In recent years, numerous catering suppliers have recognized the significance of effective distribution strategies. This is to improve their client service and also to reduce transportation costs. One of the reasons is the fact that a significant number of catering businesses have implemented an e-commerce model. In today’s menu: advance route optimization.
While enabling customers to make orders online, catering businesses inevitably had to offer a system of delivering processed orders to the client. The option to place an order online has been quite popular. This has increased the number of daily deliveries by a large margin. In order to gain an edge, these companies are competing in the areas of service quality and delivery time. Both with keeping their operation logistically economical.
Hungry will get their meals faster
A short delivery time from the moment of placing an order increases the likelihood of clients repeating the formula and ordering their meals online with delivery. This may increase the company’s competitive advantage.
For many companies this is a profitable business model. Mainly because having sufficient production capacity, restaurants can both service their guests in-house and maximize their profit by reaching another target group. Those are the customers, who prefer to receive their meals to a specified address. In order to focus on their own area of expertise, that is, preparing high-quality, nutritious meals, Food Service businesses often decide to outsource food delivery to the companies that specialize in it. This practice of cooperation between restaurant owners and courier companies specializing in food delivery comes with certain limitations for the principal. Catering companies cannot supervise and optimize the speed and quality of the order delivery. The reason is, that it is the service provider who is responsible for these aspects.
On the other hand, despite the popularization of outsourcing, it is still common for restaurants to maintain their own fleet of vehicles for food delivery. Restaurants want to deliver meals in a short time while meeting certain standards and expectations. Therefore they opt for their own delivery solutions. As a result, companies measure efficiency of the order delivery process by monitoring indices such as the total cost of the operation, the average delivery time or the average invoice amount. By optimizing these indices, it is possible to arrive at and maintain a competitive advantage.
Planning order transportation based on logistics systems
In order to facilitate the process of order delivery, and, as a result, increase client satisfaction, there are number of solutions. One of them is „Milk-Run”. This is a logistics system based on accelerating the flow of materials between locations, by dispatching vehicles to do multiple collections and deliveries at multiple stops. Another method that has been employed is called the „Hub”. An exchange of goods between vehicles and various types of transportation is handled in the central location – the hub.
Considering the time windows of deliveries to clients (which in the catering industry are short and particularly vital), a single depot (delivery address) and the maximum time of routes, the discussed problem can be modeled and illustrated as a problem of multiple sellers with time windows. It is an extension of the traditional traveling salesman problem (TSP). This problem can also be viewed as a simplified version of the well-studied Vehicle Routing Problem with time windows.
Problems with delivery network
Successful implementation and servicing of a meal delivery network is difficult. First of all due to the scale of these systems but also because to the dynamic and urgent nature of placed orders. Meal delivery is one of the biggest challenges in the logistics of the last mile problem. Typically, clients expect that he or she will receive an order in or under an hour. Additionally, the delivery process should start within minutes of the meal being ready for pick-up. Moreover, meal delivery networks ought to react to the frequent and intense demand fluctuations. Both in the dimensions of time and space. Designing optimization technology using the VRP algorithms, offers a solution to the dynamic problems with the pick-up and delivery of orders on an unprecedented scale.
Hence, in the light of the extremely dynamic and unpredictable nature of the meal delivery process, making a detailed plan of order delivery seems unlikely. For this reason, the recommendation is to apply the VRP algorithm. This innovative tool may be solution to the problem with the optimal routing for meal delivery.
Advanced route optimization – examples from the market
Let’s find out more about the company Grubhub. This is one of the leaders on its market. It connects diners wanting to use their mobile devices to order a meal online and local restaurants offering takeaway. The platforms designed for online orders enable their mobile clients to order a meal. They can chose from over 85,000 restaurants located in over 1,600 cities in the USA and London. One of the services offered by Grubhub is food delivery. They employ a fleet of couriers who pick up orders from restaurants and deliver them to hungry clients. Gruhub processes 423,200 orders daily, of which 60% via mobile devices.
Providing order delivery services for companies such as Grubhub is an immense logistics challenge. Clients demand reliable and fast service. Partner restaurants want their product to be fresh and nutritious when it reaches the indicated address. Lastly, the drivers wish to deliver a sufficient number of orders to make a decent profit. Late delivery can make clients unhappy and less likely to use the delivery option again. This is why delivery companies have to match drivers with orders to avoid delays.
Meal delivery
The Restaurant Delivery Problem (RDP) is characterized as a fleet of delivery vehicles. It service the demands of clients that fluctuate considerably throughout the day. The time schedule of clients’ demands is known but no assumption is made about clients’ location. Clients place orders of meals via a mobile application or a website by selecting from a number of well-known caterers. After placing an order, the supplier will immediately get it. He matches it with the driver that will pick up and deliver the order.
Matching orders with drivers is not necessarily instant. Several backordered meals can be matched with a driver at once (bundling). Before the driver delivers an order, he or she must pick it up from the specific restaurant. However, the time of meal preparation varies from restaurant to restaurant. Courier company can estimate the delivery time based on distance and traffic. Unfortunately, the driver does not know exactly when the order will be ready. Because of that, the driver has to wait for processing an order. The aim of using the VRP algorithms is to minimize the total positive differences between the delivery time and order completion.
To sum up, online platforms that enable ordering meals with delivery have introduced dynamic problems with pick-up and delivery on an unprecedented scale. One may assume that meal suppliers are pioneers in the area of flexible logistics models. They designoptimization technologies which can meet the challenge. Considering this, innovative transportation solutions such as VRP seem like something that may interest both – customers and caterers.