With the rapid expansion of online ordering and shorter delivery times, retailers are facing new challenges. Customers are equipped with purchasing know-how and accustomed to wide product offerings and short delivery windows. They expect to be informed on real-time inventory levels and when they can expect their delivery or pick up. In order to stay competitive, to convert customers and keep them happy, on-time-in-full targets are set higher and higher. Retailers need to streamline and tie their operations together more than ever to meet those requirements. That’s where technology and automation come into play.
This trend impacts all aspects of the supply chain, including inventory and workforce, demand forecasting, pick and pack, as well as logistics and distribution. All aspects of the supply chain must be aligned to better anticipate volatility, to operate more efficiently, and to provide real time visibility. Technology and automation play a very important role in the optimization of these operations: they speed up business decision processes by making instant calculations and suggest necessary changes in plans and rosters within seconds. Technology ensures that all processes in the supply chain are fast, efficient and flexible, which is ideal in volatile environments where OTIF is a key performance indicator.
The retail and logistics capabilities and solutions
Technology and more specifically, trained algorithms, can be implemented to optimize every aspect of the retail supply chain. In this article, we’ll focus on four core capabilities: demand forecasting, auto-scheduling, pick and pack optimization, and logistics and distribution.
1. Demand forecasting
As retailers and logistics companies expand their product portfolios and supplier networks to appeal to customers, they experience more complex and more volatile demand. This demand includes different product mixes, sales volumes, revenue and order volume. With more volatile demand, it’s difficult to stock the right products without creating big buffers. AI-driven forecasting helps retailers project accurate inventory levels with precise and short term demand forecasts. This demand forecast will not only save costs for retailers, but can also be communicated to suppliers to shorten the lead time between supplier and retailer. Forecasting can also be utilized to better align sales and marketing efforts and reduce the risk of stock outs, resulting in OTIF improvements. Simultaneously, demand forecasting also allows operational alignment in terms of logistics and workforce. Doing so will lower costs, maximize asset efficiency, and guarantee the desired service level.
An essential part of realizing a streamlined supply chain is employee scheduling. Depending on the business goals, revenue versus costs, the workforce can be optimized to meet speed standards (where more workforce might be needed) or to cut employee costs (where less employees are scheduled, but orders might take longer to fulfill). With accurate demand forecasts as a base, under and overstaffing can be minimized even more.
Auto-scheduling allows companies to put the right people at the right place at the right time while balancing customer service levels and costs. The power to make millions of combinations of employee data and the work to be done in seconds, allows companies to adjust and re-optimize working schedules in real-time as demand changes. That’s not where it ends, with great computing power also comes the ability to take staffing needs and labor laws into account when creating shifts and assigning employees.
3. Pick and pack optimization
Alongside accurate inventory levels and employee scheduling, pick and pack processes are essential to driving higher throughput while maintaining quality and delivery accuracy.
Picking processes can be optimized using the batching method. Tech-driven batching reduces the total travel distance without reducing quality of picked orders in the warehouse to fulfill (different) orders. Packing processes can be optimized using the cubing method, which maximizes the utility of crate and cage capacity, and thus truck capacity. Pick and pack optimization maximize order throughput and allows retailers to meet on-time-in-full requirements. They are an important part of the supply chain that could harness speed and quality to get the right products to customers on time at the lowest costs.
4. Logistics and distribution optimization
The final step is getting the order to the customer within the promised delivery window. To meet that promise as efficiently as possible, retailers need to look for opportunities for optimisation within their own logistics distribution process. There are two key factors to consider: building efficient truck loads, and assigning those loads to trucks and drivers. Building efficient truckloads is a complex process that must look at a wide array of factors including delivery windows, delivery location (clustering), and loading rules (capacity utilization). Most retailers are getting their orders out on time, but optimisation can reduce delivery costs while still meeting the OTIF targets. By integrating multiple solutions and methods, optimal truck loads can feed back into the pick and pack process to ensure that the right product is available at the right time for loading.
Once loads have been created, they also need to be assigned to resources (in terms of trucks and drivers). In some cases, a single driver may take multiple loads within one day. This assignment requires consideration of another complex set of parameters: truck capacity, driver rules, minimizing empty miles, and reducing carbon emissions.
By automatically re-optimising schedules, including load planning, capacity planning, and routing with Logistics and Distribution Optimisation, retailers and logistics companies can increase customer satisfaction, lower operational costs and reduce carbon emissions.
Harness the power of AI-driven supply chain management
As the online retail landscape gets more competitive, retailers need to find ways to make their operations more efficient. Those who don’t start optimising quickly will lose their existing competitive edge sooner than later. Quinyx offers best of breed AI-driven optimisation solutions that allow retailers to start operating differently.
Quinyx solutions are a perfect fit for the volatile conditions of the online retail industry. It allows retailers to plug intelligence directly into their current systems, meaning that they don’t have to replace their existing IT stack and optimisation can be implemented right away. When demand unexpectedly changes, Quinyx solutions instantly adjust workforce schedules to meet the new demand. This type of continuous optimisation and re-optimisation is a great benefit to retailers experiencing frequent changes and volatility that can occur in the supply chain.