Optimizing delivery speed

Optimizing for delivery speed is one of the fulfillment objectives that Sterling Intelligent Promising considers when making fulfillment decisions. When this objective is prioritized, the system focuses on selecting options that enable faster delivery, even if it results in a marginal increase in carrier cost, while still maintaining overall efficiency.

Overview

Sterling Intelligent Promising evaluates fulfillment nodes and carrier services by balancing processing cost, penalties, and transit cost, and favors options that can deliver orders earlier to enhance customer satisfaction.

By default, Sterling Intelligent Promising selects the lowest-cost option. Introducing the Optimizing Delivery Speed lever allows businesses to increase the weighting toward faster delivery, influencing both carrier selection and fulfillment node choice, while still optimizing for cost. This approach can also help reduce carbon footprint by favoring closer nodes as an added benefit.

In order fulfillment, the primary objective is to minimize the total cost to serve. However, focusing solely on cost can impact customer satisfaction negatively. The right balance depends on business strategy. For example, in groceries or low-value goods, faster delivery might have limited impact on customer experience. Then, for high-end items, a slight increase in cost, to achieve faster delivery, can significantly enhance customer satisfaction and encourage repeat purchases.

The delivery speed optimization model analyzes the trade-off between shipping cost and delivery time, enabling businesses to prioritize faster delivery when customer experience is critical. This model is based on transit time cost calculations that combine base transit rates with delivery speed factors for each carrier service. The system uses these weighted costs to select fulfillment options that balance speed and cost according to your business priorities.

Sterling Intelligent Promising considers the following factors when optimizing orders with a priority of delivery speed:

Transit rates and carrier service configurations.
Delivery speed factors at the carrier service level.
Processing costs and fulfillment node capabilities.
Distance and transit time between nodes and destinations.

The transit time cost represents the adjusted cost calculated by combining the base transit rate with the delivery speed factor. This cost is multiplied by the optimization weight set for the Optimizing delivery speed objective before it is factored during optimization. By prioritizing faster delivery, you can enhance customer satisfaction, reduce delivery delays, and potentially lower carbon footprint by favoring closer fulfillment nodes.

Key benefits of optimizing delivery speed include:

Enhanced customer experience through faster delivery times.
Improved customer satisfaction and loyalty, particularly for high-value items.
Flexibility to adjust priorities based on business strategy and market conditions.
Potential reduction in carbon footprint by favoring closer fulfillment nodes.
Strategic sourcing decisions during peak sales periods to minimize delays.

You can adjust the Optimization profile to prioritize Delivery speed. The delivery speed factor can be configured at the carrier service level to further refine carrier selection when multiple options offer identical transit rates.

When multiple carriers offer identical transit rates, any option might be selected. To further refine the selection, Fulfillment Managers can define a delivery speed factor at the carrier service level. This factor is not normalized and it serves as a relative weighting where higher values prioritize speed, while lower values prioritize cost. Since the values are applied as-is during optimization, they should be assigned on a consistent relative scale across all qualified carrier services. For more information, see the Get carrier service details API.

Both the Rank and Optimization APIs support delivery speed optimization with the delivery speed factor. Fulfillment managers can adjust the relative weight of delivery speed versus shipping cost, tailoring sourcing decisions to evolving business objectives. This flexibility makes it possible to prioritize faster delivery when customer experience is the priority or to minimize costs when efficiency is paramount.

The Optimizing delivery speed lever prioritizes shipment options that are based on delivery speed. This enhances the customer experience by shipping items earlier than promised. By increasing the weight, the lever prompts Sterling Intelligent Promising to optimize for earlier delivery dates at a marginal trade-off in delivery cost savings, potentially.

Transit time cost

The transit time cost represents the adjusted cost that is calculated by combining the base transit rate with the delivery speed factor for the specific carrier service.

In Sterling Intelligent Promising, this value helps to balance shipping costs against delivery speed when selecting the optimal fulfillment node. Ranking and optimization go beyond processing and shipping costs by incorporating a weighted transit time cost, enabling more strategic sourcing decisions. This ensures better alignment with both customer expectations and business goals.

For example, during peak sales periods, delivery speed can be prioritized to minimize delays and protect the customer experience.

Delivery speed factor

The delivery speed factor is a parameter that influences carrier selection during delivery speed optimization. It acts as a multiplier that amplifies the transit time cost. Lower factor values indicate faster delivery by carrier services, making them more favorable during optimization, while higher values indicate slower delivery options and impose a greater cost.

The transit time cost is fixed and it varies across the various carrier services as shown in the following table:

Table 1. Carrier service configuration
Carrier service ID	Delivery speed factor
FedEx_2Day_Air	2
FedEx_Ground	3
FedEx_Next_Day_Air	1

In this example, the FedEx_Next_Day_Air carrier service has the lowest delivery speed factor value of 1 applied as a transit time-based cost that indicates fast delivery. Alternatively, FedEx_Ground has the highest value of delivery speed factor 3 applied that indicates slower deliveries.

Note: The delivery speed factor acts as a multiplier and the range should remain relatively close across carrier services. The factor should also account for the carrier service rate currency, for example, use higher values for currencies with larger denominations.

Transit time cost calculation

The transit time cost is derived from three factors:

Transit rate: The transit shipping rate that is defined for a shipping zone.
Weight factor (0–100%): Represents the delivery speed lever. A higher value prioritizes speed over cost.
Normalized transit time: System computed and based on the minimum and maximum transit times across carrier services from qualified fulfillment locations.

To calculate the transit time cost, for more information, see Scenario: Accelerating deliveries with cost optimization.