Same‐day deliveries in omnichannel retail: Integrated order picking and vehicle routing with vehicle‐site dependencies

Currently, the most common delivery mode offered in online retailing is next-day delivery. Retailers, however, are investigating whether same-day deliveries can be offered to online and store customers in order to meet increasing customer requirements. The present paper considers an integrated order picking and vehicle routing problem assuming same-day delivery in the field of omnichannel retailing. Within this context the paper focuses on the picking and delivery process for large durable consumer goods, for example, consumer electronics and home appliances with the option of associated installation services at the customer's home as well as store deliveries for click-and-collect customers and the short-term replenishment of store inventory. We develop a decision support model and a general variable neighborhood search-based algorithm that tackle the problem described by considering the tradeoff between picking and delivery costs while ensuring customers' delivery time windows. The results show the benefits of an integrated solution approach amounting to approx. 13% total cost savings on average, compared to a sequential approach typically applied in retail practice. A case study from an internationally operating omnichannel retailer demonstrates the advantages and applicability of the modeling and solution approach suggested.