Domestic transportation can be broken down into two areas: transportation and delivery. Transportation involves transporting cargo in large volumes across long distances. In transportation, the key is to find cost-effective trucks and load as much cargo as possible (loading optimization). Delivery typically takes place after transportation. It involves moving goods in smaller volumes over shorter distances and to multiple destinations. Therefore, in delivery, effective multi-stop route (or milk-runs) planning is the key to improving load density and delivery lead time.
Cello Route Optimizer (Cello RO) suggests routes that enable you to deliver orders at minimum cost. It informs delivery drivers of the optimal cargo volumes and delivery routes that day, helping them handle tens to hundreds of daily orders efficiently. It also reduces the time spent in truck dispatching and the number of trucks you need, thus ultimately lowering total transport costs.
This white paper explains how Cello Route Optimizer can help optimize delivery plans and introduces a case study in delivery and installation.
Cello Route Optimizer
Delivery Simulations Using Heuristic Techniques
By adopting Cello RO, Samsung SDS is working on reducing truck dispatch operations that have been done manually relying on workers’ knowhow. Once a series of constraints in dispatch operations are entered into Cello RO, it generates the most optimal routes that satisfy all the constraints.
However, it is incredibly tricky to apply Cello RO to a customer’s operations and develop an automated dispatch system. As you work to reflect the experiences and knowledge of dispatch workers into a system, you often face resistance from them. And even if they do agree to contribute their inputs, you’d have to take plenty of trial-and-error because it’s hard to put this type of knowledge into words and explain.
We have adopted an advanced heuristic technique in Cello RO to address this issue. And now, Cello RO generalizes different rules and constraints to allow users to easily modify them with some simple configuration.
Route Optimization for Streamlined Packing and Loading
With the rise of digital transformation in the logistics industry, customers today are no longer satisfied with simple optimization plans based on a single optimizer. In fact, they want more sophisticated optimization created by integrating multiple optimizers. An example of this would be using both loading and route optimizers in order to check route feasibility or plan package loading according to the order of stops.
amsung SDS uses Cello Loading Optimizer (Cello LO), an optimization solution designed to help enable users to pack/deliver orders quickly and efficiently, in its transport operations. By optimizing packing and loading operations, it not only helps reduce transport costs — it also prevents cargo damage during transport as it considers rules and constraints as well as load stability.
Case Study – Furniture Delivery of Company A
Features of Delivery & Installation
When planning routes for Business to Business (B2B) delivery (like shop delivery) or Business to Customer (B2C) delivery that doesn’t involve face-to-face contact, the focus is mainly on finding the shortest route. In case of shop delivery, with some exceptions, customers (shipment receivers) are in the store during operating hours and are therefore available to receive packages. So changes are rarely made as customers are less likely to modify the delivery time. In B2C delivery too, a growing number of customers these days designate pickup points or request drivers to leave packages on the doorstep, leading to less direct contacts with delivery drivers.
Delivery & installation, however, involves not only moving goods but going inside a customer’s home to assemble and install them. Therefore, changes are frequent due to the customer’s circumstances or the environment of a delivery destination.
Furniture delivery of Company A that we’re going to look at closely in this white paper is part of delivery & installation. Furniture pieces, such as beds, sofas or desks, are packed with their Bill of Material (BOM) and delivery drivers visit and assemble them in customers’ homes. With regards to furniture delivery, there are two aspects to pay attention.
The first is about a customer’s preferred delivery time.
The second aspect has to do with the nature of furniture as a shipment and the environment of a delivery destination.
Delivery Planning for Different Types of Shipments
Before we get into the use case of Cello RO in Company A’s furniture delivery operations, let’s briefly look at the company overview [Table 2].
Furniture Company A delivers furniture products from its distribution center in Incheon to greater metropolitan areas using 1.4-ton trucks. It also assembles and installs them. Its furniture delivery has largely two features.
First, delivery drivers at Company A work with a delivery partner in two-person teams to move and assemble furniture pieces. Indeed, other furniture companies have this type of delivery system in place too. However, what’s distinctive about Company A’s two-person delivery operation is that drivers independently work on the deliveries they’ve been assigned to. And they work together only when there’re requests for two-person delivery. To reflect this feature, Company A established detailed standards to judge if a two-person delivery team needs to be deployed, such as installation time, size, dimension, elevator availability, etc.
Another feature of Company A’s furniture delivery is that it uses delivery zones. Of course, most deliveries are handled based on zones. However, since it manages furniture delivery which involves direct interaction with customers, preferred delivery hours change frequently. This is why circular-shape delivery zones in [Figure 5] is better suited for Company A to handle the frequent changes, instead of the straight line type zones in [Figure 4] whose purpose is solely to find the shortest route.
It took quite a bit of trial and error for Samsung SDS to set up delivery zones that would work for Company A. One of the first methods we tried was replacing the default zoning on Cello TMS, which is ‘TR Zone – Planning Zone’ with a three-step structure of ‘TR Zone – MID Zone – Planning Zone’ to add more flexibility. In other words, we merged several small zones into one middle-sized zone. We then created delivery plans for small zones first and applied them to the larger zone.
However, because orders are made disproportionally among zones, there were sometimes issues like shipments whose destinations were not part of a zone and a truck dispatch operator had to adjust their zoning manually. So we adopted a practice where the dispatch operator checks order distribution and chooses zones before running simulations.
As we at Samsung SDS handled furniture delivery for Company A, we were able to get much improved delivery simulation results by leveraging automated sorting of deliveries to be done by 2-person teams and shipment creation as well as zoning creation algorithms based on dynamic clustering. In the process, Cello platform and Cello optimization solutions played a critical role as they have been developed with our expertise in logistics consulting for businesses across different industries and 30 years of experience in technology.
Still, there are many challenges ahead to overcome in order to fully adopt Cello Route Optimizer, including roads API implementation, packaging/grouping that is quickly customizable for different transport types. Nevertheless, our handling of furniture delivery for Company A is significant in that we have successfully proved that our route planning can help with quick and flexible delivery planning that accommodates different shipment features.
Samsung SDS has driven technology-led innovations in logistics for a number of companies in Korea and around the world. We expect to work with more and more companies in the future and help them develop innovative logistics optimization strategies.
To find out more about logistics of Samsung SDS, visit Cellologistics.com and download the white paper.