Originally presented by George Kochumman, Senior Manager of Transportation at Chainalytics during the Supply Chain Practitioners Council in Bangalore. Presentation explores how e-tailers are meeting the transportation challenges of last-mile of delivery to customers in real time and key transportation strategic approaches. For additional information visit http://www.chainalytics.com

1. Transportation
strategy for last
mile delivery
George Kochumman
Senior Manager, Transportation
Chainalytics
August 21, 2015

2. Chainalytics
Introduction
Carrier Selection for Last Mile
TMS for Last Mile
Last Mile Strategies
Sample Projects
Conclusion
Agenda

3. Chainalytics

4. Survey Question
You would like to place an order for grocery at 10:30 AM on a
given day at online website ABC.com. The delivery windows that
ABC.com provides are 6 AM-10 AM, 10 AM-2 PM, 2 PM-6 PM
and 6 PM-10 PM. Assume that your order is not urgent. Which
option below would you choose?
1. Time window of 2 PM- 6 PM on the same day – 0 %
discount
2. Time window of 6 PM - 10 PM on the same day – 5 %
discount
3. Time window of 6 AM - 10 AM on the next day – 10 %
discount

5. Introduction
Last Mile delivery ranked high in terms of complexity because of the
high number of customers who need to be serviced within tight
delivery windows. Think about this as doing a “continuous
optimization”
Hit density – how many deliveries can be made within a given
timeframe
Lessons learned from our consulting engagements; I would like to
cover 3 aspects:
1. Type of carriers best suited for last mile
2. Transportation Management System (TMS) for last mile
3. Last Mile strategies

6. Types of Carriers
Shipper tenders
individual
loads/multiple loads
to a logistics
provider. Costing
done at a per
load/per-km basis
For-hire carriers
Shipper owns the
fleet. They buy the
trucks/trailers and
have to pay wages
to drivers
Private fleet
Shipper enters into
a contract with a
third party logistics
provider to provide
transportation
services.
Trucks/trailers/
drivers are leased
by the shipper
Dedicated fleet

7. Advantages
1. Allows you to focus on core
competency and not
Transportation Management
2. No headache managing fleet
operations
3. Can easily handle seasonal spike
in volumes
Disadvantages
1. When there is a capacity crunch in
the market, you may not find a
carrier to haul your load and even
if you find one, it could be very
expensive
2. Service levels lower compared to
private/dedicated fleet
Advantages
1. Don’t have to bother about
Transportation Management
2. “Flex” capacity available, can take
care of seasonal spikes
3. Service levels similar to private
fleet
Disadvantages
1. Expensive compared to private
fleet
Advantages
1. Better customer service
2. Guaranteed capacity
3. Scheduling flexibility
Disadvantages
1. Capital intensive
2. Fleet operation management
3. Human resource challenges
Private fleet
Dedicated fleet Common
carrier
For-hire carriers
Types of Carriers
What type
of carrier do
you think is
best suited
for last mile
delivery ?

8. Last mile – private vs dedicated vs common carrier
• Private fleets ranked high when it comes to better service and
lower cost
• For-hire carriers ranked high when it comes to higher capacity
and less effort
• Dedicated fleet sort of in the intermediate. You pay a margin to
the provider so usually not as cost effective compared to private
fleet
Chainalytics previous consulting engagements have shown that for
last mile delivery private/dedicated carriers tend to win when the
average Length of Haul (LOH) is short and when a backhaul is
usually available. And for-hire carriers tend to win when the average
LOH is long.

9. Gartner Magic Quadrant - TMS

10. TMS Selection – Important points to consider
1. Seamlessly integrate with your existing order management system
2. Generate optimized routes respecting time windows, capacity
constraints etc.
3. Reduce overall transportation costs using efficient route planning
4. Better reporting that gives total miles traveled, total costs, total time
5. Visualization aspect – can project the routes on a map

11. Last-Mile Strategies
 Optimize your last mile delivery using a
transportation software like JDA Transportation
Modeler/ Mercurygate Optimizer
 Use a multi-drop strategy for one-to-many
(DC to customers)
 Use a multi-pick strategy for many-to-one
(vendors to DC) – think reverse logistics
 Use consolidation strategies (combine
multiple small shipments into a single large
shipment)
 Use a consolidation/deconsolidation center
(Hub) Can we reduce costs or improve service
using an alternative shipping strategy?
Fleet Analysis
vs.

