Scenario: Calculate prepurchase shipment assignments and minimize the cost-to-serve
IBM® Sterling Intelligent Promising provides cost-based promising to make cost-efficient sourcing recommendations. The Calculate checkout assignments using costs API processes data by using configuration data, transactional data, and artificial intelligence (AI) and calculates the most cost-efficient sourcing solutions for prepurchase shipment assignments.
The promising factors like inventory availability, capacity, distribution groups, carrier services, transit rates, transit duration, lead time, and many more are considered to shortlist the potential sourcing nodes. The overall cost-to-serve that includes all cost factors is calculated for all nodes and one or more sourcing nodes with the lowest cost-to-serve are selected for fulfilling an order.
For cost-based promising, the Calculate checkout assignments using costs API calculates the promising dates for prepurchase shipment assignments that allow order fulfillment at the lowest cost. For more information, see Calculate checkout assignments using costs API.
Both the distance penalty and delay penalty contribute to shipping cost. Therefore, Calculate checkout assignments using costs API aims to avoid penalties for reducing overall cost-to-serve.
The Calculate checkout assignments using costs considers the optimization constraints when the cost-to-serve is calculated. For more information, see Optimization constraints.
Example
For example, your objective is to fulfill an order with multiple order lines at the lowest cost-to-serve, so you call the Calculate checkout assignments using costs API to get cost-efficient sourcing recommendations.
In this scenario, a shopper has ordered two items, a pair of shoes and a T-shirt. The selected delivery type is Standard delivery, which allows you to ship and deliver the order today or tomorrow. The potential ship nodes are Colonie, NY and Woodbury, NY. The pair of shoes is available at both the ship nodes, but the t-shirt is only available at Woodbury, NY. The following transactional parameters are used for each ship node.
- Ship node- Colonie, NY
- Operational days/Inventory capacity- Today and Tomorrow
- Carrier service- FedEx Ground
- Ship node- Woodbury, NY
- Operational days or Inventory capacity- Tomorrow (Woodbury, NY ship node doesn't have inventory capacity for shipping today.)
- Carrier services- FedEx Ground and USPS Ground
Considering all these transactional parameters at both the ship nodes, here are your promising possibilities for Standard delivery type.
| Delivery objectives | Sourcing solution | Cost-to-serve |
|---|---|---|
| Deliver earliest | Shoes
|
24 USD Note: This promising possibility requires two shipments by using FedEx Ground carrier
service. Each shipment costs you 12 USD, which sums up to 24 USD as overall cost-to-serve.
|
|
Shoes
|
12 USD Note: This promising possibility requires only one shipment to deliver two order items
by using FedEx Ground carrier service hence it costs only 12 USD as overall cost-to-serve.
|
|
Shoes
|
11 USD Note: This promising possibility requires only one shipment to deliver two order items
by using USPS Ground carrier service hence it costs only 11 USD as overall cost-to-serve.
|
After considering all promising possibilities that are mentioned in the table, Sterling Intelligent Promising recommends the third sourcing solution.
You can configure cost-based optimization to calculate prepurchase shipment assignments and minimize overall cost-to-serve. For more information, see Configuring cost-based optimization for promising.