Cainiao Network, a global logistics industrial internet company and the logistics arm of the Alibaba Group, proposed a novel business model that consolidates parcels ordered by the same consumer from one or more merchants during the fulfillment process to increase delivery speed without incurring additional costs for merchants and consumers.
To support this business mode, Cainiao develop three analytics methods: 1) a two-phase online optimization algorithm to determine which parcels of one consumer constitute consolidated parcels and to select the shipping methods for the consolidated parcels to maximize the gains while satisfying the constraints (ex., the on-time delivery rate within ten days of all consumer parcels created within a specified time should reach a target value), 2) a statistic method to calculate delivery time distributions to obtain on-time delivery rates within different days, and 3) a simulation-based optimization method to guide operators in setting appropriate target values of the constraints.
In addition, Cainiao not only proved that the expected optimality gap and constraint violation of the online optimization algorithm have sub-linear bounds but also validate its effectiveness and robustness by testing instances generated from real-world data.
Since 202, the company has implemented the system to consolidate numerous parcels shipped from China to more than 50 countries and regions, thus saving tens of millions of dollars annually and reducing delivery time by at least 50%.