11

On Time, On Demand DeliveryOn Time, On Demand Delivery

Chris KantarjievChris KantarjievTime, Place & SpaceTime, Place & Space

20 September 200620 September 2006

22

At the tone, the time will be 1999At the tone, the time will be 1999

28.8kbps28.8kbps

640x480 or 800x600?640x480 or 800x600?

What’s a cookie?What’s a cookie?

500MHz? Wow!500MHz? Wow!

33

“Manifesto”“Manifesto”

44

Dec 1996: ISRDec 1996: ISR

Oct 1997: Oasis Virtual SupercenterOct 1997: Oasis Virtual Supercenter

Feb 1998: VP Eng hiredFeb 1998: VP Eng hired

May 1998: ChrisK hiredMay 1998: ChrisK hired

Dec 1998: Christmas at the DCDec 1998: Christmas at the DC

May 1999: First deliveryMay 1999: First delivery

Jun 1999: Public launchJun 1999: Public launch

Nov 1999: IPONov 1999: IPO

Feb 2000: 3000 orders/dayFeb 2000: 3000 orders/day

Mar 2000: 2.0 cloned to ATLMar 2000: 2.0 cloned to ATL

Jun 2000: Buy HomeGrocerJun 2000: Buy HomeGrocer

Aug 2000: 2.0 cloned to CHIAug 2000: 2.0 cloned to CHI

Jul 2001: Close the doorsJul 2001: Close the doors

55

Region overviewRegion overview

60 mile diameter60 mile diameter

DC is 330,000 sq ft, costs $30MMDC is 330,000 sq ft, costs $30MM

50K SKUs50K SKUs

4.5 miles of conveyors4.5 miles of conveyors

Frozen ice cream, fresh turkeysFrozen ice cream, fresh turkeys

14 delivery zones, 4+ vans/zone14 delivery zones, 4+ vans/zone

Target 8000 orders/day, $100/orderTarget 8000 orders/day, $100/order

66

Lessons, part 1Lessons, part 1

Customers don't know where they liveCustomers don't know where they live

Maps don't know where they live, eitherMaps don't know where they live, either

Couriers are not drivers and don't know areaCouriers are not drivers and don't know area

Letting the customer dictate your schedule is a bad Letting the customer dictate your schedule is a bad ideaidea

Knowing what to measure is hardKnowing what to measure is hard

77

The big pictureThe big picture

Front OfficeFront Office

Webstore Customer Relationship Management Transportation Subsystem

Order Management SystemOrder Management System

Order Fulfillment SystemOrder Fulfillment System

88

Area WebstoreDatabase

Front OfficeNT WebstoresNT Route PlannersNT MFD2 BackendsNT XPS ServicesNT CRM ServersNT Cross-DocsNT Prep System

OMSPeople Soft TablesUNIX HostsWebvan PL/SQL

OFSDiamond PhoenixSeayco ScannersUNIX HostsNT HostsMoveAMH

Area OMSDatabase

Area OFSDatabase

HQData Warehouse

HQPublishing

99

DCW ebstoreXPSCRM

Oracle

PUB

Oracle

OM SFS

PeopleSoftOracle

OFSAM H

M O VEOracle

Catalog

Custom ersATPs & Prices

OrdersShipm ents

RM AsAdjustm ents

SKUsUPCs

Vendors

SKUsUPCs

OrdersShipm ents

ERsRTVs

Inventory

Rem edy

Oracle

Trouble TicketsCustom er Data

Order Data

Custom ers and CSRsvia Brow sers

Couriersvia

M FDs

Couriersvia

RiM M S

M FDServer

TaxW are

CCServer

PUBW eb GUI

BulkLoader

CSRs via Rem edy GUI

PeopleSoft G UI

RoutePlanner

SearchEngine

M O VEGUI

RFGuns

ConveyorServer

CarouselServer

ScannersConveyors

Carousels

M FG

CSS

Truck RoutePlan

DW S

1010

The PromiseThe Promise

Must consider five things:Must consider five things:

