Improving dispatching and courier arrival accuracy
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1. A courier company was looking to improve customer satisfaction and return on sales by decreasing field operations costs, rebates, and idling time. Their goals were to decrease field operations costs by 30%, rebates from 16% to 5%, and idling from 6% to 1%. 2. An analysis found that couriers often arrived early to short trips because the dispatch system assigned all trips a standard 30 minute travel time. It also found that rebates were given for trips over 11.3 miles, which were often performed by bikes but could be switched to trucks. 3. The implementation plan proposed assigning shorter routes (under 7 miles) a 15 minute travel time instead of 30. It also proposed
Improving dispatching and courier arrival accuracy
- 1. Improving Dispatching and Courier Arrival AccuracyTitle 1. Background PDI Inc. 3nd quarter 2015 goals: • Improve Customers satisfaction • Increase Return on Sales Operational goals: • JIT start - Reduce idling • Arrive on Time - Reduce rebates Margin 46% Rebate 16% Drive 32% Idle 6% Field Ops. 38% Revenue June 2015 2. Current Conditions (June 2015) 3. Goals / Targets 4. Analysis 7. Follow-Up 6. Implementation Plan 5. Proposed Countermeasures Primary Goal: • Decrease Field Operations cost by 30% • Decrease Rebates from 16% to 5% • Decrease Idling from 6% to 1% • ROS 11% - shutdown imminent • ROS 20% - avoiding shutdown • ROS 30% - growing business • By reaching these targets On - Time parcel handover will increase from 72% to 95%. Such On-Time handover will positively affect Customers’ satisfaction • Decreasing Filed operations Cost will positively impact ROS 4.1 Idling is a Waste Q: Why is courier idle at Customer’s place? A: Courier waits for package handover Q: Why is courier waiting? A: Courier arrived early Q: Why courier arrived early? A: Courier route was short. Courier arrived quickly. Q: Why courier hasn’t planned for a short trip? A: All trips are assigned 30’ travel time. 4.2 Rebate is a Waste Truck Bike Bike Bike Bike Bike Bike Truck 0 5 10 15 RebatesDistance Trips with Rebates REBATES DISTANCE: 11.3 MILES Prepared for: Pat Hunter, Precision Delivery Inc. (PID) Date: July 18, 2015. Prepared by: Tibor Tot Location: Toronto, ON Item Action Item Responsible Implements 4.1 Routes shorter than 7 miles do not need standard 30’. Assign them 15’. Dispatcher JM, Kelly R. 4.2 Routes over 11.3 miles should be assigned to Track couriers. Dispatcher Jake J. Generic Collect data PDI Inc. Pat Hunter Rebates were given to Customers on trips longer than 11.3 miles. Manly these trips were performed by Bike. Switch to Track. Short trips need flexibility when assigning them time. Standard 30’ seems excessive for short trips. Bike couriers generate higher Revenue and are cheaper to operate. Reduce Truck fleet. Look to hire one additional Bike Courier. Less than 5 miles Flexible trip start 5 - 10 miles Standard: 30' Over 10 miles Send trucks only Sales Rebates Field Ops Idle Cost Profit $58,500 $9,400 $18,900 $3,600 $6.600 (ROS 11%) Revenue Ops. Revenue Ops. $0 $200 $400 $600 $800 $0 $200 $400 1 2 Rebates Margin Week Rebates are up, Margin is down - should be opposite - Idling (64%) On-Time (30%) Rebate (6%)Trip (100%) 30’ 15’ Only 30% of all trips finishes on time. 2 miles 4 miles 3 miles1 mile 5 miles 7 miles 6 miles 8 miles 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 0 2 4 6 8 10 12 14 16 18 20 Pareto Chart: Distance for 80% of Idling Expenses Idle Cost Cum. % Vehicle - Revenue - Field Operations 7 miles Action Due Date Responsible Outcome Reduce start time for short distances by 15 minutes. July 30, 2015. JM, Kelly R Verify that Courier arrival is inside allowed time frame. Dismiss one of three trucks July 25, 2015. Pat with Subcontractor Renegotiate with subcontractor to eliminate one truck from the fleet. Send only trucks for longer distances July 25, 2015. Jake J. Dispatchers should familiarize with new rules. Vehicle - Revenue - Field Operations Week 1, July 22, 2015 Week 2, July 29, 2015 • Verify reduction of rebates and idling • Confirm that bikes are running safely. • New policies must not increase risk of Couriers. Safety first!!! Expected: Further reductions in Field Ops. Calculate carefully. Prepare Rebate, Margin and Idle Cost detailed reports. Reducing fleet by one truck and replacing it with Bike is reflected in Field Operations cost reduction Results communicated and success celebrated Revenue Fieldops. Revenue FieldOps. $0 $200 $400 $600 $800 $1,000 Trip Data: 50 days 30’ 45’ On-Time During June 2015, Rebates and Filed Operations took 54% of Revenue due to inefficient dispatching, thus generating very low ROS of 11%. Customer satisfaction was negatively affected by delays and Rebates are not helping.