Last week, I spoke with Donald Rowley, CIO at Sleepy’s. Headquartered in Hicksville, NY, Sleepy’s is a privately owned mattress retail company with 1,000 stores and 2,900 employees. The company sells mattresses and bedding accessories through its showrooms, website, and call center. Donald and I spoke about route planning and the impact it can have on customer satisfaction and percentage of landed deliveries.
Since 1998, Sleepy’s had been using a route planning application that was a batch product. Essentially, when a store associate or call center representative took the order at the point-of-sale, they had limited visibility into the finer details that the customer would care about. They could tell the customer whether they had the inventory in stock and could give them a delivery date. However, they could not give the customer a delivery timeframe at that point. The system would batch all the orders and build the most efficient routes that it could for the trucks. Then, they would start the picking process and loading the trucks.
The batch process would take place the night before the delivery. On the morning of delivery, an automated outbound IVR system would call the customer with their delivery windows, generally a four hour block of time that day. While the majority of customers were fine with the delivery window, this wasn’t the case for everyone. Sometimes Sleepy’s was unable to get in touch with the customer, meaning they would not be home during that delivery time frame. Other times, the customer would call back in to the call center to arrange for an alternative delivery time. These two issues cost the company time and money and reduced their percentage of landed deliveries. The trucks were basically hauling dead space, as the mattresses were not going to get delivered. When these orders were not delivered, the company had to take them off the truck and put them back in storage. This was problematic, as the more these products are handled, the likelihood for damage increases.
In 2007, Sleepy’s built an in-house system that connects to the Descartes Route Planner. The company needed a way to optimize their routes and this technology allowed it to expand its capabilities. The route optimizer allows Sleepy’s to build more efficient routes at a lower cost. At the point-of-sale, they can now show the customer exact delivery time frames on specific days, rather than just offering a delivery day with a timeframe to be determined later. The system looks at inventory and resources (trucks, labor), and builds out routes based on different criteria, such as average traffic conditions, driving speeds on specific roads, and the time to set up products (since some take much longer than others). All of this information is used to determine routes and give the customer a specific timeframe at the point-of-sale.
The biggest reason for choosing the solution was the real-time routing. They were able to create a better customer experience right at the point-of-sale by offering delivery timeframes. It also eliminated the need for outbound calls to every customer receiving a mattress in the morning. The company’s on-time delivery percentage has increased as a result, and its landed percentage has increased 4.5%, which is significant. Sleepy’s has also been able to reduce the costs associated with damaged products, as employees are no longer double handling nearly as many items. The company sees new and exciting opportunities with this product, including the opportunity develop delivery price incentives to customers based on grouping deliveries together. The customer would potentially pay a lower price for a delivery and the company can build even more efficient routes. This is just in the design phase for now, but Sleepy’s is reaping the rewards from optimizing their routing capabilities.