1.1. InventoryInventory

2.2. Van driver time slotVan driver time slot

3.3. Van capacityVan capacity

4.4. Truck capacityTruck capacity

5.5. DC capacityDC capacity

1111

Delivery flowDelivery flow

1.1. Define zonesDefine zones

2.2. GeocodingGeocoding

3.3. Subzone assignmentSubzone assignment

4.4. Schedule deliverySchedule delivery

5.5. Order confirmationOrder confirmation

6.6. CutoffCutoff

7.7. Fill to orderFill to order

8.8. PickPick

9.9. StackStack

10.10. Truck loadTruck load

11.11. Download routesDownload routes

12.12. Van loadVan load

13.13. Delivery (unpack, returns, receipt)Delivery (unpack, returns, receipt)

14.14. Special situationsSpecial situations

1212

Scheduling is much harder than routingScheduling is much harder than routing

FTO was very slow, couldn't be started early

truck routes were 'fixed' but changed every week

personnel scheduling was done by hand

van resources were fairly fixed 7 days out

interesting anomalies from van and truck size

never got our heads around driver breaks

1313

Yield managementYield management

Make the map smarterMake the map smarter

Special events Construction Realistic speeds

Variable pricingVariable pricing

Short window but not wide choiceShort window but not wide choice

Remove FTORemove FTO

1414

What went wrong?What went wrong?

too much technology lovetoo much technology love

needed 5/hourneeded 5/hour

couldn't do 4/hour too customer centrictoo customer centric

didn't charge enough for deliverydidn't charge enough for delivery

opened with a too-large service areasopened with a too-large service areas

DC too rube goldberg...DC too rube goldberg...

chill chain/FTO3250/day max, based on 8000seayco server that handled tote diverters would crash

we started with 4000 orders/day, but we poisoned the well.we started with 4000 orders/day, but we poisoned the well.

shifted from carriage trade to basic supplies, shifted from carriage trade to basic supplies,

but never had same day deliverymany SKUs does not match many stores

hard to get customers to plan aheadhard to get customers to plan ahead

hard to shift demand in timehard to shift demand in time

1515

Lessons, part 2Lessons, part 2

Don’t design for perfectionDon’t design for perfection

More vans not necessarily betterMore vans not necessarily better

Open slowly, can’t go backOpen slowly, can’t go back

Think big in the right placesThink big in the right places

Optimize the entire chain, if you canOptimize the entire chain, if you can

Bigger windowsBigger windows

Too much technologyToo much technology

Density matters!Density matters!

1616

Make the map smarterMake the map smarter

Sample Route: Kennedy Expressway - I-290/Circle --> O'Hare (Chicago)

Actual Travel Times vs. LandSonar Predictions for One RouteBased on 2981 Travel Time observations collected by Illinois DOT (5/27-6/18)

0

1020

3040

50

6070

80

Time of Day

Tra

vel

Tim

e (M

inu

tes)

.

Kennedy ExpresswayTravel Times: I-290/Circle --> O'Hare Based on 2,981 Travel Time observations collected by Illinois DOT (5/27-6/18)

0

10

20

30

40

50

60

70

80

Time of Day

Trav

el T

ime

(Min

utes

) .

Most traffic data companies focus on outliers (accidents, etc.)80% of observations

within dark blue band

1717

Traffic data sourcesTraffic data sources

Government sensorsGovernment sensors

Cell phonesCell phones

Tracked vehiclesTracked vehicles

1818

Traffic data providersTraffic data providers

LandSonarLandSonar INRIXINRIX Traffic CastTraffic CastTrafficTraffic

.com.com

WestwoodWestwood

OneOneState DOTsState DOTs

Flow Traffic Flow Traffic Coverage Coverage (12/05)(12/05)

100% 100% freewaysfreeways

100% 100% arterialarterial

~15% freeways~15% freeways

~0% arterial~0% arterial

~15% freeways~15% freeways

0% arterial0% arterial

~15% freeways~15% freeways

0% arterial0% arterial

N/AN/A ~15% freeways~15% freeways

0% arterial0% arterial

Historical GPS Historical GPS data sourcedata source

GPS data from GPS data from nationwide AVL nationwide AVL

providersprovidersTaxis, othersTaxis, others N/AN/A N/AN/A N/AN/A N/AN/A

CustomersCustomersNAVTEQ, @Road, NAVTEQ, @Road, GEOCOM, ESRI, GEOCOM, ESRI,

othersothersClearChannelClearChannel Yahoo!, GoogleYahoo!, Google

TV & radio, TV & radio, NAVTEQNAVTEQ

TV & radio,TV & radio,

NAVTEQNAVTEQN/AN/A

DOT sensor data DOT sensor data sourcesource

TrafficTraffic

ServiceService

FlowFlow FlowFlow

IncidentsIncidents

FlowFlow

IncidentsIncidents

FlowFlow

IncidentsIncidents IncidentsIncidents

FlowFlow

IncidentsIncidents

Traffic productsTraffic products PredictivePredictive

Real-timeReal-time Real-timeReal-time Real-timeReal-time Real-timeReal-time Real-timeReal-time