This is the second of three parts on “3 signs your e-commerce logistics is obsolete” about the importance of route planning optimization in the current context of rising home deliveries. You may wish to read the first part before if you haven’t done so.
Sign 2: Each booking slot can only be selected up to a predetermined number of customers
Let’s recover the example of Acme, a grocery company selling through their e-commerce website to customers sitting at home.
Suppose all Acme’s customers pick the same delivery time slot to book their deliveries, e.g., from 08:00 to 09:00. This would imply a significant effort on Acme’s logistics operations to satisfy such a demand peak. Eventually Acme would have to spare all available resources to try to serve all customers simultaneously. That wouldn’t work very well.
The simplest way to prevent this is to limit the number of customers that can select each booking time slot. This allows Acme to smooth the peaks and ensure it’ll have enough resources and time to fulfil all orders once they’re spread throughout the day.
So Acme establishes that from 08:00 to 09:00 only up to 10 customers may select such booking slot, from 09:00 to 10:00 up to 15 customers and so on. Acme may vary the slot capacity according to its resources’ availability throughout the day (trucks, warehouse preparation) but in the end it will establish some hard limit for each of its booking slots.
Now let’s suppose James is booking his delivery time. He picks the 08:00 to 09:00 slot and it just happens he’s the 10th to do it. The slot is now exhausted, the website removes it for all customers and it no longer allows anyone to select it again.
That’s when Abby – who is James’ next door neighbour in the same building – finishes shopping and is asked by the website which time slot she wants to book. She also wants the 08:00 to 09:00 slot but it is no longer available. Since Abby can’t wait longer at home during the morning her next option is an afterwork slot, from 19:00 to 20:00.
We now have two next-door customers booking time slots very far apart, forcing Acme to dispatch a truck in the morning and another in the evening to the same building. Abby wanted to be served at the same time as her next-door neighbour James. From the logistics viewpoint, serving Abby as the 11th delivery in the same slot as James would almost free. But Acme will never know that! Because Acme limited Abby’s choices upfront and she never had the chance to even say what she really wanted. It couldn’t be more expensive for Acme and it couldn’t be worst for Abby.
A state-of-the-art e-commerce booking process considers the customer’s address to simulate the delivery cost for each of the slots regardless of how many orders are there for the same time.
It may happen that some slots are not feasible at all due to other customers’ orders already committed. It may happen that some slots will have a different cost to serve than others (in which case Acme may take the opportunity to increase or decrease each slot price). But Acme will always allow all slots that really are possible and let the customer state his preference.
Following this approach the company will receive more orders, considering some customers may quit when they see they’ll have no feasible time slot available. Also, by joining orders of neighbouring customers it will allow the fleet to serve more customers per day in the same working period. It will also reduce the miles-per-delivery and CO2 emissions. In the aftermath it will automatically allow Acme to sell and deliver more with the same resources.
This process is backed by Routyn as the real-time vehicle routing scheduling system. The e-commerce website is delegating on Routyn the evaluation of each time-slot for every incoming pre-order.
Routyn is specifically designed to respond very quickly on this query because the customer is waiting for the available booking slots to finish the order.
Knowing the marginal cost of serving the next customer according to a route plan continuously maintained in the background is key to efficient e-commerce logistics management.
This is the second of three parts on “3 signs your e-commerce logistics is obsolete”. Keep reading the third part here.