In the race to improve customer experience, the retailer’s quest for a profitable and effective method to offer same-day delivery has been surprisingly slow. Perhaps distracted by what the competition is doing or intimidated by perceived obstacles, many retailers have tried too hard to look to the future and missed what technology is telling them today: The same-day delivery puzzle has already been solved.
Under the radar – a droneless solution
The two-pronged approach of dynamic planning and delivery demand shaping makes a less catchy headline than, say, flying robots and driverless delivery vehicles. But for the retailers who care about customer experience and the bottom line, this method wins where it counts: It does not require hit-and-miss guesswork. It does not have to be rolled out on a small scale, nor is it only effective in certain areas, such as densely populated cities. It does not require a large capital investment in new delivery resources. It doesn’t involve studying legislation such as air space regulations or privacy laws.
Dynamic planning and delivery demand shaping technology enables you to offer cost-effective delivery options (including same-day) with the resources you have. And it’s something you can implement now.
How – and why – it works
Dynamic planning technology enables you to create and continuously update optimal delivery routes in real time. By analyzing how a new order affects your route and, therefore, your margins, the system can then offer your shopper several different options at the moment of purchase.
This is best illustrated with an example. Your customer, Meg, is shopping for a product she needs today. When she goes to her shopping cart and selects delivery options, based on her address, your system dynamically plans and determines that it’s easiest and most cost-effective for you to deliver at 2:10pm. The system calculates that delivering between 1:00 and 1:30pm would take you slightly off your route so it adds miles and some additional costs, but doesn’t impact your schedule and jeopardize other deliveries. Delivering before 1:00pm or much later in the afternoon would require you to schedule an additional resource or pay for an outside carrier because adding it to your current routes would disrupt other deliveries.
Delivery demand shaping enables dynamic pricing, which uses the real-time routing intelligence and optimization to suggest delivery slots. In less time than it took you to read this paragraph, your planning system has already made the calculations and when Meg checks out, she sees that her delivery options are 2:00pm – free, 1:00pm – a small fee, and 4:00pm – premium price.
Now Meg has a choice. The 4:00pm price discourages her from selecting the late afternoon delivery, but if the other times are not convenient, she can choose to pay and cover your costs, or ask the system to come up with more alternatives. Either way, you give her control and no matter what she chooses, your margins are intact.
Breaking out of rigid misconceptions that are holding you back
With any innovation, a new way of thinking has to precede a new way of doing. In other words, forward-thinking can only take you so far when old habits are holding you back. Most retailers and/or their delivery services still rely on increasingly irrelevant static slotting and routing delivery methods that have been used for decades.
Prevailing assumptions are based on technology limitations of the distant past. So yes, if you are depending on the human brain alone or even on most planning solutions on the market today, it is true that planning a dynamically evolving delivery schedule based on customer preferences is too time-consuming, complex and costly.
But when you rely on technology designed to solve this puzzle – one that incorporates artificial intelligence and record-breaking optimization – it’s a very different story.
Whether for same-day delivery planning or the next big thing in customer delivery experience, dynamic planning and delivery demand shaping provide the building blocks – and the agility – retailers need to evolve to remain competitive today and in the future.
[Editor’s Note: To learn more about this topic, register for the upcoming webcast, Same-day Delivery: Shaping the Customer Experience (July 15 from 11 am – 12 pm EDT), featuring Adrian Gonzalez from Adelante SCM and Robert Oliver from Quintiq]
Victor Allis is the co-founder and CEO of Quintiq. He has been a puzzle fanatic all his life. Victor describes the day he was given his first Rubik’s cube as one of the best days of his life. (He solved it later that same week, of course.) As an academic, he’s known for his ingenious AI solutions for Connect Four, Qubic and Go-Muku. At Quintiq, he’s known as the guy you call when you have a planning puzzle no one else can solve; whether in logistics, manufacturing, workforce or any of the other many industries that rely on Quintiq planning and optimization technology. When Victor isn’t solving puzzles, he puts his tenacity and healthy disregard for the impossible into endurance running.