Case Study

Leveraging Data Analytics as a Tech-Enabled Cost Reduction Stategy

In today’s hyper-competitive market, every dollar counts. Traditional cost-optimization approaches are, however, yielding diminishing returns and will soon be obsolete. Subsequently, firms are increasingly turning to tech- enabled cost reduction strategies, one of which is data analytics. The global market for data analytics is projected to hit US$132.9 billion by 2026, at a staggering CAGR of 26.4%*.

“ The solution to a client's issues were hidden deep within their massive amount of operational data."

In this case, moving cars around hundreds of stores and auction spots had proven to cause disruptions to the business: cars are not delivered on time, leading to inventory management and customer services issues. As a technology-driven company, the Client believed that the solution to their issues might be hidden deep within their massive amount of operational data. They believed that, with the assistance of Seraffinity, data could benefit their decision- making process and improve delivery efficiency.

Solution

Our data analytics team started out with pinpointing the root cause of spiking transportation costs. Using descriptive analytic algorithms on the Client’s historical data, the location in which transportation costs incurred the most and the most resource-extensive routes were identified. Deeper analysis revealed that the routes customized by existing delivery vendor's software were not optimized, leading to time wasted on the road and inefficient spending.

Optimization Algorithms were developed to test the effectivity of models. After simulating the scenarios over the span of 30 days, the algorithms produced the following results:
- A hybrid model – where delivery vendor work alongside in-house drivers, should be maintained.
- The optimal number of in-house drivers was 20-30 people.
- A list of dealers to which in- house drivers should be assigned for best outcome.

Additionally the team set out to resolve was Route Optimization by combining different trips within a specific working duration. For routes that are more difficult and inconvenient, it was revealed that utilizing a Transportation Vendor would yield the most efficiencies.

Value Realized

Optimization

The optimized routes enabled by Seraffinity's AI, have been helping drivers to move around much more effectively than before, reducing wasted time and effort while maximizing the number of cars delivered to locations.

Savings realized

Transportation expenses saved by up to 80%. The effective cost-reduction strategy was realized thanks to data analytics – which relied on historical transactional data and AI to pinpoint the underlying issues and simulate different scenarios to find the best solution.

Application

The approach can
be applied in other industries involving route optimization like aviation, logistics.

Realizing the Power of Data Analytics in Minimizing Transportation Costs