Importance of route planning for India, given huge surge in e-commerce demand

Importance of route planning for India, given huge surge in e-commerce demand

The growing demand of online products and on time delivery has become a challenging job in a country like India which is one of the fastest growing economies in the world. India’s e-commerce revenue is expected to jump from US$ 39 billion in 2017 to US$ 120 billion in 2020, growing at an annual rate of 51 %, the highest in the world. This growth also brings opportunity for the e-commerce companies to gain the market share which can be achieved by having competitive advantage of one organization to the other. The value created by the organization in terms of price, quality and delivery is driving the growth of the organization. This has increased the competition among companies to reach the customer in the promised time with the best value generation of the product. This has generated the need to go closer to the customer and improving the last mile delivery, whereas the optimization of the First mile has reached the saturation.

To improve the Last mile delivery, there is strong requirement of accurate route planning which do not only include the minimum distance of travel but also the identification of smaller distribution centres for further delivery. The requirement of small fleets has increased, due to smaller deliveries and ease of accessibility in busy hours of the city. From small fleets to the motor bike, right decision needs to be taken which vehicle would be accessible at what route. This will create value for each stakeholder in terms of customer, LSP and end distributor & dealer each level of the Last Mile.

Optimized Last Mile delivery leads to cost saving & operational efficiency

An accurate route-planning solution will improve customer service to greater extent and can dramatically reduce fuel & labour costs. Drivers tend to spend less time on roads, reducing wear and tear on vehicles and vehicle maintenance costs. Route-planning solutions help businesses meet tight schedules. Flexibility in route planning enables businesses to handle emergencies with ease, keeping customers happy.

Reduces carbon emissions. Since route-planning solutions provide the most efficient routes, reducing average distance travelled, carbon emissions to environment will be reduced going towards sustainable operations . For environmentally conscious businesses, that’s a big plus.

Increases productivity by saving route planning time & significant decrease in drive time. Route planning solutions help you do more work with fewer resources while holding the line on costs. That can help boost business growth and profitability. 

Key factors that need to be focused upon while designing an optimized route plan

Factors to Consider:

1.   Customer Location:  The geographical locations of the customers and their distances form the hub, insights to the planners, number of customers to be served & type of vehicles to be used based on the constraints. Customer locations help planners to arrange the consolidated shipments in the vehicles based on the number of customers to be served in a single or multi trip.

2.    Transportation cost : Transportation cost is one of the most important factors when it comes to last mile delivery. Balance of service levels & cost required to meet that service level is what driving LMD.

3.    Shipment structure:

Shipments includes the load that each customer needs, shipment structure helps planner to decide the type of vehicle to be used for the delivery and design load for multi customer point.

4.    Service Level:

Service level must be given importance while designing the route and the customer demand .

5.    Constraints:

Because of various constraints in the delivery , timeline to deliver the product to the customer effected . There are constraints where a certain vehicle (say bigger vehicles like 20Ft or 32Ft)  can not reach to destination, thus we must have a smaller vehicle to do the delivery, thus we can not combine more of the customers to achieve the delivery.

Again, there are more constraints such as material type, where different materials cannot be combined and thus, we must use a greater number of vehicles to do the delivery for the same location.

Present and upcoming trends in route planning for an optimized last mile delivery experience

Fulfilment timetables are changing. Consumers want faster fulfilment, and shippers need to move more product at a faster pace. Shipments that previously required one hour to process are now being forced into three-minute intervals, if not faster times. Consequently, last mile logistics is finally able to become part of this push toward faster fulfilment.

Current Trends:

Analytics Will lean Logistics Costs

Analytics allow supply chain entities to isolate the cost-impacting factors across all shipments. Although subtle changes may not have a major impact on initial costs, data analytics provide a means of pushing costs to infinitesimal limits.

