Transportation costs constitute a significant fraction of total logistics cost in Supply Chain Management (SCM). To reduce transportation costs and to improve customer service, the optimal selection of the vehicle route is a frequent decision problem and this is commonly known as Vehicle Routing Problem (VRP). Vehicle Routing Problem with Time Windows (VRPTW) is an important variant of VRP and also a practical problem in real-world applications. Since VRPTW belongs to NP hard problem, development of heuristics is a prime concern. In this paper, an ant colony based heuristic is developed to solve VRPTW. The heuristic is tested with benchmark instances and provides improved solutions.