management system’s data with information from other systems (eg telematics)

• Projections of fuel use and costs

It’s very important not to neglect reporting capabilities when exploring route management systems. With logistics costs rising so sharply - the Logistics UK study we mentioned earlier found they’d risen by more than 25% for 40% of businesses - it would be very unwise to simply assume that everything is working as efficiently as it can.

The Bottom Line

You might have spotted that we’ve used a lot of images of the eLogii platform to illustrate this blog about the many features you should be looking for in route management systems…

That’s no coincidence: eLogii is perhaps the most powerful and flexible solution available today, which incorporates all of the features we’ve discussed and more.

Except for the smallest delivery businesses that won’t need all of this functionality, eLogii is ideal for businesses looking to better manage and optimise their internal fleet of vehicles. Not only that, the platform is fleet/agent team-size and industry-type agnostic, thanks to its unique level of customisability.