xTrack TMS optimization algorithm for warehouse network distribution
You get many benefits when you use an optimization algorithm for a warehouse network at the order distribution stage, specifically for the deliveries by carriers to your customers. Reducing transport costs is among the most important benefits: optimal route planning reduces the number of kilometers travelled, the number of vehicles needed, fuel consumption, transport costs and the time drivers need to deliver the goods.
Route optimization in a warehouse network
Proper route planning is made much easier by the optimization algorithm in a warehouse network as it groups placed orders so they can be delivered as quickly and efficiently as possible. The algorithm identifies the most efficient route between the different warehouses from which the ordered products should be picked up, so that costs are kept to a minimum. The grouping for each route of the orders you need to deliver takes into account a number of constraints, such as customer schedules or the capacity of available vehicles.
After grouping orders, you can set up potential routes (also called delivery patterns). If necessary, routes can include stops at multiple locations so drivers can pick up products from two or more warehouses and deliver them to end customers.
The vehicle allocated by the algorithm for each route will always have the appropriate capacity for the volume of goods that are to be loaded at your suppliers’ logistics centers or warehouses and subsequently unloaded at the locations specified by your customers.
How does the optimization algorithm work?
First, orders are retrieved from your company’s ERP system, then all important data, such as address, customer names or agreed-upon time intervals for delivery at final destinations are exported to the TMS system.
The optimization algorithm takes into account all the information, including data about the vehicle fleet: number, type, capacity or availability, so that routes can be optimally planned.
All you need to do is to get a delivery schedule by entering into xTrack TMS data such as departure and arrival times at the destination or loading times. The app will then automatically schedule the deliveries for the following week, taking into account the days and time intervals when deliveries can be made.
To give you a concrete example, let’s consider the following cases:
- All orders placed on Monday by 08:00 will arrive by 09:40;
- All orders placed on Monday between 08:00 and 10:00 will arrive by 11:45;
- All orders placed on Monday between 10:00 and 13:00 will arrive by 14:45
- All orders placed on Monday between 13:00 and 15:00 will arrive by 16:45.
The schedule list created based on user input will contain the route segments (legs) defined by two points (start point and destination) as follows:
| Source | Destination | Day of departure | Deadline / Order receipt time interval | Departure time | Arrival day | Arrival time | Duration (minutes) |
| Warehouse 1 | Warehouse 2 | Monday | 08:00 | 08:30 | Monday | 09:40 | 70 |
| Warehouse 1 | Warehouse 2 | Monday | 08:00 – 10:00 | 10:30 | Monday | 11:45 | 75 |
| Warehouse 1 | Warehouse 2 | Monday | 10:00 – 13:00 | 13:30 | Monday | 14:45 | 75 |
| Warehouse 1 | Warehouse 2 | Monday | 13:00 – 15:00 | 15:30 | Monday | 16:45 | 75 |
Next, if the route is a complex one (with several legs) the algorithm generates all the possibilities to connect two or more warehouses in the network, taking into account the potential constraints to ensure efficiency, then goes through the steps below to choose the optimal variant. The algorithm:
- checks stock availability for the ordered products, and warehouses with sufficient stock will be labelled as “source warehouses”;
- creates a list of “destination warehouses”, which will include warehouses serving the customer;
- identifies all routes that have a source and a destination warehouse and adds to these distances the time from the arrival of the goods at the warehouse to the departure of the vehicle and the average time needed to deliver the items;
- selects the route that requires the shortest delivery time from those calculated in the previous step.
The importance of an optimization algorithm for warehouse network distribution
A company that carries out, among other things, distribution, transport and delivery activities or provides courier services needs a complete management of the trips between warehouses and route optimization for the entire fleet of vehicles used.
The implementation of a distribution optimization algorithm is essential for coordinating the entire transport management system and increasing efficiency in route planning.
Only through the use of powerful software applications dedicated to digitizing transport flows can route optimization and efficient planning of deliveries between warehouses be achieved.
The TMS optimization algorithm for warehouse network distribution must take into account the efficient use of logistics resources, so that the following requirements are met:
- automatic collection and processing of data related to orders, goods, customers;
- monitoring of trips, identification of transport-related problems and their resolution;
- efficient distribution center design allowing a continuous and fast movement of goods throughout the supply chain;
- integration of the TMS solution with various other systems such as the Axes Software WMS system for warehouse and stock management to ensure product traceability.
By using an optimization algorithm for warehouse network distribution, a company will be able to manage logistics flows more efficiently benefitting from:
- multi-criteria planning (optimal routes, available vehicles, driver working time, etc.);
- real-time dashboard monitoring (trip status, graphical representations of selected key performance indicators);
- predictability of deliveries for end customers;
- automatic issuance of necessary transport and/or payment documents);
- reduction of distribution costs.
Advantages of cloud-based applications
The xTrack TMS application can be fully hosted on a cloud platform and this has a number of significant benefits. In addition to the reduced transport costs and increased efficiency you get as a result of optimizing your shipments with this software solution, you can also enjoy other benefits:
- reduced costs related to computing power, information storage and physical server maintenance, as physical servers are replaced by virtual ones;
- resizing of resources without computing power and storage restrictions;
- constant data processing speed, regardless of whether new functionalities are added to the application or not;
- complete elimination of the risk of information loss, increased stability;
- access to data anytime, anywhere, provided there is an Internet connection.
In addition, the infrastructure management is the cloud provider’s responsibility, not yours. In short, effort is reduced, but efficiency is increased…
Cloud integration is one of the objectives we aim to achieve within the project “Innovative platform for artificial intelligence management of work processes in factories and warehouses“, co-financed by the European Social Fund through the Competitiveness Operational Programme 2014-2020. Also within this project, in addition to diversifying the xTrack LMS (Logistics Management Suite) application suite, we are also extending some of the functionalities of the existing software solutions in our portfolio, creating new optimization algorithms. And the optimization algorithm described above is one such example.
Find out how xTrack TMS can be customized for your company. Fill out the form below and send a message to our consultants for more details!
