A key challenge for retailers is the handling of logistics. Managing customer expectations while maintaining profits involves the intricate balancing of delivery loads, logistics resources, costs and trip times. The amount of empty miles can be an indicator of efficiency in retail logistics. Fewer empty miles are sure a sign of efficient logistics. Optimizing truck loads to reduce empty miles is therefore a crucial capability in retail logistics. Over time, the accumulated inefficiencies of empty miles robs retailers of fuel, time, money and manpower.
Underutilized miles also represent a missed profit opportunity. To leverage this opportunity, these miles need to be filled – resulting in lower supply chain costs and improved logistics performance. It sounds like a simple equation in theory, but how does eliminating empty actually play out in practice? Let’s take a look at a sample case study involving a large US-based retailer.
Step 1: Knowing is half the battle
The retailer realized that how it addressed its empty miles could strengthen its competitiveness by increasing its profit potential and logistics efficiency. Armed with this insight, the retailer knew that to truly optimize its logistics, it needed a new planning approach.
Knowing the scale of its operations and – more importantly – having visibility and agility across its supply chain was crucial in its efforts to create optimized and real-life feasible logistics plans.
Step 2: Break down the challenge and identify limitations
Apart from reducing empty miles, the retailer wanted to improve on service levels and planned shipment amounts for store deliveries and vendor pickups. The planning process was hampered by limited end-to-end visibility and the need to take into account a myriad of strict business rules and requirements, such as different truck types, specific recipient delivery hours and labor laws regarding drivers. Its existing legacy planning system also lacked agility in handling sudden disruptions such as harsh weather, traffic congestion and truck breakdowns was also limited.
Step 3: Choose the right solution – and make sure it fits
DELMIA Quintiq’s planning solution enabled the retailer to seize opportunities for route consolidation and improve its KPI for empty miles — something no other solution provider in the vendor selection process was able to prove they were able to do. Additionally, the solution was able to optimize logistics without disrupting the planners’ regular workflow.
The DELMIA Quintiq team worked closely with the retailer to ensure that its planners adjusted well to the new and dynamic KPI-based planning approach. Information was pulled from the retailer’s existing systems to feed into the planning solution, enabling real-time feedback to adjust existing plans where necessary. The team also updated the optimizer for speed and accuracy. The retailer’s hardware was also expanded to ensure continued scalability as its operations continued to expand.
Step 4: Review the results
With the DELMIA Quintiq solution, the retailer now enjoys huge savings from reduced empty miles and optimized planning across tens of thousands of shipments a day and thousands of drivers. By leveraging dynamic planning, the retailer is able to deliver higher efficiency and lower costs — which ultimately strengthens its market leadership position.
Post-implementation, the retailer saw an 8% surge in loaded over empty miles. The DELMIA Quintiq solution also enabled an increase in the amount of deliveries and average loaded miles per driver. Operations also became more sustainable as carbon emissions were decreased due to smarter routing.
Reducing empty miles in retail logistics doesn’t just increase profits – it also improves overall operational efficiency and productivity, enabling companies to achieve more without increasing capital costs.