Vehicle routing decision support for a local retailer

Abstract

One of the most challenging decisions that has to be made routinely by dispatch managers at distribution centres of warehousing and distribution businesses in the retail sector involves the assignment of delivery vehicles to service customers exhibiting demand for retail goods and the subsequent routing of these delivery vehicles to the various customers and back again. Perhaps surprisingly, these dispatch managers do not always use vehicle routing software to schedule goods deliveries to customers, instead often relying on teams of human schedulers who perform this task manually. The reason for not using such software is usually a perception that it may be difficult to integrate the software with existing enterprise resource planning systems already in use. In such cases, estimates of potential costs savings that may be brought about by appropriate software is often required before the dispatch department will risk the significant step towards investing in vehicle routing planning software. Dispatch managers may then employ these cost savings estimates in cost-benefit trade-off analyses. This paper contains a practical case study in which the potential cost savings of a vehicle routing optimisation approach are quantified for a large retail distribution centre in the South African Western Cape in a bid to support its decision as to whether or not to invest in vehicle routing planning software.