12. Fleet Analysis
 Change modes
 Change size of fleet
 Cross-divisional consolidation
 Consolidation strategies
 Demand shifts
 Adjust delivery windows
 Open and/or close facilities
 New service requirements
What-if Analysis Considerations
 Network and cost trade-offs
 Numerous potential assets routing possibilities vs.
the one-way carrier costs
 Must look at both cost optimisation and repeatability
of asset utilisation to ensure value through the year
 Costing and analysis need to be objective and free
from bias of the outcome
(De)ConsolidationPoint-to-Point Rates Private/Dedicated Fleet
?

13. Fleet Analysis Inputs and outputs
Inputs
 Demand forecast (transaction-level data)
 Carrier tariffs, fleet costs, capacities and service levels
 Business constraints
 Equipment and facility profiles
 Potential routing and carrier options
Output Examples
 Total transportation costs
 Mode selections
 Detailed loads and trips
 Fleet capacity usage
Optimization Engine

14. Last mile strategies - continued
• Postponement
• Wait till multiple shipments are available and they can be shipped at an overall lower cost
• Peer-to-Peer Collaboration
• Identify like minded companies and figure out lane matching opportunities
• Transportation Management System (TMS)
• Select a TMS that can handle your network complexity
• Fleet sizing
• Determine optimal number of fleet assets you should have
• Fleet location
• Determine domiciles or depots where you should be locating your fleet
• Centralized logistics planning vs decentralized
• Determine whether centralized planning or decentralized planning would work for you
• If you are starting out fresh in fleet operations for last mile – determine a location that would serve
as a POC before implementing the strategy over your entire network

15. Last mile strategies - continued
Use private fleet for reverse logistics
A recent project where a company wanted to
use its private fleet to pick up vendor products
• The fleet was going to a location, delivering
a load and coming back empty
• There were vendors on the way who were
shipping products directly to the company
• The cost paid to the vendors included the
cost of the products plus a cost component
for transportation
• Company saw an opportunity to save on
these vendor shipments by using its private
fleet

16. Last-Mile and Local Fleet Projects
COMPANY OBJECTIVE RESULTS
Foodservice
Distributor
 Realign service territories to DCs
 Identify opportunities to consolidate DCs
 Identified millions in savings using
multiple strategies
Medical Waste
Disposal
 Identify a routing and scheduling solution to
optimize routes of its fleet in metro areas while
meeting strict time windows
 Develop requirements and demo scripts; host RFP
 Identified two viable solutions with
which to conduct a Proof of Concept
 Client selected the tool which met
its needs
Wood Mouldings  Select a routing system that handles complexity,
including Sales & Merchandiser routes
 Develop requirements and demo scripts; host RFP
 Identified routing solution to coordinate
the sales and merchandiser routes
Natural Gas
Distributor
 Develop territory plan for technician network
 Evaluate requirements for demand over five years
 Re-aligned network for future demand
with 4%+ savings
Furniture
Manufacturer
 Select a TMS to manage operations, including
white glove, LTL, TL, parcel, and cross-docks
 Develop requirements and demo scripts; host RFP
 Client implemented a TMS and
realized the value it identified
Architectural
Products
 Assess process, systems and organization to reduce
LTL network damage
 Developed a multi-stop TL solution

17. Fleet Strategy Case Studies
COMPANY OBJECTIVE RESULTS
Grocer  Determine fleet savings from better planning in one
region as a POC
 Identified savings from shifting CC loads to
Fleet
Food Manufacturer  Find value of current private fleet add value  Potential to increase fleet value by $1.5M by
resizing
Food Manufacturer  Find optimal size and location for fleets  Identified $7-13MM in savings by re-aligning
the fleet
3PL  Select a TMS that handles fleet complexity
 Determine requirements and host RFP
 Client selected tool to meet its various
needs
Paper Manufacturer  Assess practices, rates, and model the network  Identified $8-10MM in annual savings
Discount Retailer  Perform diagnostic analysis potential future state  Identified $15-20MM in savings
Forest Products  Determine impact of centralizing logistics planning  Implemented numerous initiatives
Food Wholesaler  Determine savings from changes in practices
 Compare current practices and systems to best-in-class
 Identified $4.5MM in savings
Snack & Beverage
Manufacturer
 Analyze benefit from centralized transportation
planning across divisions
 Significant savings by shifting to more
dedicated fleets

18. To summarize
Select a TMS that would work for you
Decide on the type of carrier you would want to service your network –
fleet versus for-hire carriers
If you choose fleets, determine optimal size of fleet and fleet location
Look at different optimization strategies – including fleet analysis and
consolidation analysis
Look at postponement and peer-to-peer collaboration

19. For more information on e-commerce and technology solutions
from selecting the best TMS to transportation optimization
Contact George Kochumman
gkochumman@chainalytics.com
or visit
www.chainalytics.com