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Q&A: Route4Me CEO Talks Logistics Optimization in the DTC Era

The rapid growth of e-commerce is driving deep changes in logistics and transportation management, from tightening up trucking capacity to elevating the importance of final-mile delivery processes. To respond, logistics managers now need to leverage diverse systems and new ways of thinking in an effort to improve carrier partnerships and increase speed and efficiency.

With its “Dynamic Route Optimization” technology, available on mobile apps on the iPhone, iPad and Android, route planning software platform, Route4Me, can outline optimal routes quickly.

Company CEO and founder, Dan Khasis, discussed the company’s software and how it’s helping firms meet the challenges of logistics in today’s e-commerce-driven world of rapid delivery and high consumer demand.

Sourcing Journal: How did you start Route4Me?

Dan Khasis: What started as a real estate app for house hunters or real estate agents, within a week we were inundated with B2B and B2E business. So we said ‘forget the consumer, we’re going straight business.’ That was 10 years ago. Week one we have 50,000 downloads. Now we’re at almost 2 million downloads, still all B2B with some enterprise in the mix.

We have over 23,000 customers at this point and it’s just continuing to grow.

SJ: What is route optimization and what does your software do?

DK: When we got started we soon realized that what we thought was simple was one of the most sophisticated and unsolved computer science problems in existence–it’s called the traveling salesman problem. And it only gets more complicated as you add business rules and considerations into the mix. What we ended up seeing is the only way to solve a route after 12 stops is you have to use very complicated algorithms, which very few people know about and very few companies develop. The first step was to figure out what the difference was between route optimization, route planning and route management, and who uses what.

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The first versions of the software had 12 stops and that was great. Then the customers said, ‘I have two drivers, or three or five,’ and then…we realized that this problem has dozens of derivative problems and they’re all fundamentally linked but are distinct in terms of business application. So route optimization isn’t just for delivery. It’s actually for everyone who has people, assets and vehicles. This software is for any logistics-intense business.

SJ: How has the industry and your company dealt with the rapid changes brought on by e-commerce when it comes to logistics and transportation?

DK: Many companies have gone after last-mile delivery without the right systems or software and they haven’t been successful. It took us 10 years and 2 million man hours to get to where we are and we still think we have a lot to learn and a lot to improve. On the e-commerce side, almost all of the delivery is going through FedEx, USPS, UPS and DHL. Then for the big stuff and white glove stuff, it’s still going through XPO and other subcontractors.

We don’t believe anyone is integrating the brains of this so-called ‘economic optimization,’—the routing, the inventory, and locations and traffic patterns—with the actual shopping experience to truly benefit from personalized e-commerce, particularly for small business. That’s where we’re heading, where you’re integrating the supply chain into the user experience and monetizing it and making pure profit by giving the customer a choice.

SJ: What are some of the particular challenges for the apparel, footwear and retail sectors in this realm?

DK: What’s really big right now is cross-docking and transloading, where companies are taking goods that need to go from one warehouse or distribution center and bundling things together to another distribution center most efficiently to get as much density in one or two vehicles to get as close the consumer as possible. If you can show companies where all their vehicles are at any given point so they can plan according, that’s where we think there’s opportunity on the wholesale and retail distribution side.