Last Mile Delivery Challenges and Opportunities in India: Converting Challenges into Possibilities for LSPs - Mahindra L

1. LOGIQUEST TOPIC Last Mile Delivery and its challenges in India. How can the challenges be Converted into possibilities and be differentiator for LSP’s

2. Mahindra Logistics as an integrated service provider • Last Mile Delivery : challenges & opportunities in India Cross-docks/Consolidation Centres Transportation Freight Forwarding Supply Chain Consulting Vas (packing, Labelling, Kitting) WH Inventory & order Management Last mile delivery In-Plant Stores & line Feed

3. Root Causes for Failure in first attempt of delivery • Customer not available in the specific time slot • Late Delivery- Could not deliver at specific time slot • Delivery person could have purposefully skipped a location • Root Cause for high rate of returns: • Customer initiated returns after acceptance due to dissatisfaction • Returns due to order cancellation before first delivery attempt Solution- Click and Collect Use Dense Network of Retail Store in India as an extended arm for last mile delivery Kirana Store

4. STAGE 1- Conceptualization Use of Retail Store as an extended arm of LSP Vision Launch Analysis Final Deliverable Evaluation Review Objective 1. Financial Investment 2. Run Trails to Identify gaps 3. Evaluate Credibility and KPIs Review Result, adjust investment, scale up and optimize • The store provides last mile delivery service • Store takes care of item sorting, delivery/pick-up and order reconciliation. • Enable LSP to augment its last mile storage space at locations close to the customer. Pinpoint: Kirana Store to be targeted Viable Structure of Program Infrastructure Changes required Cluster Analysis : Evaluate Geographic Regions to identify pin code with High rate of returns and other factors Build Structured Program Area wise launch Continuous monitoring STAGE 2- Development Market Research Study of ground existing program: Benchmarking STAGE 3- Implementation Final Assessment Asses Current Facilities and required Investment

5. Hurdle Risk profile Reasons Mitigation Strategy L H M Implementation on local scale, customization may be required even after using proper methodology, Upgrades in future, unforeseen expenditure • Plan Do Check and Act methodology • Encourage shopkeeper located with reward point mechanism to ensure timely delivery The Store associate must be able to handle the influx of business, and perform task while addressing the needs of in-store customers • Supporting App development and integration with the existing control tower If we scale up, Pan India The problem will be in keeping track and maintaining record of the shopkeepers and their delivery status • Opportunity: • Indian Retail market is Fragmented (traditional)- 92% & Organized- 8%* Thus, Lucrative additional Earning option for partners at tier II and tier III cities • Consumer’s désire for instant gratification- ease of collection as per connivence • Best for restricted entry area’s like IT parks, gated communities, and educational institutions.

6. Cost Benefit Analysis And Modelling • Clustering of Pin Codes • GMV • Order Frequency • No. of Orders • Rate of Return % • Failure of first attempt of delivery % 25% Projected Cost Savings Assumptions & Financials Assumptions: 20% of the pincodes serve most of the demand hence will have CDP Single type of vehicle is used for delivery Fixed overhead charges assumed for training, IT and maintenance. Delivery is completed in second attempt of delivery GMV, OrderFreq., No. of orders, Rate of Return %, Failure Rate of Return % are generated using Randbetween() in Excel Cost structure: 1. Variable cost per Kirana store- 12-14 Rs. 2. Fixed Cost per Kirana store - INR 2000-8000 per month, depending on the store. 3. Additional Expense- Training of kirana store representative 4. App development and Maintenance cost

7. “Giving the customer the ability to fully engage in the delivery process allows them to make more informed decisions about the service they want and then to help manage the ‘final mile’. The result is reduced costs to all stakeholders and a greater customer satisfaction.” • Root Causes for Failure in attempts of delivery- • Lack of Customer Engagement & Visibility in the last mile Interactive voice response (IVR) is a technology that allows a computer to interact with humans through the use of voice and DTMF tones input via a keypad. System Cross verifies the delivery location coordinates and the delivery person’s geo location. System log maintains record of missed deliveries Proposed Solution REAL TIME TRACKING

8. IVR Call Flow Real Time tracking in last mile Backend Operations System Cross verifies the delivery location coordinates and the delivery person’s geo location. System log maintains record of missed deliveries. 3rd Party Cloud Mobile API that tracks geo-location MLL centralized System

9. Customer Engagement & Visibility in the last mile To BE AS IS Confirmation with the customer via automated call. One sided notification based Fixed delivery slots Option to re-schedule the delivery if required Unaware of customer availability Delivery person is monitored through a centralized system via cloud Delivery person is not monitored continuously Vendor Selection For Geo tagging: R-Rootfly online services IVR network: Aria Solutions • Selection Criteria: • Cost • Scalability • Credibility Quoted price 70800/- P.A Quoted Price: 1,50,000/- P.A

10. A mega-city is a city with a population above 10 million people. Mega-cities simply weren't designed with modern transport in mind. Traffic snarls on highways, delays at toll plazas, accidents and political blockades annually cost the economy nearly Rs 40 billion in lost truck-operating hours.(1)  Proposed Solution • In India, various experts estimate that market opportunities could soon exceed hundreds of billions of rupees.(2) • Drones will help exponentially reduce delivery times • US, UK, UAE, Iceland, China, Japan, Africa • FedEx, DHL Parcelcopter, Amazon Prime Air, Alibaba Why? Autonomous Drones For completing last mile 1: Second Report on Operational Efficiency of Freight Transportation by Road in India, released by minister of road, transport and highways C.P. Joshi 2: Quoted by Jayant Sinha, Minister of State for Civil Aviation

11. Drones in Last Mile: Use Case

12. THANK YOU Ruchita Namdeo PGDIE-47, 1701075 Ruchita.namdeo.2019 @nitie.ac.in SashilDath PGDIE-47, 1701081 Sashildath.2019 @nitie.ac.in KSP Tarun PGDIE-47, 1701038 Kodali.tarun.2019 @nitie.ac.in

13. References: • KPMG India Report, E-Commerce Retail Logistics in India-Driving The Change, May 2018. • Bob Ruffin, Meghan Shehron, Debjit Banerjee and Jared Lapin (Bain & Co.), Are Your Distribution and Transportation Costs Out of Control?, 2018. • Jorgen Schroder, Bernd Held, Florian Neuhaus (McKinsey & Co.), Fast forwarding Last-mile Delivery – implications for the ecosystem, July 2018. • Gartner Report, Best Practices for Future-Proofing and Extracting Value From IoT Fleet Solutions, 10th May 2018. • Ernst & Young Report, Rural e-commerce: The Untapped Potential, Nov 2018. • Martin Joress, Jurgen Schroder, Florian Nuehaus (McKinsey & Co.), Parcel Delivery – The Future of Last Mile, Sept 2018. • McKinsey & Co., Same Day Delivery – The Next Evolutionary Step in Parcel Logistics, Aug 2018. • Bain & Co., How Reverse Logistics Improves Retail Performance, 2018. • Christian Titze, Bart De Muynck, How to Choose the Right Supply Chain Operational Visibility Software for Your Organisation, 5th Apr 2017. Appendix I

14. Appendix II

15. Appendix III

16. Appendix IV

17. Appendix V