• Miebach India

The question of Last Mile Delivery – 2

Last mile Continuing from our discussion in the last post,  where we looked at a few levers to reduce variable costs of last mile delivery, let us now talk about the other key cost of operations: Fixed costs. For most ecommerce vendors & courier companies, these fixed costs are the cost of facilities & the fixed costs of delivery agents. Working with less: We can begin with keeping the assets low. Which would mean having fewer delivery centres per city, or fewer delivery agents on the roll. But as we discussed earlier, we cannot go down to a single delivery centre and a single delivery agent. Not only they may not be able to handle the volumes, but the agent will be traveling to long distances, thus wasting time in commute, and adding fuel costs. This is clearly an optimisation problem, and a periodic optimisation of the delivery centre network & resourcing with a tool can deliver significant savings. Using cost optimum locations: Just moving 2-3 kilometres into the suburb can significantly reduce rentals that you have to pay on facilities. Many deliveries are made to the residential areas, so probably moving to suburbs will even reduce the kilometres traveled. Even in the middle of a commercial district, getting a small space in a by-lane is much cheaper than getting it on the main road. A delivery centre does not need a prominent retail location, and can be accessed by bikes. Another interesting way of getting a low cost facility is to use mobile vans, which can park in any area and wait for TDAs to do pick ups. Since these can move closer to end delivery locations as per need, this will further drive down variable costs. Scheduling: To ensure optimal usage of delivery agents’ time, one important activity is to schedule his/her deliveries. If the agent is assigned to specific routes only, it is possible that less load on that route might mean less utilisation for him. His absence is also likely to affect the deliveries for this route completely. Using manual or automatic scheduling tools in the morning and having pre-assigned loads for the agents will not only save the agent’s  waiting time, but also increase overall utilisation. More new ideas! There are a few innovations which are targeting last mile delivery, particularly in Asia where traffic congestions significantly affect the service time. Notable amongst those is the use of drones, where delivery agents are replaced by drones flying through the air and dropping packages in destination addresses. In a Chinese city, a parcel company has already experimented with using drones, though before this becomes a reliable method, regulations addressing drones will have to be brought in. In countries like Taiwan, delivery companies are collaborating with retail stores for commerce deliveries. Customers can identify the closest store to their address, and then collect from these stores any time as per their convenience. The delivery company gains by reducing the chance of repeated attempts and also delivering more packets per delivery location (4-5 orders can ideally be clubbed to one retail store). The retail store gains because the collecting customer will come in to their store and likely make some purchase. The customer gains because she is not bound to be at home when delivery agents come, but can still collect the package from next door. So lots of ideas dedicated to making last mile less painful. Have you come across any other interesting means to address this? Please share your thoughts in the comments. Miebach Consulting has worked successfully with retail and eCommerce companies in reducing their supply chain costs while streamlining operations. For knowing more about this service and our success stories in supply chain consulting, please write to mcindia-mkt@miebach.com

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