Dynamic Time Slot Management
Ecommerce is currently growing with extreme pace. Most of us regularly order books and movies online, and clothing, groceries and furniture are also becoming more and more common to purchase online. Online shopping offers a lot of conveniences over shopping at regular stores, including 24h browsing, large catalogues and home delivery. But, according to these studies (Link 1, Link2), there is one thing that bothers us consumers the most when ordering online: Delivery Failures. Either the consumer was not at home or the courier was not on time, mostly both! It turns out we really do not like to get home to find a note in our mail stating that the courier was unable to deliver our goods and we are required to pick-up our ordered goods at some neighbour or at some store/postal office. In some sense this defies the major convenience of ordering online.
Also retailers and logistic providers actively search ways to limit delivery failures. Since the last-mile is already the most expensive part of the logistical chain, last-mile delivery failures are very costly and potentially bad for the environment. Currently, there are some innovative ideas on how to ‘solve’ such problems. I’ll name a few. Retailers/logistic providers offer pick-up points (e.g. bol.com offers pick-up at various grocery stores) or install delivery boxes at large public places, companies or apartments (e.g. DHL). There are also private companies offering 24h pick-up points (e.g. ‘De Buren’) or a network of ‘delivery’ neighbours. While all of the above innovations ‘solve’ the delivery failures in some sense and are relatively cheap to operate, they still are not very widespread and most of them still require the consumer to take additional actions. For this reason, I investigate a completely different way of ‘solving’ these last-mile delivery issues: by giving customers’ the control over their delivery time window during checkout.
This solution is inspired by online grocers (such as Albert Heijn Online, Waitrose, Peapod), which probably incur the highest costs for failed deliveries (groceries are perishable goods and generally cannot be stored/used again). These online grocers typically offer customers to choose from several delivery time slots, ranging from 2 to 6 hours and possibly having different delivery fees. Consumers can book time slots one or multiple weeks in advance to match their agenda. Although such system definitely increases customer service and the probability the customer is actually at home, these time slots do make it a lot harder for retailer to make cost-effective routes.
To increase the cost-effectiveness of routes, two schemes are generally being considered in scientific literature: Static Time Slot Management and Dynamic Time Slot Management. Static Time Slot Management concerns a tactical planning of available time slots for each area. For instance, time slots offered to rural and other low demand customer areas can be limited, to aggregate their demand over only a few delivery moments. All decisions are made before customers can actually order. Although such tactical plan seems to work quite well in practice, the often greatly varying demand requires additional management to decrease the chances of costly inefficient routes. Dynamic Time Slot Management, which is the main focus of my project, tries to manage the availability of time slots in real-time during the customer ordering process. Using real-time routing algorithms, we are able to monitor and respond to the changing time slot demand by offering customers time-slots (in time and place) near already placed customer orders. We might even be able the provide customers incentives with the expected environmental impact of their time slot choice. There is not much scientific literature on Dynamic Time Slot Management, especially concerning the use of such systems in a practical setting. My current research is aimed at filling this gap.
Hopefully I have given some insight in the relevance of my research project. I’ll regularly post updates and comments on last-mile innovations on this website.
Feel free to comment/provide suggestions by mail: Thomas Visser
