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Case Study:
Network Optimization / National Distribution Company
Reducing transportation costs by optimally routing deliver trucks
Global distribution company optimizes first/last mile distribution routes using data analytics, saving miles, costs, and meeting delivery deadlines
Challenge:
Sub-optimum first/last mile routing stalling profitability
First/last mile delivery efficiency often depends on contracted drivers, to whom it may not be possible to impose a distribution pattern (for various reasons, including legal). As a result, however, the rates per mile travelled end up having too much volatility instead of being based on quantified metrics easy to agree upon, bounded only by the worst case scenario of multiple round trip from the distribution center to each individual customer.
Solution:
Routes optimization provides accurate estimates of reasonable total distribution miles expected as function of daily volume variations
Using proprietary first/last mile routing algorithms with adapted cost model, Teranalytics was able to provide a lower-bound estimate of the total distribution miles expected as function of daily volume variations, adapted to specific cities and regions in the United States. The algorithms search for most efficient paths in both pick up and delivery, utilizing full truck capacity to optimally serve multiple customers during each trip. Once connected to the daily source of data, the system can quickly provide an estimate of optimum routes for the day, allowing to set expectations on total miles necessary to deliver the volumes. Even if not directly realizable due to external constraints, these estimates of minimum miles necessary counter-balance the worse case scenarios of multiple roundtrips and allow the distribution center to better negotiate their rates with the drivers.
Results:
More than 30% immediate cost savings identified across the entire US network
1. Optimal routes suggest new and fairer pricing model
2. Immediate increase in profitability: adjustment can be performed daily depending on constraints
3. Real-time optimization on a daily basis allows proactive adjustments across the entire distribution network.
Client Feedback:
“Teranalytics delivered an immediate 30% cost reduction on a national scale – a huge boost to our bottom line.”
– General Manager-
