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The Algorithmic Engine: How Algorithms Power Logistics.

by Matt Corby,
Dec 8, 2023

Table of Contents:

Come with us on a deep dive into the complex but highly useful world of algorithms.

Deep in the heart of Australia’s logistics industry, beneath the buzz of warehouses, the hum of transport, and the complexity of supply chains, lies a silent powerhouse: algorithms. These digital constructs are the architects of efficiency, orchestrating the intricate dance of goods across the continent. 

In this blog post, we are going to get technical. We’ll embark on a journey through the mysterious realm of algorithms, exploring what they are, how they work, and their pivotal role in driving Australia’s logistics industry forward.

But don’t worry. This isn’t going to be like one of those boring Year 13 maths classes. We will keep it as simple as possible and by the end, you’ll be an algorithm aficionado. 

Demystifying Algorithms

So what are algorithms? At their core, algorithms are step-by-step sets of instructions designed to perform specific tasks or solve particular problems. They are the brainpower behind computer software, providing a structured approach to tackling complex challenges.

How Do Algorithms Work?

Algorithms function through a series of logical and mathematical operations. They take input data, process it through defined steps, and produce an output or solution. The efficiency and effectiveness of an algorithm depend on its design and implementation.

Update “max”

By way of example, here’s a simple algorithm to find the largest number in a list of numbers. You can do this for fun on a piece of paper.

  • 1) Start with a list of numbers.
  • 2) Initialise a variable, let’s call it “max,” to the first number in the list.
  • 3) Run through the list, starting from the second number.
  • 4) For each number you encounter in the list:
    • Compare it to the current value of “max.”
    • If the number is greater than “max,” update “max” to be that number.
    • Otherwise, continue to the next number.
  • 5) After running through the entire list, “max” will be the largest number in the list.

There you go. You’ve just performed an algorithmic function. Wasn’t so hard, was it? So now we know what an algorithm is, let’s find out how useful they are to the logistics industry in Australia.

Algorithms in Australia’s Logistics Landscape

You may not know it, but algorithms are working diligently behind the scenes of almost everything you encounter during your day. From traffic lights to coffee orders, these nifty number crunchers are figuring out the best way to get things done and the most efficient way to move people and goods from place to place.

And when it comes to logistics, algorithms are the brains behind the logistics software systems that make your life so much more efficient and simple.

Route Optimisation

One of the most critical applications of algorithms in logistics is route optimisation. Australia’s vast expanse poses an almost infinite number of logistical challenges. But algorithms can calculate the most efficient paths for deliveries, accounting for factors like distance, traffic, and delivery windows.

We will take a deep dive into how algorithms drive route optimisation a little later in the post.

Demand Forecasting

Anticipating future demand is a fundamental aspect of logistics planning. Algorithms analyse historical data, market trends, and external factors to make accurate demand forecasts. This ensures that businesses can keep their stock inventory at appropriate levels and meet customer needs in the best way possible.

Inventory Management

Hard on the heels of demand forecasting is inventory management. Efficient inventory management is crucial in the logistics industry as it ensures that your warehouses are stocked in ways that best suit both your customers and your bottom line. There is no point in having too much of one type of stock and not enough of something else. Algorithms assess real-time data on stock levels, sales, and replenishment lead times to determine optimal inventory levels and prevent stockouts or overstock situations.

Load Balancing

In transportation logistics, load-balancing algorithms distribute cargo among available vehicles to optimise capacity utilisation. This ensures that none of the vehicles in your fleet are underutilised or overloaded, improving efficiency and cost-effectiveness.

The Logistics of Algorithm Implementation.

Algorithms require large amounts of accurate and comprehensive data as their foundation. In logistics, this data includes information about shipments, inventory levels, customer orders, vehicle locations, and more. Accurate data is vital for the algorithms to make informed decisions.

Data Processing

Once the data is input, algorithms process it through predefined steps. They use mathematical models and heuristics (shortcuts) to find solutions to complex logistics problems. For example, the Travelling Salesman Problem is solved using various optimisation algorithms to find the shortest route.

Real-Time Adaptation

Logistics operations are dynamic and subject to change. Algorithms in logistics software continuously adapt to real-time data, ensuring that decisions remain optimal despite shifting conditions. For example, an algorithm might take some real-time information about a traffic accident and use it to reroute a delivery vehicle to avoid traffic congestion.

Route Optimisation using the Dijkstra’s Algorithm.

