The challenge

As restrictions from the COVID-19 pandemic eased, our client's Click & Collect service faced declining demand, jeopardising its financial viability. A business case was initiated to assess the feasibility of implementing centralised fulfilment to reduce costs. ​

Estimating real-world logistics costs proved challenging despite potential staffing efficiency and pick rate improvements.

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Our approach​

• Store location analysis identified optimal clusters with short distances and high density for centralised picking trials. ​

• Driving metrics were extracted from online maps to calculate driving cost based on fuel and driver hourly rate. ​

• Existing algorithms were insufficient, so they were enhanced to account for capacity constraints and multiple pickups and deliveries. ​

• Through simulations using historical Click & Collect demand data, lowest achievable variable logistics costs were determined.
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The results

• Clusters were defined which identified financially viable centralised picking stores and the ideal fulfilment hub within each cluster.

• Logistics cost modelling was completed to show lowest possible logistics costs based on historical demand and the future logistics costs based on C&C demand estimates.

• The new logistics algorithm for order capacity planning, and pick-up and delivery routing was developed and integrated.​