Co-innovation of Small-Scale City Logistics Facilities

Abstract

The Courier Express Parcel industry is booming business. Final delivery in the business to customer (B2C) parcel market has been one of the main focusses for innovation. The last mile in the B2C market is inefficient and expensive, due to delivery failures, congestion, urban constraints, non-optimum loading rates and regulations. The best solution in solving the last mile problem within B2C logistics is decoupling the presence of the final costumer and the delivery; electronic parcel lockers achieve exactly that. MYPUP is one of the companies operating in the electronic parcel locker market and their method of operation is unique. MYPUP allows for delivery from all courier services by integrating the last mile of the delivery. The integration of the final delivery resulted in a new logistics process to consolidate, register and redistribute parcels and is the subject of this research. Analysis of the current logistics process exposed that the process involved a fair amount of manual labor, was error prone and reaching its capacity. The aim of this research was to redesign the warehousing process of MYPUP, focusing on the outbound logistics, to be more efficient, less error prone and to increase capacity, within the constraints of the limited available funds. Solutions were found based on brainstorm sessions with MYPUP executives, MYPUP employees and by consulting experts. A model was developed to show the potential of the proposed solutions and to support the decision-making process of which solutions to implement. The model results showed that introducing optical character recognition (OCR) in the registration process leads to the biggest improvement. A MYPUP specific algorithm was developed to deliver a proof of concept for implementation of OCR in the registration process. This algorithm provided a financially attractive alternative to the expensive, already existing OCR solutions in the market. The other identified solutions that were modeled all showed that significant improvements can be achieved. The registration process time can be reduced to a third of the current registration process time and a substantial portion of the errors can be eliminated, if all solutions are implemented. Furthermore, the reduction in registration time almost triples the hourly capacity. It is recommended MYPUP implements all proposed solutions. The software solutions are recommended to be implemented first, in case financial constraints do not allow for immediate implementation of the 3D camera solution. Although using a 3D camera to determine the size of parcels, eliminates errors and saves time, it requires investment in expensive hardware. It is also recommended to introduce the use of barcodes in combination with a drivers’ app to eliminate errors in the registration, sorting and delivery process. The first step is to implement the drivers’ app with the scan and OK functionalities. The route optimization algorithm requires further research and is recommended to be added later. Finally, further research into the consolidation phase is recommended. Consolidating all parcels in time is crucial if the parcels are to be delivered the same day. Quantifying these benefits strengthens the negotiating position of MYPUP in concluding agreements with parcel delivery service companies. Solutions proposed in this research, although specifically designed for MYPUP, can be adjusted and used to improve logistics processes in small-scale city logistics facilities as well.