A retailer was offering a home delivery
service from stores nationally. Some stores used a van and others made
use of local carriers and taxis. The type of service, productivity
levels and costs varied between stores. We were asked to help to develop
a service offer that would be keenly priced and available from all
stores at all times of the year.
At the start of the project the client carried out a survey of current
practices. A steering group and project team were then formed and we
were selected to provide guidance and technical skills. A detailed
sample of home deliveries was collected to provide a basis for
modelling. In addition, a number of delivery rounds were examined in
detail to derive road speeds and unloading rates. Paragon was then used
to model alternative delivery services.
A large number of Paragon runs were carried out to establish the
difference in cost between the customer being allowed to choose the
delivery day, rather than being told the day for their area, and
different levels of activity. The process was then repeated using data
from other stores with different geographic characteristics.
The modelling demonstrated that although allowing the customer to choose
the day would be more costly, the premium was surprisingly small. Graphs
were plotted to illustrate the sensitivity of the cost per delivery to
the level of activity.
To ensure that the service could be supported at peak times, parcels
carriers were identified, so that if the work exceeded the capacity of
the store's van the excess could be dealt with in a reliable manner
which maintained customer service. We also established the level of home
deliveries below which it would be cheaper to use a parcels company
rather than have a dedicated van. This enabled the project group to
implement a trial of the new service and to identify significant cost
reductions from re-deploying under-utilised vans
