Everyone who buys online knows the messages telling them when the parcel will be delivered. Nothing wrong with that. But there is a huge variation in the promised delivery times. I live in Belgium and there the promise of today's delivery is predominant. Today means somewhere between 8 am and 8 pm. This is of course a very wide time window. In the Netherlands, time windows are usually narrower, so it is easier for the recipient to arrange for someone to be home.
Customer satisfaction or lower costs?
Time slots are, after all, an important service qualifier and contribute significantly to customer satisfaction. As a logistics service provider, it is therefore important to ensure that deliveries are made as closely as possible within the time slot. From a cost perspective for the logistics service provider, it is of course more practical to plan without time slots. This gives the planner greater flexibility to schedule orders as effectively as possible, resulting in lower costs. Fixed time slots (whether imposed by the customer or not) result in less planning flexibility and higher costs. This is the (theoretical) fundamental difference between planning with or without time slots.
A double benefit
The above example of parcel delivery is actually more nuanced in reality. The logistics service provider informs the recipient of the time of delivery. In doing so, it sets itself a time slot and communicates this to the customer. But in fact, the logistics service provider is trying to achieve a double benefit here: low costs in organising its routes (without many restrictions) and keeping the recipient satisfied by providing a (relatively narrow) delivery time slot. In their planning, they can effectively treat it as if there were no time slots at all. This means full flexibility and low costs. They then communicate a time slot to the recipient based on their planned routes. The customer is satisfied too.
Now, however, it is no longer possible to adjust routes. If the customer is not at home after all, or there is a traffic jam, or... the route may not be adhered to after all. Then it is necessary to be able to re-plan quickly and effectively, taking into account the already announced time slots of the original route. Unfortunately, re-planning is an expensive hobby: no flexibility (e.g. time slots are fixed now) and done under time pressure. It also always leads to less efficient routes.
Planning for uncertainty
Research shows that if you plan better in advance, taking into account potential uncertainties (journey times, customers, etc.), you will ultimately be better off as a logistics service provider. The planning process itself becomes more complicated, albeit supported by smart IT. However, ultimately, there is little or no need for re-planning because the routes taken are already robust enough to cope with these uncertain events. This demonstrably leads to lower costs, a higher likelihood of always being able to deliver within time slots, and far fewer real-time route adjustments.
Tom van Woensel - Professor of Freight Transport & Logistics
