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Soon customers of New Hope, Minn.-based SimonDelivers may be able to get a discount -- and help the environment -- if they piggyback their grocery delivery on a neighbor's order.
This service is part of a new solution from Atlanta-based UPS Logistics technologies that hasn't been released yet in the United States, and online-only SimonDelivers, which services 3,500 square miles around the twin cities of Minneapolis-St. Paul, is working with the technology arm of Big Brown to optimize it for commercial use.
"Although we're a small company, UPS sees us as kind of pushing the technology envelope," says Chris Servais, v.p. of operations for SimonDelivers. "They have a lot of big clients, like Office Depot, but it's easy for us to move quickly to make things happen."
What the software will do is allow SimonDelivers to apply basic business rules to the delivery schedules of its 75-truck fleet. "If a customer has $400 of groceries in her shopping cart, we [should have] a way to deliver it whenever she wants," says Servais. "Or a platinum customer should see more options than a bronze customer. That will enable us to provide more value to our premium customers, while still making our business more profitable from a route execution standpoint."
The piggyback delivery is another business rule the retailer is planning to develop. The basic idea is that if one customer places an order, and a second customer lives close enough that the driver has to make only one stop for both, then the second customer is offered a discount if she places an order to coincide with the timing of her neighbor's delivery. That way, the driver stops the truck only once to make both deliveries. Such a practice would save money for both the company and the customers, help the environment by reducing the amount of fuel consumed by the trucks, and make the routes more efficient.
This solution is an example of the innovations that have come from a relationship between SimonDelivers and UPS that dates back almost to the beginning of the company. UPS handles all of SimonDelivers' logistics and transportation automation needs.
While it may seem strange that a company typically known for delivering nonfood packages is working with a food retailer, a closer look at both companies' approaches to fulfillment shows that there are more similarities between the two than one would expect.
"Prior to my joining SimonDelivers in 2000, its executives made a key decision that I think has helped us have some longevity in our industry, and that was to use a route-based delivery model, similar to UPS or FedEx or the USPS," says Servais.
"Many online grocers use an on-demand model, similar to a taxi company or pizza delivery, where customers choose the delivery time and date," he explains. "Route-based [fulfillment] is similar to what the milk delivery guy used to do, where he would travel a path through the neighborhood, and you would have the same delivery times on that day of the week, and it's very efficient for the delivery company to execute."
FreshDirect and Peapod are prominent examples of on-demand grocery delivery models. According to Servais, who says he has had conversations with Peapod employees, this approach sometimes leads Peapod to make three deliveries per day to the same location, say, the Sears Tower in Chicago. With a route-based model such as the one used by SimonDelivers, the retailer would make only one stop for all three deliveries.
Two pieces of UPS Logistics software form the foundation of SimonDelivers' logistics automation, each tailored and modified to meet the e-tailer's specific needs.
Territory Planner is the software used, as its name implies, to plan out the delivery routes based on customer and demographics data for the locations in question. The software runs various algorithms to determine how large a territory an existing route should encompass, based on the customers who are there, as well as potential customers according to demographic profiles.
"If we were going to go into Atlanta, Ga., for example, we would buy demographic data, compare it to what we've seen in our existing markets, and then size our routes and plan our route architectures accordingly," explains Servais.
The route architecture is the number of times and days that SimonDelivers offers deliveries in certain areas. "The core part of Minneapolis-St. Paul gets a delivery option Monday through Saturday," notes Servais. "But we may be in your neighborhood Monday morning, Tuesday afternoon, Wednesday evening, Thursday morning, Friday afternoon, and Saturday morning. So that's where you see the difference from on-demand services. We kind of tell you when we're going to be in your neighborhood, and then we provide flexibility by being there at different times and on different days."
Roadnet 5000 is the route-planning tool that evaluates the orders and builds the drivers' actual routes and schedules to be as efficient as possible. It optimizes the travel path, keeping in mind the delivery times that SimonDelivers has committed to for its customers.
Of course, this would all be pretty routine if Minnesota didn't have any foul weather or rush-hour congestion. But SimonDelivers has worked with UPS to build flexibility into the system in the event of sudden changes in traffic patterns.
"There may be construction, or in the winter, major delays because of storms," says Servais. "We also have some rush-hour traffic. We simulate those situations. If there's rush-hour traffic from 4:30 p.m. to 6:30 p.m. on this stretch of roadway, for example, we need to slow down our travel speeds by 70 percent, or if on a given day we're forecasting six inches of snow, and that's going to impact our delivery fleet's travel time by a 40 percent reduction, we incorporate the change into the system to adjust the delivery routes and schedules."
The system has been successful, according to Servais, with more than 98 percent of the company's deliveries falling within the two-hour time windows it provided its customers.
Recently SimonDelivers has taken this flexibility a step further, to deliver timely information on whether drivers are on or close to schedule. "With delivery fleets and in the business world as a whole, delivery information was becoming more important, so we needed to invest in some mobile information-gathering technology," says Servais. "The most logical choice was to continue down the path of using UPS Logistics, and so the new piece we added is called MobileCast."
MobileCast provides real-time updates about delivery routes as they're progressing, based on GPS data from each driver's mobile phone. SimonDelivers' Web site features built-in functionality that uses this data to provide regular updates on driver ETAs for customers.
"Typically, online grocers will offer a two-hour time window for deliveries," says Servais. "We now publish the targeted delivery time -- so instead of two to four, say, we'll publish an exact time. Because of the automatic updates to our driver's routes and schedules based on traffic conditions, we're within 15 minutes of the published ETA 85 percent of the time. This has reduced our customer service calls dramatically. Our customers used to bombard our in-house customer service people with delivery questions, especially during storms. Now they can see it for themselves."
Another, less technical -- but still important -- functionality SimonDelivers has added to its Web site is a picture and short bio of each of its drivers. "This makes our customers feel more comfortable getting deliveries, especially at night," says Servais.
With SimonDelivers driving information closer and closer to its customers, it's taking care of everything but preparing their meals. But delivering the food those last few feet to the table is probably best left to the customer.