Developing vehicle routing and outbound fulfillment systems for an E-grocery company

Abstract

This paper outlines areas for improvement within the outbound fulfillment network of an emerging online grocery ("e-grocery") company offering home delivery to the customer. In particular, the research focuses on developing an efficient, scalable home delivery network, as a result of the known challenges and relatively high fulfillment costs associated with this business model. Last-mile home delivery accounts for a substantial portion of total e-grocery fulfillment costs. The Vehicle Routing Problem (VRP), a well-known NP-hard combinatorial optimization problem, is examined in the context of e-grocery and its impact on last-mile delivery costs. The paper emphasizes an integration of scalable vehicle routing systems with efficient order fulfillment operations. Practical analytical approaches, as well as new case experiments, serve as a framework of recommendations for an emerging e-grocer or similar last-mile delivery provider. The paper presents analysis using a real case study, serving as a basis for example, as well as more broad recommendations in the field. Moreover, it directs the reader to a wealth of literature in the fields of logistics, grocery fulfillment operations and the VRP class.