Optimizing delivery speed
Sterling Intelligent Promising provides a delivery speed optimization lever, allowing businesses to prioritize earlier delivery at a marginal increase in carrier cost. During optimization, Sterling Intelligent Promising evaluates fulfillment nodes and carrier services based on processing cost, penalties, and transit cost.
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.
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.
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.
Both the Rank and Optimization APIs support delivery speed optimization with the delivery speed cost 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 penalty 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, where higher values impose a greater cost penalty, making lower-valued carriers more favorable during optimization.
The transit time cost is fixed and it varies across the various carrier services as shown in the following table:
| 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.
Transit time cost calculation
- 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.