Driving efficient store deliveries is now more important than ever
Read time: 5 minutesThe world of retail is in constant flux. The effects of the coronavirus pandemic are a stark manifestation of this. While some retailers have been forced to temporarily close down most of their stores, others are struggling to cope with peaking order numbers. Supermarkets, convenience stores and pharmacies, in particular, are seeing an upsurge in volumes. With purchases increasing, the importance of store deliveries cannot be understated. However, time windows for delivery at stores are getting tighter due to governmental restrictions. Inventory space is getting smaller. Shelving is preferably done outside of peak hours to respect social distancing, but also at times when employees can be contracted at a reasonable cost. This puts a lot of pressure on store managers, who want to implement a repeatable replenishment schedule. It also stresses transportation and distribution. In our latest E-Guide, we discuss 5 best practices that can help you uphold service levels at lower costs.
By Goos Kant, Professor Logistic Optimization Tilburg University and Managing Partner ORTEC
Store deliveries, also known as store-to-store deliveries or inter-store transfers, refer to the process of transporting goods or products from one retail store location to another within a supply chain or distribution network. This can involve transferring inventory, supplies, or other items between stores to optimize inventory levels, meet customer demand, or improve overall operational efficiency. Efficient store deliveries are essential for maintaining an effective supply chain and ensuring that the right products are available at the right stores, at the right time.
These 5 steps can help retailers lower costs and deliver quality service:
1. Balance your peaks by reviewing the store delivery schedule
The first step for creating your store delivery schedule is to compute the desired delivery frequency per store per week. This is dependent on consumption, promotions, and min/max stock levels. Next, you need to compute the right delivery days and time slots per store. The goal is for daily routes to be as efficient as possible, while respecting business requirements. Ideally, the workload is balanced over the week and over the day. Delivery time slots per store should also comply with local government rules on environmental zones, pandemic restrictions, and inner-city access.
You can use advanced tactical solutions to create the type of schedules described above. The output of the solution will give you a starting point to establish agreements with each store on the proposed delivery time slots over the week. Let’s look at another crucial step to improve store delivery: route optimization.
2. Use advanced optimizers for daily route optimization
After defining weekly delivery time slots per store for the upcoming period, you need to create operational plans for the coming week(s), based on the latest volume forecast. Given the current volatility in demand, more and more retailers are leaning towards dynamic routing and relying on optimizers and new techniques to improve visibility. Powerful optimizers improve routes dynamically, while respecting all business requirements.
These optimization solutions don't only account for orders and delivery windows, but also your fleet mix, constraints on the receiving end, driver capabilities, and inner-city restrictions. In food retail, this might include more complex loading constraints. Applying an advanced optimizer, rather than a basic routing solution, can go a long way to help you cut costs, even if you outsource your transport execution. Optimization can also go beyond routes.
3. Extend your modeling beyond delivery to support the entire supply chain
There are more aspects you should consider to further improve store delivery. Typically, routes are created at a DC-level, but route assignments for trucks and drivers can be done at a more central level. This helps you balance resources and avoid shortages in one DC while inadvertently creating a surplus in another. With this approach, you can create efficient loops for each driver. By centralizing truck and driver assignments, you can also decide which routes to optimize and which to reassign based on real-time data, such as actual order volumes, traffic conditions, and weather events. This holistic approach to modeling and optimization can enable you to make more informed decisions and further enhance your store deliveries.
4. Implement a control tower for end-to-end visibility
A control tower is a central hub that provides real-time visibility and control over all aspects of your supply chain, including store deliveries. By implementing a control tower, you can have a comprehensive view of your entire delivery process, from order creation to final delivery at the store. This visibility allows you to proactively manage any disruptions or exceptions that may occur, such as changes in delivery time slots, unexpected traffic delays, or order cancellations. With end-to-end visibility, you can take proactive measures to mitigate risks, optimize routes on the fly, and ensure smooth and efficient store deliveries.
5. Continuously monitor and optimize your store delivery process
Finally, it's crucial to continuously monitor and optimize your store delivery process. Keep track of key performance indicators (KPIs), such as on-time delivery, delivery window compliance, and transportation costs, and use data analytics to identify areas of improvement. Regularly review and update your store delivery schedule, routes, and modeling parameters based on changing business requirements, customer demands, and external factors. By continuously optimizing your store delivery process, you can drive operational efficiencies, lower costs, and deliver superior service levels to your customers.
In conclusion, optimizing store deliveries is a critical aspect of modern retail operations, especially in the face of changing consumer demands and business requirements. By following best practices such as balancing delivery schedules, using advanced optimization techniques, extending modeling to support the entire supply chain, implementing a control tower for end-to-end visibility, and continuously monitoring and optimizing the process, retailers can lower costs, improve service levels, and stay ahead in today's competitive retail landscape.
