While the day when retailers, manufacturers, grocers and other users of vehicle routing (VR) software trade in their VR packages and truck fleets for an air traffic controller and a squadron of unmanned aerial vehicles (i.e., drones) is still largely a figment of Amazon’s Jeff Bezo’s imagination, such companies are nonetheless under immense competitive pressure to deliver goods to their customers faster and more efficiently. VR software developers and vendors, in turn, are under immense pressure to meet the growing demands of their customers for integrated, data-driven, near real-time VR solutions, whether it’s an auto manufacturer in need of car parts in Michigan or a restaurant chain in need of chicken parts in Arizona.“Systems have to come up with answers faster,” says Julian Stephens of MJC2. “You can’t always spend hours optimizing an entire fleet. Sometimes you need to do it in minutes.”
Rising Customer Expectations
Same-day and even next-day delivery systems require exceptional optimization, notes Ken Wood of Descartes. “In the past, VR software would look at historical statistics to create and sequence delivery windows, but deliveries have different driving times and geography so it is very difficult to weigh them equally. Fuzzy delivery windows equal more missed deliveries.”
In response to those and other issues, particularly rising customer expectations, Wood points to a number of growing VR trends, including real-time intelligence deployed in the field, continued real-time optimization as orders change, and offering tighter delivery windows at point-of-sale, all of which require dynamic routing.
Of course, data, lots of data, Big Data is needed to power and drive intelligent, optimized, dynamic routing. Fortunately, like so many other industries, fleets have more data coming in from more sources – drivers’ mobile devices, engine sensors, GPS, customer relationship management (CRM) and supply chain software – than ever before, and it’s only getting bigger and better.
“There is now so much data available that the question is, how do I take the information from CRM, finance, and routing and produce something actionable?” says Cyndi Brandt of Roadnet. “Ten years ago, people wanted to see reports. Now they want to make data easily visible and actionable.”
Which brings us to the next big VR trend: integrating routing with other systems. “We’re no longer silos,” Stephens says. “We’re integrating supply chain information, big data, even crowd-sourcing.”
Mergers & Acquisitions
Along those lines, many VR vendors are looking to add or acquire logistics solutions, broad management software and even hardware devices as part of the integration process. Qualcomm sold Omnitracs, a big player in fleet management software and hardware platforms, to an investor group in December, and a week after the deal was finalized, Omnitracs bought Roadnet. Trimble bought ALK Technologies a year after it purchased TMW Systems, a routing and enterprise software company. Meanwhile, Descartes has made many acquisitions to extend its reach into logistics.
Another trend that deserves mention is customer relations and the idea that companies consider their drivers a vital component of customer service. Again, software, technology and data make it possible. For example, many routing software products collect real-time information on and off the truck, allowing companies to see how much time drivers spend serving each customer and how much time they spend in the truck. That data, in turn, makes it possible for delivery companies to automatically send an estimated time of arrival during the day to their customers and to update it as needed.
Data and technology also enable companies to differentiate customers and treat them accordingly. “If a restaurant chef realizes he forgot to order a case of shrimp and needs it tomorrow, in the past, companies would jump to get it to him, even if it meant losing money and upsetting other deliveries,” Brandt says. “Now, if he is an ‘A’ customer, they would bend over backwards for him. If he’s a ‘B,’ maybe they give him a time slot that they could do it. If he’s a ‘C,’ maybe he doesn’t get it tomorrow at all.”
Complex Case Study
The point is, VR customers are different, and so are their routing needs and problems, which require flexible, innovative answers. Consider the following case study:
NOCO Energy Corp., a North American distributor of industrial and commercial lubricants and engine motor oils, faced a complex problem: With a product line that includes everything from bulk motor oil to food grade lubricants to packaged goods, how do you optimally route a fleet of bulk tankers, regular box trucks, hybrid trucks (which can carry both packaged goods and bulk lubricants) and recovery vehicles that collect waste oil? To make things even more interesting, the route planner faces the following constraints: complex product and compartment rules, weight and volume limits on vehicles, variable customer time windows and the need to maximize compartment utilization.
For answers, NOCA turned to Optrak vehicle routing software, which automatically manages all product compatibility constraints and selects the optimal compartment for each product that minimizes the risk of contamination. Optrak takes into account variable unloading times for each bulk lubricant and cleaning requirements for each compartment.
The results? According to NOCO, Optrak’s optimization capabilities enabled it to achieve significant operational efficiencies, reduce transport costs and improve customer service while achieving a 50 percent reduction in time spent planning.
Where VR Goes From Here
So what does the immediate future hold for vehicle routing? Julian Stephens of MJC2 predicts growing opportunities for small- and medium-size home delivery companies, especially for the “final mile” from distribution points in rural areas, aided by “crowd-sourcing.” To that, we would add more of everything else: technology, data, innovation, rising customer expectations, real-time route planning and optimization, use of mobile devices, flexible, integrated systems, you name it.
As for unmanned aerial vehicles, well, that might have to wait a little longer.
This Year’s Survey
Fifteen software vendors (nine North American and six from Europe/Asia) participated in this year’s survey, representing 17 products. The questionnaire was divided into sections covering platform, algorithmic capabilities, interfaces and features, applications, system integration and background information. All responses are self-reported and unverified.
