Supply Chain Planning

The Last Mile to the Customer: Cello LMD Route Planner (2)

Last mile delivery represents the final stage of delivery of goods to end customers. Customers want high quality services at lower costs. Cello LMD Route Planner offers a delivery optimization solution that is essential to delivering such services. This second in a two-part series of white papers looks at the key functions and features of Cello LMD Route Planner.

According to this year’s Third-Party Logistics Study, as shown in Figure 1, the logistics service that shippers want to outsource the most is, once again, domestic transportation. There are multiple reasons to this preference, one of which is that it is difficult to secure the know-how, infrastructure (vehicles and drivers), and licenses required for local transportation. An interesting trend in this regard is the rapid increase of the value created by applying IT to logistics services. In a survey asking which IT-based logistics capabilities shippers and logistics companies need the most, the majority of the respondents answered transportation planning.

Samsung SDS leads this trend with Cello LMD Route Planner, a delivery planning solution that it has developed and enhanced over the years. This two-part series of white papers has been prepared specially as an introduction to Cello LMD Route Planner. The first part covered the functions and features of the solution. This second part will discuss what to consider to successfully introduce and adopt the solution in deliveries, along with real-world applications of the solution.

[Figure1] Shipper Continue to Outsource a Diversity of Logistics Services

Features of Cello LMD Route Planner

Cello LMD Route Planner covers planning of both conventional shop delivery (delivery to shops) and home delivery (delivery to end consumers), which has come into the spotlight with the growth of e-commerce. The route planning process takes place in the following three steps: accurate master data preparation, route planning execution, and route finalization. Cello LMD Route Planner offers unique features that help the system carry out these steps.

First, the Resource Dispatcher performs repeated simulations while automatically changing inputs such as order data, vehicle types and capacities, and departure time, to create an optimized scenario.

In addition, the system allows users to set basic patterns, such as pickup, delivery, and repair/installation/removal, or create patterns that combine some of these basic patterns. This allows them to develop delivery route plans that incorporate increasingly diverse delivery types and their characteristics.

Cello LMD Route Planner also comes with other functions that allow users to accommodate various temporal restrictions, such as customers’ preferred delivery times, break times for drivers, and statutory work hours.

[Figure 2] Cello LMD Route Planner

Real-world Applications and Challenges

Proposal of Integrated Transportation Plans

Businesses can use Cello LMD Route Planner as an automated vehicle dispatch engine for transportation management systems (TMS) to develop delivery plans for various delivery environments. Samsung SDS also uses the Planner to simulate delivery plans in the consulting or proposal phase. In this paper, I would like to introduce a case where Samsung SDS used the solution to analyze the effects of system-based integrated transportation plans for a manufacturer which had been manually creating delivery plans.

The company consisted of several business divisions, and each carried out its own delivery planning; it received orders for its products from dealers and shops, manually developed delivery plans, and delivered the products. Delivery plans were manually created based on the relevant personnel’s experience, which took a long time and made it impossible to verify the efficiency of the plans. In addition, as each division separately established its own plans, dealers or shops often received the same products from multiple divisions. Such practice also lowered the company’s load efficiency.

Samsung SDS performed simulations to calculate the quantitative effects of integrated transportation plans for the company. Specifically, Samsung SDS analyzed how delivery volumes affect the delivery outcomes and the time required to carry out solutions. To this end, three scenarios were simulated by dividing delivery volumes into the top 20 percent, the average and the bottom 20 percent.

In addition, Samsung SDS referred to past delivery results and interviews with the manufacturer’s shops to bring the conditions applied to the simulation as close to the actual delivery environment as possible. The conditions included vehicle access to destinations, the upper limit of target destinations, the upper limit of travel distance for each vehicle, and how long it takes to unload goods.

As shown in Figure 3, the simulation showed that integrated planning would allow the manufacturer to get more out of its large-sized vehicles by reducing redundant dispatches and increasing their load efficiency. In numbers, integrated planning was shown to decrease the number of vehicles required by 40 percent and improve load efficiency by 6 percent. In addition, with each vehicle visiting more destinations per trip, the cost factor went down by 17 percent.

[Figure 3] Delivery Simulation Result

Challenges to Successful Delivery

In simulations, route planning is relatively easy; you have a set of master data at your disposal, and you work in a static environment devoid of uncertainties. However, real-world deliveries are affected by numerous factors that were not considered in the simulation phase. For this reason, route planning managers complain that it’s difficult to use the optimization solution while drivers say that it’s almost impossible to execute deliveries following the delivery plans. Therefore, to ensure successful delivery from the planning phase all the way to completion, the solution needs to be capable of responding to unexpected developments in real time, and meet the following challenges.

The first challenge is automating the collection and updating destination information as much as possible. Shop delivery is relatively easy to manage as destinations seldom change. However, home delivery destinations change every time; it is impossible to verify and collect reference information on so many destinations manually.

The second challenge is providing delivery drivers with mobile solutions. Upon leaving the center, drivers face numerous variables such as uncertain travel times, and customers who change their preferred time of visit. Interviews with drivers and engineers revealed that most of them rely on their experience and intuition to adjust delivery schedules. Therefore, they need to be provided with mobile solutions so that they can adjust their schedule based on data. [Figure 4] shows the service image of the LMD Mobile Support Solution, which Samsung SDS has developed based on the delivery drivers’ needs.

[Figure4] LMD Mobile Support Solution

Conclusion

Many companies have attempted to provide faster delivery services at lower costs by applying delivery plan optimization solutions. However, not many of them succeeded. Such a low success rate shows how difficult it is to provide faster delivery. Therefore, if you plan to get more out of your existing solution or introduce a new solution to optimize your delivery plans, you need to pay attention to the following.

Cello LMD Route Planner has been developed by Samsung SDS itself, which means it can be readily customized as delivery environments change, and its functions can be upgraded on an ongoing basis. The user can plan different types of delivery services, from shop delivery to home delivery. The Planner is also designed to consider vehicle dispatch rules and temporal/spatial restrictions. In addition, it supports mobile solutions and automatically performs simulations based on delivery status shared in real-time.

Going forward, Samsung SDS plans to apply major Industry 4.0 technologies to Cello LMD Route Planner. Future versions of the solution will auto-collect various delivery information with IoT devices, analyze big data, and utilize AI-based analysis learning to offer real-time mobile delivery support while analyzing and managing reference information. With these advancements, Cello LMD Route Planner will play a crucial role in creating new business opportunities in the logistics market by offering optimized LMD services.

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To find out more about Cello LMD Route Planner of Samsung SDS, visit Cellologistics.com and download the white paper.

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