OK. It’s time to get technical. Let’s delve into a step-by-step analysis of a specific algorithmic function that is commonly used in logistics. 

Step 1: Input Data

The first step in any algorithmic function is gathering and preparing the necessary data. In the case of route optimisation, the input data includes the following information.

  • Graph Representation. The road network is represented as a graph, where nodes (vertices) represent locations, and edges (connections) represent roads or paths between them.
  • Node Coordinates. For each location, the algorithm needs to have its geographic coordinates (latitude and longitude) to calculate distances accurately.
  • Vehicle Information. Information about the logistics vehicles, such as their capacity, current location, and availability.

Step 2: Graph Creation

Using the input data, the algorithm will create a graph representation of the logistics network. This graph includes nodes for each location and weighted edges between them, where the weights represent distances or travel times. The graph also considers factors like one-way streets or road restrictions.

Step 3: Initialisation

  • Create a list of unvisited nodes, initially including all locations.
  • Initialise the distance to the starting point (the current location of the vehicle) as zero and set it to infinity for all other nodes.
  • Set the current location as the starting node.

If this sounds familiar, it’s pretty much the same algorithm we did on paper earlier on to find the largest number in a list. Although this is a much more complex example, it still follows the same basic principles of all algorithms, that is, to solve a problem using successive steps. Let’s continue.

Step 4: Calculate Shortest Paths

Now, the system will apply Dijkstra’s Algorithm to calculate the shortest paths from the current location to all other nodes. The algorithm repeatedly selects the unvisited node with the smallest distance and explores its neighbours.

  • For the current node, calculate the tentative distance to each of its neighbours by summing the distance from the current node to the neighbour.
  • If the newly calculated tentative distance is shorter than the existing distance, update the distance.
  • Mark the current node as visited.
  • Select the unvisited node with the smallest distance as the next current node and repeat the iteration until all nodes are visited or until you reach the destination(s).

Step 5: Path Reconstruction

Once all nodes are visited it can reconstruct the optimal route. Starting from the destination node, it follows the path by selecting the node with the smallest distance at each step until it reaches the starting point. This provides the shortest route from the current location to the destination(s).

Step 6: Handling Constraints

Route optimisation often involves constraints, such as vehicle capacity or time windows for deliveries. The algorithm should incorporate these constraints during path selection. This may require additional data structures and checks to ensure that the route adheres to the constraints.

Step 7: Final Output

The final output is the optimised route, including the sequence of locations to visit and the corresponding distances or travel times between them. This optimised route minimises travel distances, reduces costs, and ensures efficient logistics operations.

Step 8: Implementation and Integration

The algorithmic function is implemented within logistics software or systems. It integrates with real-time data sources, such as GPS for vehicle tracking and traffic updates, to continuously adapt and optimise routes as conditions change.

Step 9: Continuous Monitoring

To maintain efficiency, the algorithm continually monitors the logistics network for changes, such as traffic disruptions or new deliveries. When changes occur, the algorithm recalculates routes to ensure optimal performance.

Route optimisation using Dijkstra’s Algorithm is a complex but powerful process that involves data preparation, graph creation, iterative calculations, and constraint handling. It plays a vital role in logistics by ensuring that vehicles take the most efficient paths, reducing costs, and improving customer satisfaction.

Benefits of Algorithmic Logistics

Algorithmic logistics operations are significantly more efficient than manual approaches. Route optimisation, load balancing, and demand forecasting algorithms reduce costs, improve resource utilisation, and enhance overall efficiency.

Customer Satisfaction

Accurate demand forecasting and route optimisation lead to timely deliveries and better customer service. Satisfied customers are more likely to become repeat clients, boosting loyalty and revenue.


Efficient logistics operations reduce fuel consumption, vehicle emissions, and overall environmental impact. Algorithms can contribute to sustainable logistics practices in line with Australia’s commitment to eco-conscious transportation.

Where’d We Be Without Algorithms?

Lost. That’s where we’d be! In Australia’s logistics industry, algorithms are the invisible architects shaping the future of efficient, cost-effective, and sustainable supply chains. From optimising routes that traverse the vast outback to forecasting demand in bustling cities, algorithms are the driving force that keeps the logistics wheel turning. 

As technology advances and data becomes more accessible, the logistics landscape in Australia will continue to be transformed by the algorithmic engine, powering the nation’s logistics evolution toward greater efficiency and resilience.