X5 Group (Vprok.ru Perekrestok): handling 15 000 daily orders with 95% arrival accuracy

  1. Challenge
    Ensure quality delivery amid rapid growth and limited resources
  2. Solution
    Introduce automated route planning and open new warehouses to accommodate surging order volumes
  3. Results
    Achieved a 17% average increase in the number of delivery stops on a route. Despite the increase in volumes, arrival accuracy reached 95%, and the number of cancellations due to delay dropped to 2%
About the partner
X5 Group is a leading Russian food retailer that manages the retail chains Pyaterochka, Perekrestok and Karusel, as well as a digital businesses Vprok.ru Perekrestok, 5Post and Okolo.

Vprok.ru Perekrestok is an online hypermarket that delivers in Moscow, Saint Petersburg, and other major Russian cities. The company has grown a great deal over the past year. Currently, the Vprok.ru Perekrestok handles up to 15,000 orders per day, with the total number in Q2 2021 having exceeded 1 million (up 13% year-on-year). The average ticket was RUB 4,877 (around 70 USD).

Today, there are five Vprok.ru Perekrestok dark stores in Russia, including three in Moscow and one each in St Petersburg and Nizhny Novgorod. The online hypermarket's courier service is offered in eight regions across Russia, including Moscow and St Petersburg, as well as the Moscow, Leningrad, Nizhny Novgorod, Ryazan, Tula and Tver regions. 

Orders are delivered to a customer's doorstep by truck drivers, with over 70,000 SKUs available for purchase, including from the fresh and ultra-fresh categories. All trucks are equipped with special refrigerators to maintain proper temperature during delivery.
Crisis as opportunity for growth

The pandemic in early 2020 led to a swell in delivery orders that not all major retailers were able to cope with. Vprok.ru Perekrestok was already using RouteQ technologies, which helped them automate logistics, but the pandemic brought new challenges to test the company’s delivery scheme.

The increased load meant several things:

  • The existing fleet had to be used with maximum efficiency.
  • The company had to quickly hire and onboard new couriers while maintaining sufficient resources for storing items and handling orders.
  • Customers started ordering more items than usual, so the size of each order grew.

At the same time, one of the things that didn’t change was the team of logisticians who had to face all these challenges and manage the new processes.

To meet customer demand for delivery, the retailer engaged about 40 partner delivery companies whose businesses were out of work due to pandemic-related restrictions. Because volumes increased so quickly, the company opened warehouses earlier than planned – it launched two 30,000-item dark stores in Moscow and Nizhny Novgorod. 
A dark store is a facility used by online retailers for storing items and fulfilling online orders. Dark stores cut storage costs by eliminating expenditure on interior design and product display. 
Configuring logistics
The team at Vprok.ru Perekrestok believes that onboarding new couriers and opening new storage facilities would not have paid off without the right approach to logistics.

Here’s how some retailers manage logistics. They group orders into geographical zones and give each driver a list of addresses where they need to deliver orders during the day. The driver contacts the customers and plans the route on their own. The route rarely turns out to be optimal – depending partly on the driver's skills, and partly on the traffic situation. Drivers who are running late leave customers dissatisfied, leading to order cancellations and a drop in the quality of service. 

To avoid these common problems, Vprok.ru Perekrestok decided over a year ago to use RouteQ to automatically plan optimal routes based on distances between delivery locations and traffic along the way. Automation helped the company achieve its goals without expanding its logistics team. As an added bonus, they managed to save on delivery costs.  

Applying RouteQ technologies
To implement new routing algorithms, Vprok.ru Perekrestok had to adapt some of their processes. Initially, data exchange was largely manual, but it soon became clear that the only way to move forward was to start using the API. 
An API is a means of exchanging information between two or more systems. One system knows which operations the other system can perform (like planning a route) and knows what data is required to perform those operations. For example, a CRM or accounting system can interact with Yandex.Routing directly, sending it order data and receiving planned routes.

Vprok.ru Perekrestok started with configuring all the possible options for vehicles, shifts, and orders – about 50 parameters in total. Here’s some of the information that the company is now inputting into the program:

  • Order details (order number, order weight and properties, address, delivery time window, arrival/departure time gap).
  • Vehicle data (load capacity, work shifts)
  • Warehouse information (location, capacity, load)

They did a pilot launch in October 2019 and then went full-scale in Moscow and Saint Petersburg, and later in Nizhny Novgorod.

RouteQ builds the optimal route for each vehicle considering traffic congestion and average speed, and calculates the estimated delivery time.

As a result, a single driver now gets four or five extra delivery points, and all drivers cover a total of 2000 delivery points each day.

The driver can see all the delivery points on their smartphone in Yandex.Navigator – a navigation app with real-time traffic information and turn-by-turn directions.

Rolling wave planning
Apart from automated planning, the retailer was looking to automate its interactions with warehouses, making sure that they assemble orders as quickly as possible. If all the orders that go into a truck are received at once, it takes a long time for manual pickers to put them together and send them out. As a result, trucks may leave later than the specified time.

For Vprok.ru Perekrestok  the solution was automated rolling wave planning, where orders are routed several times a day as they are received. Incoming orders are passed on to the warehouse at certain intervals, where they are assembled and loaded into vehicles. Then comes the next wave of planning, which takes into account the orders that have already been assigned to vehicles and adds new orders to the routes. 

This way, Vprok.ru Perekrestok saves time on handling orders and loading vehicles. 
Implementing RouteQ algorithms: results and figures
Vprok.ru Perekrestok optimized their logistics processes with RouteQ technologies, and here’s what they achieved:
+17%
the density of routes
95%
accuracy of observing intervals
×4 times
fewer rejections due to delays
  1. 95% accuracy in meeting customers’ designated time frames amid tangible growth in order numbers
  2. Reduced cancellations due to delay, from 8% to 2%
  3. Denser routes. The number of addresses on a route increased by an average of 17%
  4. New warehouses. The same team of logisticians at Vprok.ru Perekrestok is successfully handling the increased volumes
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Fri Jan 14 2022 16:55:57 GMT+0300 (Moscow Standard Time)