An ICT-based reference model for E-grocery in Smart Cities

An ICT-based reference model for E-grocery in SmartCities

R. Tadei1, E. Fadda1, L. Gobbato1, G. Perboli1, 2, and M. Rosano1

1 DAUIN Politecnico di Torino, Turin, Italy,2 CIRRELT, Montreal, Canada,

Smart City-June, 15-17, 2016

Tadei, Fadda, Gobbato, Perboli, Rosano SOUL project Smart City-June, 15-17, 2016 1 / 16

Outline

Introduction

The Literature of e-grocery

The State-of-the-art of e-grocery

The E-grocery distribution model: SOUL ProjectI GoalsI SOUL ArchitectureI Mobile applicationsI Perishable goods

Simulation-Optimization analysis

Computational results

Conclusions


Introduction

E-grocery distribution in urban areasI E-commerce is changing the retail business in different industry, while

e-grocery is still at an early stageI E-grocery is a new emerging and challenging business channel for the

food and beverage marketI Need to find a model of success that ensures profitability to e-grocery

business.

The SOUL projectI Local Food Supply Chain (LFSC) modelI Innovative solution based on ICT and mobile applications


The Literature of e-grocery

The literature of e-grocery retailing can be split in two different mainstreams:

Retailer’s point of view:I definition of efficient operational models and focus on the factors that

determinate the failures of e-grocery businessesI efficiently design and management of the e-grocery supply chain

key issues related to picking and delivery operations

home deliveries represent additional costs and investments

Impact of e-grocery on the Last mile distribution:I Green House Gas (GHG) emission reductionsI potential benefits for urban areas


The State-of-the-art of e-grocery

LLacks in the state-of-the-art of e-grocery applied to local fooddistribution:

A framework of e-grocery LFSC combined with a business model hasnot been proposed yet

E-grocery as an additional channel for traditional grocery retailers

Consumer interest in local foods increases

Need to develop ICT application to the e-grocery LFSC combinedwith a Decision Support System (DSS)


The E-grocery distribution model: SOUL Project

The project Simulation and Optimisation of Urban Logistics (SOUL)develops in collaboration with Telecom Italia a prototype for urban B2Bfreight distribution fleet routing managament system in integration withbusiness modeling and near field communications technology for LFSC.

Combined use of DSS, ICT and mobile application:

Increases the effectiveness and the efficiency of the e-groceryoperations

Allows retailers and consumers of fresh food to monitor the flowalong the entire supply chain

Enables the exchange of real-time shipping and traffic-relatedinformation for the optimization of logistics operations and trafficcongestion mitigation


Goals

SOUL project has a twofold purpose:

Reduce with the use of ICT solutions, the issues that affect e-grocery

Deal the e-grocery with an innovative point of view, paying theattention on fresh food and LFSC


SOUL Architecture I

Vehicle-to-Infrastructure (V2I) architecture


SOUL Architecture II

Main building blocks:I Traffic Handler Service (THS). It aggregates data and real-time data

from External Sources as private or public networks of sensors (inTurin, provided by Traffic Operation Centre 5T) and from vehicles.Thus, THS provides real-time information for third party applications,such as the fastest paths for vehicles and the detection of congestion inthe urban area.

I Central Unit (CU). It is the operative core block that builds optimisedroutes for the distribution of fresh and perishable food, considering thechanging in the traffic conditions.

routing optimizer (VRPTW)post-optimizer (DVRP)


Mobile Applications

To represent information to users, SOUL uses:

A mobile application design on the Android and written in Java

allows users to monitor the flowalong the supply chain

enables different operation (e.g.,order placement, inventorycontrol, freight tracking andreceiving management showedin figure)

connects users to the technologyinfrastructure of the DSS

A db4o database to store persistent data.


Perishable Goods

Perishability is one of the levers of the SOUL project

SOUL tracks the position and monitors the temperature of perishablegoods from depot to the final destination

Collection of information through mobile and remote sensors on thevehicles

Signaling environmental conditions not satisfied


Simulation-Optimization analysis I

The analysis of SOUL was conducted by a simulation-optimizationapproach.

Data setI gathered during the URBan Electronic LOGistics (URBeLOG) Project

fieldI database of 16000 customersI networks ranging from 3 to 45 customers

Realistic scenariosI Small-sized food companies, less capable to manage deliveries with an

own feet of vehicles in an efficient wayI Medium-large sized retailers having a more consistent demand and

vehicles with a capacity of about 50% greater than the previous.

AlternativesI each retailers performs the deliveries with own fleetsI consolidation of foods from different firms in distribution centres


Simulation-Optimization analysis II

KPIsI Number of deliveriesI Improvement % generated by the consolidation, in terms of:

number of vehiclesdistances traveledservice timescost savings


Computational Results I

DeliveriesImprovement [%]

∆ N. Vehicles ∆ Distance ∆ Time ∆ Cost

Scenario 1

30 - 50% - 47% - 40% - 47%50 - 50% - 45% - 35% - 45%

100 - 25% - 32% - 23% - 32%150 - 25% - 25% - 17% - 25%200 - 25% - 28% - 19% - 28%250 - 42% - 39% - 26% - 39%

Scenario 2300 - 33% - 30% - 19% - 30%350 - 38% - 33% - 22% - 33%400 - 31% - 28% - 28% - 28%450 - 40% - 32% - 21% - 32%

Table: Simulation Results.


Computational Results II

Consolidation of food allows operative and economical efficiency, mainlyfor the small-sized retailers.

Costs decrease up to the 47% of reductionI outsourcing of the fleet managementI cut of relative economical efforts

Reduction of the number of vehicles on the road and the distancetraveled respectively of about 50% and 47%

I positive impact on the environment

Improvement in service time that is reduced by the 40%

The benefits are more relevant when retailers and logistics providers havedifferent capacity due to the greater capacity of the logistics providervehicles combined to the optimization of the routes.


Conclusions

We have introduced in the SOUL project a solution based on ICT andmobile applications

We have integrate the e-grocery Supply Chain with a referencebusiness model

The simulation-optimization results have showed the positive impacton environment and the e-grocery solution is capable to reduce thenumber of vehicles on the road up to 50%

The integration and the synchronization of the entire chain are alsorequired to guarantee cost-effective robust solutions.


Presentations & Public Speaking

An ICT-based reference model for E-grocery in Smart Cities