Insourcing Reaches into Last Mile Logistics

Outsourcing seems to be the topic of the year, especially among companies providing third-party logistics (3PL) services. However, the sudden spike in last mile delivery encourages more shippers to begin insourcing last mile deliveries.

Synergy between companies : In current scenario, many companies are exploring opportunities for warehousing & transportation synergies for reduction in bottom lines with improved service levels.

Future Trends

In this customer centric market, there is requirement of delivery of right product at the right place. To achieve there are upcoming many ways E-commerce are looking forward to it.

Address intelligence: involve customers

Based on ‘address intelligence’, parcel companies could work on alternative delivery (and returns) networks and options for specific areas, smart outsourcing and collaboration and even dynamic pricing of deliveries.

Robotization in the supply chain

Robotization downstream will impact e-commerce ready packaging, picking and sorting processes, transportation upstream and containerisation in the supply chain; operational excellence is necessary in the integral door-to-door supply chain. Robotization is also necessary because of growing driver shortages and changing labour market conditions

Smart planning, IoT, traffic data and Uberfication

Currently, most transport planning and scheduling systems are based on reducing the distance travelled. However, in urban freight, most time (and cost) is spend on finding an unloading zone, walking and actual delivery, not on driving. New transport planning and scheduling systems will be developed using big data to forecast delivery routes . 

Zero emission transport modes: no pollution, no noise

A trend for last mile delivery is the requirement for zero emission transport particularly in central and densely populated areas of cities; e-mobility. Not only cargo vans and trucks will be electrified.

Sense and respond

There’s a strong focus on visibility in the delivery process. Data that demonstrates proof of delivery along with tracking information is invaluable for when a delivery is late or gets lost. It also improves customer satisfaction, as customers can see exactly where their delivery currently is, with a realistic estimated time of arrival. IoT-technology will support ‘sense and respond’ planning and control of the delivery supply chain (in picking, sorting and delivery).

Block Chain in Last Mile Delivery

Block chain and last mile delivery are the match made in the heaven.

One of the main benefits of blockchain technology is the amount of transparency provided to the customer, as well as, the company. Customers today, are more conscious about where their products come from, how they are managed and finally, the last mile delivery.

Comparative analysis between manual route planning and automated route planning

·       Main advantage of the automated route planning is increase in the efficiency and saves the cost. Planning with automated route optimizer improves the utilization of your resources such as drivers, vehicles and trailers. Trips are optimized in line with your specific requirements, including delivery time windows, vehicle capacity and access restrictions. Even with small fleets the software generally creates savings of between 7 and 15%.

·       Manual planning is complex and can take several hours. With automated route optimizer you can calculate the optimal solution in a matter of seconds. By using automated route optimizer, a planner will reduce planning time dramatically while improving customer service. The time saving in planning can bring advantages in other areas. Picking and loading can start earlier, reducing expensive over-time or shift rates, order cut-off times can be delayed, offering improved customer service.

·    Trip planning is not only about optimal use of resources; a plan also must comply with statutory regulations, road access restrictions and social obligations. With automated route optimizer you can ensure your planning results are compliant with external and internal requirements. Create visibility over your logistical processes.

·       Automated route optimizer create visibility over your logistical processes, provides the exact data you need to evaluate your logistics processes and identify additional savings and optimization potential.

·     Most automated route planning systems will create a matrix table that plots time and distance between all delivery points on a map. The programmed will then generate multiple different plans based on the constraints in the system, selecting the best one in terms of a specific goal, whether that be reduced mileage or reduced hours. The problem with this method of working is the huge burden on processing power to generate the huge number of different scenarios. The system will run through a set routine to try and find the optimum scenario as fast as possible, but a limit is often put on how long the system is allowed run. This means that a better solution may be available, but the computer has not been allowed to find it yet. The system demands for automation therefore require that expensive machines are needed.

·       The best possible solution for small and medium enterprises is to go for the automation along with the human intervention at certain key points which helps them to achieve desired output efficiently.