Platform: Whereas licensed software solutions continue to be available from most vendors, it has been edged out by software as a service (SaaS) as the most common platform (15 versus 14 products). In addition, a few vendors are offering routing software on Apple’s iOS operating system, as well as Google’s Android, making routing tools available on tablets and smartphones. From a hardware perspective, vendors generally recommend a PC operating with 2 GHz or more, combined with up to 4 Gb of memory and 2 to 125 Gb on the hard disk. These figures have not changed much in the last six years.
Algorithmic capabilities: The algorithms underlying routing products are generally proprietary, though typically involve a combination of integer programming methods and heuristics (likely some form of localized search). Runzheimer and DNA Evolutions utilize genetic algorithms, and various improvement heuristics are mentioned by others.
Vendors generally claim unlimited problem size for their software, but from a practical perspective, processor speed, memory size and disk space bound product performance, so it is important to test software on actual problems. In this regard, most vendors claim computation times at about five minutes or less for an average-sized problem, described as the time to solve a problem with 50 routes, 1,000 stops and two-hour, hard-time windows. A few vendors claim solution times of less than a minute.
Fast computation times are particularly important in real-time applications, such as when deliveries are scheduled while the customer is on the phone or when stops are inserted and scheduled while vehicles are in the field. Sometimes vendors can quickly update routes without going through a full execution of the routing algorithm.
Node routing is the capability to assign and sequence discrete stops, and arc routing is the capability to assign and sequence street segments. Node routing appears to be available on all surveyed products. Arc routing is more specialized and occurs when vehicles visit every (or most) address on block segments, as in meter reading, mail delivery and garbage pickup. Half of the vendors claim they can do both of these. All vendors claim they can provide daily routing, weekly planning, territory planning and route planning/analysis.
All vendors stated they have the ability to provide real-time re-routing of vehicles. Most vendors have the ability to incorporate real-time traffic and utilize historical traffic by road segments to better optimize routing. This can enable a fleet to reschedule in response to customer requirements, vehicle delays or traffic conditions. Products also generally can account for specialties of individual drivers, geographic route restrictions and hours of service constraints. Asked for the first time this year, we found that most products now have the ability to provide map street views.
Interfaces and features: As a starting point, basic features offered by most include an ability to display routes and stops on maps and edit these routes with the “drag-and-drop” feature (i.e., click on a stop and move it to whichever route you desire). This enables the dispatcher to modify the algorithm-produced routes and is needed in practice to satisfy customer constraints. To make these features work, products need digital maps, which are not inexpensive, and are often sold separately and are chosen by customers according to their requirements.
Integration: Real-time communication with drivers, as well as tracking their locations, has become particularly important, and most products offer these features. This usually is provided with vehicle-mounted on-board computers, personal navigation devices, hand-held mobile units and increasingly, smartphones and tablets. Interfaces with other software systems – such as order-entry and inventory management – is also important for retailers and distributors. Other important features include forecasts for delivery requirements, generation of load manifests and load planning. Software is usually available in combination with driver messaging, real-time tracking and driver displays, and is sometimes coupled with supply chain or RFID tools, order processing systems and engine monitoring.
Applications: Whereas vendors generally claim that their products are designed to serve a broad range of applications, most specialize in an industry sector. Specialization is largely driven by interface requirements – both in terms of presenting information in a manner that is useful to the target user and in terms of interfacing with business software systems and hardware devices. Police, taxi and emergency vehicle dispatch, for instance, each demand special requirements that differ from the traditional market of private fleets. Just six products provide an interface to police/fire/emergency computer aided dispatch. This is an example of a niche market, even though in theory it is just a variation of vehicle routing.
Vendors that are more experienced in an industry will be better prepared to consult on software installation and are more likely to have relevant features, leading to a higher likelihood of success. The optimization code might also be different to account for the particular network structure, for instance the hub-and-spoke design of less-than-truckload (LTL) networks.
In the survey, most of the respondents have specialized in private truck fleets, serving such markets as food and beverage (e.g., Anheuser Busch, Coca-Cola, Pepsi-Cola and Snapple). Other applications include waste management, industrial supplies, retail drug stores, airline bag delivery, petroleum and milk.
Routing installations tend to require a large degree of customization, as reflected in software prices, which often run in the tens of thousands of dollars. As an alternative, SaaS requires little upfront cost. Beyond these software costs, some level of consulting is likely needed to ensure full integration into a fleet’s information systems, typically priced in the neighborhood of up to $150 to $250 per hour. In terms of pure size, many companies now claim more than a thousand installations each.
General information: The accompanying directory provides contact information and product names for the vendors. Pricing is available for some vendors (in many cases, prices are negotiable and depend on fleet size). For a 50-route single site license, expect to pay $20,000-$40,000. Higher-priced products generally offer more customized service, a larger array of features and interface capabilities, and specialized experience in a particular industry. Price structures do vary, so be sure to compare the full installed cost before making a choice, including license fees, installation and maintenance costs, hardware and digital maps.
How to Buy
It sounds simple, but the most satisfied routing software customers are clear about their goals before they shop for a routing solution. Look for a routing company that knows your vertical market, and one that can help you leverage the software for productivity gains throughout your organization. Consider how frequently routes must be generated and updated, and how much time is available to generate routes. Check references. Make sure the vendor has customer service available when you need it. If your routes are built between 7 p.m. and 9 p.m., make sure they will be answering calls during that time. The last step is to try it out. Some companies offer a free trial. Others will charge a customer for a trial that includes consulting services. The customer will pay for some of the trial and will be obligated to make a purchase if all trial objectives are met.