WhyLastMileIsEXPENSIVE?

Disorganized
LossofScale
ReAttempt
MorePeople
Uncertainty

Walmart5%ofFCisRent
IndiaDS5%ofFCisRent

About6075RsspentontheLastMilepercustomer(tryingtodeliver)
315DSlocatedinIndiaTier1andTier2towns

ConsiderthechoiceoflastmiledeliveryasVCvsFC

Parameter

Value

SalaryofDeliveryAssociate

20k

PackagesperRoute

~40

DAperstation

~30

Totaldailyvolume

~5k

3rdpartyalternativesavailable

yes

Typicalroutetimes

67hrs

Typicalstemtimes

2hrs

Onzonehours

45hours

TotalwavesofDA

3(earlymorning,latemorningandafternoon)

SortationAssociates

Definitions:
StemtimefromDSto1stdeliveryandlastdeliverytoDS
OnzoneTimefrom1stdeliverytoLastdelivery
Coincidencepackagesdeliverablepervehiclestopmade
DeliveryDensityTotalpackagesdeliverablepersquarekilometerinaspecific
sublocality(aproxyfordemand)

Costsincurred:
DAsalary(FC)

VehicleandFuel(SemiVC)
Rent/Utility(Phonecalls,etc)
Sortation(FC)

AnalysingCosts:

DA20daysamonth,20routes,1000perroute,carrymax40packagesperroute

Utility

PerPackageCostinRs

Allocatedsalary

25

Fuel

13

R/U

Sortation

Total:40Rs.
ReAttempt:About30Rs.
Approx75%deliveredin1stattempt.
HighDensityabout1.5packagespervehiclestops

Optimization:
MakesurethatDAaregoingoutwithmaximumcapacity(Deliverychannelshouldbe
utilizedtomax)
RouteOptimization
MaximizingCoincidencetemporaloptimizationandphysicaloptimization
Deliveryinsameareainthesamedayshouldbeavoidedlost75MMinUS
alonelastyear
Takemorepackagesinmoredenseareasandlesspackagesfromtheless
denseareas
Upstreamoptimizationdecidingwhetherdeliveringselfor3rdparty
E.g.IIMAhas112packagescoincidencethussaving70%costs
Temporaloptimizationdelaysortationtoreachathresholdcoincidencelevelandthen
deliverthruDAs(preferablyduringthelastwave)

TurnCosting:
GiveturnbyturndirectionstoDAs(USandUK)
InUSnoleftturns,UPSsavedabout$7580million
20morepackagesperwave
UShasaspecificrouteplannertooptimize

Tworoutingdisasters:
Sendinglowervolumeofpackages
Havingaspecifictimewindowforthedeliveryofpackages

MajorTasks:
DeterminationofcostofpackagedeliverythruDA
Howtobenchmarkthisagainstdifferentchannels
Shouldamazondeliverallthepackages
Howdoyouallocatevolumesacrossallthechannels
HowwillyouoptimizedensitytoensurethatDAtimeisutilizedtothemaximum?

AMZL:
Moreofastrategicdecisionasopposedtocostoptimization
Whynothandovertoathirdparty?
Receives19kordersperweek,tightdeliverywindows,3rdpartyunreliable
UPSmissed60%deliveriesduringpeak

IhaveSpaceProgram:
EliminationofStemTIme
LowerReAttempts
ConversionofFCtoVC
Useduringpeaktimes
Increaseincoincidence(manypackagestoonestore,eliminationoflowdensity)