CARGOCONNECT JULY2024 - Flipbook - Page 69
E-COMCONNECT 2024
“The key challenge lies in optimising
operations as e昀케ciently as possible and
striking the right balance in passing costs
onto customers. For instance, implementing slot-based deliveries o昀昀ers clear cost
bene昀椀ts. However, market dynamics in
retail evolve di昀昀erently, emphasising the
critical trio of range, service, and price.
De昀椀ning range involves ensuring that
customers 昀椀nd what they need, rather
than just the number of product SKUs
stocked. Similarly, de昀椀ning excellent service is nuanced and subjective. In the grocery
sector, service expectations have shifted from next-day delivery to more convenient
2-hour delivery slots, which redefined service standards across the industry. As
competition intensi昀椀es, focus alternates between service levels and pricing strategies.
Currently, there’s renewed emphasis on ultra-fast delivery times like 10 minutes versus
15 minutes, prompting discussions on what constitutes optimal service. Ultimately, the
last mile’s role is twofold: to optimise operations for maximum cost e昀케ciency and to
identify customer segments willing to pay for convenience. Similar to low-cost airlines
that prioritise minimising operational costs rather than fares, our aim is to achieve
the lowest possible last-mile costs. Once we identify and cater to customers valuing
rapid delivery, we can e昀昀ectively meet market demands and achieve business success.”
“The entire route management system
(RMS), particularly in e-commerce,
revolves around designing a logistics
network that precisely meets customer
needs. In rural markets, infrastructure
challenges such as poor roads contrast
with urban congestion, creating distinct
paradigms for product delivery and
infrastructure investment. RMSs rely
heavily on mapping, navigation data, and
real-time tra昀케c information, especially
in urban areas where data density is high. This enables e昀케cient operational decisions
like optimising delivery routes, switching vehicle types, and o昀昀ering discounts during
o昀昀-peak hours. In rural areas, partnerships with local entities sustain e-commerce by
establishing pickup points where customers can conveniently retrieve their orders. This
approach reduces overall logistics costs. Currently, RMSs are primarily tailored for tier
I and II cities, with ongoing e昀昀orts to adapt them for tier III and IV cities. Companies are
exploring strategies such as establishing transportation hubs and nodes to minimise
costs and sustain operations in these markets. Concepts such as dark stores, hubs
and spokes are also being discussed to further optimise the overall logistics network,
along with integration of RMSs with advanced technologies like arti昀椀cial intelligence
(AI) and machine learning (ML).”
AASHUTOSH TAPARIA, Head– LMD and Transport,
Bigbasket (Innovative Retail Concepts)
MIHIR S PARAMANE, National Head– Logistics and Warehousing,
Reliance Consumer Products
“What we observe is a delicate balance
between speed, cost optimisation, and
delivery e昀케ciency. Newer entrants in the
market excel at optimising the 昀椀nal stages
of operations, particularly in last-mile
delivery, by establishing mini-ful昀椀lment
centres closer to the end consumer rather
than relying on large, distant centres.
This proximity enhances operational
e昀케ciency and customer service. Regarding cost optimisation, volume plays a
critical role. Businesses must achieve a substantial volume to e昀昀ectively reduce costs.
It’s essential to understand that without su昀케cient volume, achieving cost e昀케ciency
becomes challenging. This premise underscores the importance of operating at a healthy
scale to o昀昀er competitive pricing. Another signi昀椀cant lever is building a dense service
network. Increasing basket size and average order value contribute to lowering delivery
costs over time. Continuous monitoring and adjustment of these metrics ensure ongoing
cost reduction. Route optimisation is another key factor, facilitated by advanced tools
such as AI and automation. Process and 昀氀ow automation further streamline operations,
accelerating order placement and improving delivery planning and adherence to timelines.
Collaboration also plays a crucial role in mitigating business risks and optimising costs.”
“Sustainability has become an integral
part of business strategy, emerging as a
strategic pillar. According to Q-Service,
50 to 60% of customers now prioritise
companies with sustainable practices and
local compliance. In the context of last-mile
delivery, sustainability spans three key
areas: ful昀椀lment centre (FC) operations,
packaging services, and actual deliveries.
Starting with FCs, initiatives like early
operations from 7 AM to 5 or 5:30 PM
leverage abundant sunlight, reducing electricity consumption and carbon footprints.
This approach also promotes diversity by accommodating more female workers during
daylight hours. Additionally, exploring Power Purchase Agreements (PPAs) for green
energy adoption further enhances sustainability e昀昀orts. Packaging presents another
opportunity for sustainability through recycled materials and optimised packaging
solutions. Avoiding over-packaging by utilising manufacturer packaging directly can
minimise waste and reduce the need for larger, more emission-intensive vehicles. In the
last leg of delivery, shared logistics initiatives can signi昀椀cantly cut down vehicle usage and
emissions. Collaborative aggregation of deliveries among multiple recipients in a locality
exempli昀椀es sustainable logistics practices, which are increasingly valued by customers.”
BIJAY PRASAD, Head– Logistics and New Business Operation, Urban Ladder
VENKATESH RAO, Cluster Manager (India), Coats
“Since 2016, the internet revolution has
significantly impacted tier III and IV
markets, where customers prioritise
value and appreciate the right product,
price, and experience. To meet these
demands, we have developed two key
capabilities: advanced technology and a
tailored network. Firstly, our technology
focusses on optimising delivery routes
and ensuring adherence to service level
agreements (SLAs), enhancing e昀케ciency
and customer satisfaction. Secondly, our network design has evolved from a 昀椀xed
salary model to a variable pay system, aligning incentives with delivery performance
and ensuring livelihoods for our partners. Moving forward, we anticipate continued
growth in tier III and IV markets, as these segments present signi昀椀cant opportunities.
Recognising the importance of local adaptation, we have implemented vernacular
languages and address entries in 18 regional languages, easing the process for customers
to input addresses in their preferred language. Additionally, we provide support to
new internet users navigating online shopping, assisting them in accurately entering
addresses to facilitate e昀케cient deliveries. This comprehensive approach underscores
our commitment to expanding into emerging markets while enhancing accessibility
and customer satisfaction.”
“Over the past eighteen months, we’ve
extensively visited e-commerce facilities
to understand current challenges. What
we’ve identi昀椀ed is a pressing need for
compliant last-mile delivery locations.
In response, we are actively pursuing the
development of such facilities. However,
a signi昀椀cant hurdle we face as developers
is the exorbitant cost of land for last-mile
delivery purposes, especially in prime
urban areas. This cost often rivals that of
land suitable for o昀케ces, hotels, or residential complexes, necessitating equivalent revenue
generation. To optimise space utilisation and operational e昀케ciency, we are exploring
vertical integration strategies inspired by global practices observed in Blackstone’s
assets across cities like Hong Kong and Singapore, which feature multi-level facilities.
This approach aims to streamline vertical material movement seamlessly. Moreover, our
focus includes addressing critical operational issues observed in current e-commerce
facilities, such as inadequate facilities for delivery personnel. Many workers endure
harsh conditions with insu昀케cient amenities like proper rest areas, washrooms, and
dining facilities. Our goal is to collaborate closely with partners to design future-ready
facilities that enhance operational e昀케ciency and improve the working conditions of
delivery personnel.”
DHEERAJ MADAN, Sr Director– SCM, Snapdeal
POOJA MALIK, Head– Leasing, Horizon Industrial Parks
CARGOCONNECT JULY 2024 | 69
