The Optimal Route of Goods to Hofer Shops at the “Press of a Button”

15. 05. 2020

The planning of the supply to shops from the Hofer distribution centre looks like a scene from a movie. The technology of the future helps the logistics planner to calculate the optimal solutions, which a human being could never find so quickly and efficiently. An intelligent system for distribution planning (Atlas DMS) plans optimal distribution based on all of the specific limitations and rules of the trader. 

Among other things, our solution has helped Hofer to reduce external logistics costs by more than 10%, to improve the punctuality of deliveries, and to shorten the time of daily planning of material requirements from four hours to a mere hour. State-of-the-art vehicles and optimal transport routes also contribute to a reduced daily carbon footprint.  

The international commercial enterprise Hofer has been present in Slovenia since 2005, and in 2008 their modern administrative-logistics centre in Lukovica also opened its doors. Today, they have more than 80 shops throughout Slovenia, which are supplied by 22 trucks clocking up more than 11,000 km every day. 

The diversification of their commercial network, the number of different products, the cold chain and many other specifics and conditions gradually proved too overwhelming for manual logistics planning of the optimal transport routes. The company, therefore, decided to automate the planning of their transport. At the same time, they also:

  • simplified and shortened the planning time;
  • decreased the number of vehicles needed;
  • increased vehicle load utilisation to 95%;
  • increased the punctuality of deliveries; and
  • ensured an overview of costs.

Work Performed by Only the Most Skilled and Experienced Logistics Planners
Hofer uses only the most modern and environmentally friendly vehicles for goods distribution. Most transport routes run on motorways, except when it is necessary to access individual shops. When delivering to shops, trucks need to be as fully loaded as possible, but they are not empty when they return to Lukovica, either – they pick up goods from suppliers along the way. In planning deliveries, Hofer establishes the priority sequence with regard to the location of the shop and the type of goods being delivered. In planning the optimal routes, they also take account of rush hours, time windows, estimated unloading time, rest periods for drivers, etc.

During manual planning, the logistics planner needed to be very familiar with all of the processes, rules and limitations with regard to goods and transport resulting from the company’s commercial policy. Needless to say, this demanding and responsible task was only entrusted to the most experienced logistics planners. Both the desire and the need for the automation of these processes arose in order to alleviate work and save time.

Algorithms Supported by Self-Learning AI
Successful implementation of the solution adapted to the needs of the client is always a result of cooperation between the customer and the solution provider. Hofer’s staff showed an excellent understanding of their processes and demonstrated that they have clear goals, so our team started tackling the Mentek solution first by observing their processes. Hofer’s experts helped us make an accurate inventory of all their procedures, the specifics already mentioned, and the desired outcomes.  

Based on the acquired starting points, which served as references, we adapted the Atlas DMS (Delivery Management System) solution to Hofer’s specific requirements and successfully implemented it. With the help of optimisation algorithms assisted by self-learning artificial intelligence, Atlas DMS establishes several equivalent distribution plans, while a person has the option to make the final choice. Thus, the logistics planner instantaneously obtains the most rational route from the logistics centre to all Hofer shops, taking into account all of the limitations and rules.  

Seven Successfully Realised Goals
Hofer achieves enviable results in the supply of their shops around Slovenia supported by the Atlas DMS solution. They highlight the following achievements, in particular:

  •  4x faster planning.
    Automatic logistics planning has greatly simplified and sped up the planning process. The time necessary for logistics planning of all daily transports has been reduced to less than an hour. Managing the plans is also considerably simpler with the new application. In addition, the induction of new employees is simpler because all of the “knowledge” is already in the software.
  • More punctual deliveries.
    Thanks to Atlas DMS, deliveries have become more predictable and punctual. Every transport has a precisely planned route from start to finish with the foreseen times of transport, loading and unloading. In this way, the delivery plan is always fulfilled.
  • 100% cost control.
    As the loading plan, the route plan and the time are known in advance, carriers cannot find any arguments for charging additional costs. This is particularly important when transports are outsourced.
  • 95% vehicle load utilisation.
    By optimising transport routes, the load utilisation of trucks has improved and is now more than 95%. Atlas DMS also combines transport to shops with the return transport of goods from suppliers to the distribution centre, so the trucks do not run empty back to the distribution centre. Accurate planning eliminates the need for back-up trucks and drivers.
  • Savings in logistics.
    By using Atlas DMS solutions, Hofer has saved at least 10% of total distribution costs. However, as some savings, such as the punctuality of deliveries, are impossible to evaluate, we estimate that this percentage is even higher.
  • Scalability and flexibility.
    Atlas DMS-assisted logistics planning always takes place in the same manner, as input parameters are the only additional conditions. Therefore, sudden changes of working times and workload, adding new shops, and constant changing of delivery conditions are no longer a major challenge to Hofer.
  • Reduced CO2 emissions.
    Smart distribution planning enables carbon footprint reduction. There are fewer trucks on the roads and thus lower CO2 emissions.

Building Long-Term Partnerships
It is our concern and obligation to support our clients in their growth and development. By doing so we grow, too. We pursue the objective of building long-term partnerships with our clients. We regularly exchange experience and, in view of the needs and wishes of our client, we also upgrade the solution whenever necessary.  

Together with Hofer, we are proud to have successfully joined forces and combined their experience and our expertise. In the educational programme Galileo Hofer proudly shares its state-of-the-art approach to distribution. You are kindly invited to watch the presentation here: https://www.youtube.com/watch?v=ctlWL5_LUPo&feature=youtu.be (in Slovenian only)

The Optimal Route of Goods to Hofer Shops at the “Press of a Button”
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