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Express Delivery end-to-end Management System through collaborative intelligence.

Periodic Reporting for period 1 - COLLOGISTICS (Express Delivery end-to-end Management System through collaborative intelligence.)

Reporting period: 2015-10-01 to 2016-03-31

The main objective of COLLOGISTICS is to implement a market ready version of its end-to-end, Express Delivery Management System –currently at a prototype stage– that aims to solve the last mile problem by improving its efficiency up to 50%. COLLOGISTICS will emphasize the integration with e-commerces, as the continuous growth of this sector is imposing additional complexities to last mile deliveries. The system will thus communicate with customers, e-retailers, express delivery companies ERP’s and Fleet Management Systems in order to optimize deliveries in the whole value chain. COLLOGISTICS will consist on two main complementary modules. Through RECS module, online customers will be able to select a time slot for delivery before finishing their purchase. This information will be delivered to the carrier, which in turn will use the NextStep module in order to manage delivery routes and load per vehicle.

The proposed solution is based on three novel concepts: (a) collaborative behaviour among members of the delivery fleet, (b) bidirectional communication with the client from the purchase to the delivery and (c) dynamic pricing. In addition COLLOGISTICS will incorporate state-of-the art developments in the sector such as real time route management. The final objective is to allow CEP companies to make a better use of their resources, improving revenue and profit margins as well as providing a better service to shoppers, who in addition will be able to choose the exact delivery day and time slot subject to variable pricing. COLLOGISTICS will be commercialized as a SaaS (Software as a Service) and will leverage the rich array of functionalities of the installed base of smartphones (GPS, navigation, Internet connection, etc.) to dramatically reduce adoption costs, aiming to make the technology accessible to a mass market to maximize its impact. The pricing strategy will be based on charging carriers a variable cost based on a percentage of the operational efficiency gained thanks to COLLOGISTICS, making its adoption always profitable for all parties.

In the context of the SME Instrument Phase I, COLLOGISTICS has performed a feasibility study of the project. This study has provided a clear evaluation of COLLOGISTICS’ feasibility, including a better market knowledge by country, technological roadmap, resource needs estimation and financial viability. Also a clear commercialization strategy has been devised, including suppliers, entry barriers, dissemination actions, and strategic partnerships to accelerate market adoption and distribution. To support all these activities, a comprehensive regulatory and IPR analysis has been performed.
An in depth market analysis was performed as part of the feasibility study. Several surveys were distributed among key stakeholders in the industry (e-commerce executives, express carriers, delivery people, shoppers, etc.) in order to gain insights and better understand their needs, and adapt the proposed solution. In addition, the company dedicated two people to search for publicly available data about the market to gain a wider understanding of the market conditions, trends and needs. As a result the company has gained a deeper knowledge of customer needs, differentiating the needs for each user typology: e-retailers, e-shoppers, express delivery companies and on-demand service providers. Also, a wide analysis of market trends, size and competitor analysis has assisted the company to better understand the product-market fit.

Based on the market overview and the gained insights about the challenges faced by the express delivery and e-commerce sectors, as well as consumers, the company refined its product definition. This was carried out through several team meetings that included company executives, engineers and business developers. As a result the desired product features and advantages to the end customers were defined. The key product functionalities (collaborative behaviour, bidirectional communication customer-provider and dynamic pricing to optimize demand) were defined with the final objective to allow CEP companies to make a better use of their resources, as well as to allow eCommerce sites to improve delivery experience, improving revenue and profit margins as well as providing a better service.

In order to evaluate the technical feasibility of the project, the project’s team has collaborated with the Polytechnic University of Catalonia (UPC). After analysing the existing technology of COLLOGISTICS, the state of the art and the objectives of the project, both teams concluded that the correct implementation of a market-ready version of COLLOGISTICS would require the de use of advanced artificial intelligence algorithms based on evolutionary algorithms, multi agent systems and neural networks. This collaboration with the UPC will continue in the future project development and implementation.

Once the company had a better knowledge of the market and its customers, and a product designed to better fit their needs, the company defined a commercialization strategy. This included the definition of key partners that would enable a more successful commercialization, defining strategic markets, and understanding the commercialization barriers the company would face. This commercialization will have to approaches, one for CEP companies and another one for e-retailers.

During the feasibility study a patents agency was subcontracted in order to analyse the patentability of the solution and perform a freedom to operate analysis. In addition, an ISO specialist agency was subcontracted to better understand the requirements and advantages of obtaining ISO certifications, the only regulatory aspect that applied to COLLOGISTICS. As a result, COLLOGISTICS has now a clear IP strategy and a lear understanding of regulatory issues and requirements to obtaining ISO certifications.

Based on the development and commercial needs of the project, all the partners involved have made a projection of the tasks to carry out, the resources and its costs. This has been implemented on a Gantt plan as well as a budget for the necessary tasks to develop a market ready version of COLLOGISTICS.
The key advantages of the solution, when compared to existing solutions are:
a) Better use of resources: By generating more optimal routes, reducing the number of failed deliveries and relaxing the demand with dynamic pricing it is possible to increase capacity utilisation of the fleet and reduce delivery bottlenecks. Thus, operating costs decrease due to a lower use of resources. The best competing solutions offer an efficiency increase of 15%, whereas COLLOGISTICS expects to achieve up to 50%. As a consequence, the number of delivery vehicles will be reduced, resulting in lower levels of CO2 emissions and traffic.
b) Enhanced integration in the value chain: COLLOGISTICS is the first solution that integrates end-to-end in the last mile value chain, creating a seamless communication between the different stakeholders: shoppers, merchants, and carriers. As a result, the project opens the possibility of a global optimization of the last mile delivery network.
c) Improved service from carriers and e-retailers: Thanks to a more efficient route management, timeliness of deliveries will improve. In addition, reducing the rate of failed deliveries will eliminate in many cases the inconvenience of making clients move to the central depot to pick up the package as well as avoiding potential e-commerce purchasing barriers such as having to choose undesired / suboptimal delivery locations (e.g. deliver purchased goods to shopper’s work office to mitigate delivery time uncertainty). In addition, dynamic pricing will lead to a lower average cost for the customer. As a result of better services at lower overall prices customer satisfaction will increase and companies would attract more clients. Similarly, e-retailers will offer precise delivery options, which have shown to be highly valued by customers and increase conversion rates.
d) Higher revenue for carriers and e-retailers: implementing dynamic pricing would lead to higher revenue for CEP companies, especially during periods of higher demand. Also as a consequence of better services at lower prices, it is expected that companies that implement the new technology would attract a higher number of clients while improving balance between delivery supply and demand.
e) Cost-effectiveness: commercializing COLLOGISTICS as a SaaS, and using smartphones’ functionalities to substitute tracking and navigation devices remarkably reduces adoption costs of the technology. In addition, the business model based on charging a percentage of the attained efficiencies guarantees its clients profitability.
COLLOGISTICS description