Most industries face similar problems with Vehicle Routing Problems (VRP), which lead to excessive expenses, missed delivery deadlines, and damaged goods.
Reducing transportation costs is one of the main goals for any business, especially for those that frequently ship goods, such as logistics and supply chain industries.
So, what is VRP? How can solving that problem reduce a company’s transportation costs? For a more detailed explanation, read this article.
What is the Vehicle Routing Problem?
Vehicle Routing Problem (VRP) is a long-standing problem that has been a major challenge for businesses for many years.
It is not easy for businesses to find an effective and efficient route combination that minimizes the total distance from the warehouse to various customers.
The Vehicle Routing Problem algorithm or sometimes simply referred to as the VRP solver refers to the method used to find and determine the most optimal route from the warehouse to many locations, considering various factors.
These factors include fuel, road construction or damage, and a specific time for each customer. Long-distance shipments will be costlier if businesses fail to handle these constraints properly.
For example, a logistics company needs to complete 1000 deliveries in a day using 40 vehicles. The business needs to have a good route planner so that the drivers can deliver the goods in one go.
Why Vehicle Routing Problem is Difficult to Solve
Unlike the Traveling Salesman Problem, which tries to find the shortest route, VRP must consider many factors to find and plan the most appropriate and optimal path.
Many constraints and unpredictable factors contribute to the complexity of this route planning.
VRP requires significant computational effort since drivers or managers responsible for route planning cannot solve it manually due to the many factors that need to be considered.
These factors can be unpredictable, such as changes in customer demand, traffic congestion, roads suddenly closed due to maintenance, and so on.
How Solving VRP Helps Daily Business Operations
The right solution to the Vehicle Routing Problem can offer businesses several benefits, including:
- VRP helps businesses achieve sustainable growth
- VRP can increase fleet productivity and efficiency
- Improve customer satisfaction levels to maximize profits
Constraints of VRP that Businesses Often Face
Businesses often face various types of Vehicle Routing Problem constraints, including:
Vehicle Routing Problem with Time Windows (VRPTWs)
The first type of constraint is delivery requests with specific time windows. Customers often request deliveries to be made within a specific time frame.
This limits the pickup and delivery time, as drivers must arrive at the customer’s home at a predetermined time. However, it should be noted that delivery drivers may arrive before the scheduled time but should not exceed it.
If a company cannot meet the delivery request, it is likely that customers will feel disappointed and unsatisfied, which could result in significant revenue and profit losses.
Therefore, businesses need to consider these Time Windows factors when planning delivery routes.
Types of Time Windows include:
Soft Time Windows
In this type, drivers are allowed to deliver goods outside the predetermined time, but they must accept heavy penalties.
Hard Time Windows
Drivers cannot miss their scheduled time in any way. They must wait until the Time Windows opens, even if customers arrive before their scheduled time.
Disjoint Time Windows
If drivers arrive or appear between two Time Windows, they must wait until the next Time Window opens.
Multiple Time Windows
A set of non-overlapping Time Windows with different time lengths.
Pickup and Delivery Vehicle Routing Problem
The next constraint is the pickup and delivery Vehicle Routing Problem. This obstacle is often faced by companies that focus on delivering goods or food and beverages.
They need to plan delivery routes every day, sometimes even several times a day, depending on the size of the business. Managers responsible for route planning need to consider several factors such as resource constraints, parameters, and schedules.
Combining pickup and delivery points is usually the biggest challenge to reduce travel time and reduce fuel costs.
Capacity Constraint Vehicle Routing Problem
Next, there is the capacity constraint Vehicle Routing Problem, which includes weight and volume.
Businesses sometimes decide to load more goods and serve more customers in one trip without exceeding the vehicle’s capacity to save costs.
However, businesses also need to consider several things before doing so, such as
– Package sizes for delivery and pickup
– Vehicles with different capacities, and
– Multi-compartment vehicles.
3 Ways to Solve Vehicle Routing Problem
There are several ways and solutions to solve VRP problems that can be used by business owners. Here are the methods:
VRP problems can be solved manually by drivers or managers, but it takes a long time and is not an easy task.
In addition, drivers may make mistakes during the manual process. Simply put, this method is very inefficient and ineffective for VRP.
Moreover, using Google Maps doesn’t help much because Google Maps can only guide drivers through the best routes considering traffic, but cannot help find the right route to deliver goods to customers in one trip.
The next solution is preset solvers. However, unfortunately, this method is more suitable for academic settings that require in-depth research and not in real life, because preset solvers can only solve two or three basic constraints.
Route Optimization Software
The last solution is to use special software for route optimization. This method is the best way to solve VRP.
With this software, route planning problems and all constraints can be solved within a relatively short time frame.
This software will help businesses optimize routes that are fast, and fuel-efficient, reduce operational costs, and comply with each customer’s time windows.
Optimize Delivery Routes with LOKASI
As mentioned above, planning delivery and pick-up routes will be easier using the software.
LOKASI is a spatial analysis platform that can help businesses visualize route planning and optimize the route with accurate directions, considering all constraints, including traffic congestion, saving driving time and fuel, and finding alternative routes when a road is blocked.
Learn more about how LOKASI Intelligence can help businesses by contacting email: firstname.lastname@example.org WA: 087779077750
What is meant by Vehicle Routing Problem?
The Vehicle Routing Problem is a method to find the most optimal route from a warehouse to multiple locations, taking into account various factors.
What is the difference between TSP and VRP?
The Travelling Salesman Problem is a method to find the shortest route, while VRP is a method to find and plan the most appropriate and optimal route, involving various factors.
What is Time Window?
The Vehicle Routing Problem with Time Window refers to delivery requests with a specific deadline