Tag: delivery

OM in the News: The “Last Mile” and USPS

As consumers demand ever-quicker and convenient package delivery, the US Postal Service wants to boost its business this holiday season by offering what few e-commerce retailers can provide: cheap next-day service with packages delivered Sundays to your home. Retail giant Walmart says it is considering the Sunday option, which could reshape weekend shopping trips to the mall.

The program, available in 20 major US cities, allows consumers to place online orders with participating retailers before a cutoff time Saturday. Postal carriers pick up merchandise from local stores for delivery the following day, similar to the Sunday package deliveries it now handles almost exclusively for Amazon in much of the US.

“The next-day weekend service is part of the Postal Service’s aggressive push into the parcel business at a time when its more lucrative first-class mail is declining in the digital age,” writes the Boston Globe (Nov. 4, 2017). With Amazon continuing to raise the bar of ‘‘free shipping’’ conveniences, from 1- or 2-day package arrivals to keyless in-home delivery via couriers, the financially beleaguered post office is billing itself as the trusted, low-cost carrier already serving every US household.

Bolstered by e-commerce growth and its Sunday operations, the Postal Service will reach new highs this year in holiday package delivery, with nearly 850 million parcels delivered from Thanksgiving to New Year’s. That 13% increase from 2016 would exceed the single-digit growth for UPS and FedEx, putting the post office on track to capture 45.6% market share in peak holiday deliveries. The post office’s growth is due in large part to its established network in the ‘‘last mile,’’ the final and usually most expensive stretch of a package’s journey to a customer’s door. UPS and FedEx already subcontract a chunk of their last-mile deliveries to the post office.

Classroom discussion questions:

  1. Why is the “last mile” an important OM issue?
  2. What are the strengths and weaknesses of the USPS model to Sunday deliveries?

OM in the News: UPS and the Golf Cart Controversy

UPS already uses golf carts in Florida, as seen with the author and his local driver

“United Parcel Service uses jumbo jets, hybrid electric vans and, sometimes, drones to deliver nearly 5 billion packages each year,” writes The Wall Street Journal (June 30, 2017). But a push into a less glamorous transportation method—golf carts—has touched a nerve with drivers in one of its home bases. UPS can now use golf carts to deliver packages in Kentucky– thanks to a new state law allowing delivery drivers to use the vehicles on public roads. The company is using retrofitted golf carts to complement its fleet of brown delivery trucks primarily during the winter holidays, when daily volumes can rise 2/3 from normal levels.

But union leaders argue that having the vehicles share the road with cars and trucks puts workers at risk. They also object because at UPS golf cart drivers earn less than traditional truck drivers.

The golf carts, which ​are modified with a flatbed or pull a trailer containing the packages, are driven by part-time workers. The carts generally don’t go faster than 15 mph and are only allowed to operate in residential areas and on public roadways with a posted speed limit of 35 mph or less.

Controlling costs is a major issue at both UPS and FedEx, which have taken steps to optimize driver routes through routing systems, automate more sorting facilities and deliver more packages to drop-off points like stores. UPS has a number of unique delivery methods to accommodate local quirks, including horse-drawn carriages on Michigan’s Mackinac Island and gondolas in Venice, Italy.

Classroom discussion questions:

  1. What are the advantages of this new logistics tool?
  2. Disadvantages?

Video Tip: Watching UPS’s Drones Deliver

A drone-equipped UPS van, seen from above
A drone-equipped UPS van

“Both the drone industry and federal regulators are years away from actual legal drone deliveries in the U.S.,” writes USA Today (Feb. 21, 2017). But that’s not stopping UPS from testing possibilities, both to get the visual of a drone with their logo out in front of the public and to see what works. The firm this week ran a test of a truck-launched drone delivery system for rural areas in Lithia, Fla. The drone-equipped vans would only be used on rural routes, says UPS.

Imagine a triangular delivery route where the stops are miles apart by road. The van-top drone would allow a UPS driver to make one delivery at the lower-left of the triangle, after launching a drone that would autonomously fly and deliver to the top of the triangle. While the drone is making its delivery, the driver would continue to the next stop, make another delivery by hand, and the drone would then rendezvous and recharge on top of the UPS truck.

UPS’  aim isn’t to replace drivers but to make them more efficient by allowing one driver to more quickly and efficiently deliver to several homes near one and other. The drone is fully autonomous. It doesn’t require a pilot. So the delivery driver is free to make other deliveries while the drone is away.

UPS estimates that reducing the distance its truck drive by just one mile per driver per day over one year could save the company up to $50 million. Rural delivery routes are the most expensive to serve, due to the time and vehicle expenses required to complete each delivery.

Here is a very short video your class will enjoy!

OM in the News: The Last Mile at UPS is by Golf Cart

upsWalking down the street today here in Winter Park, FL (temperature 83 degrees), I chatted with my local UPS driver. But, as you see in the photo, it is not a big brown truck he is driving–rather a golf cart. A large storage pod, next to my gym and about a mile away, is his supply depot and he makes several runs a day to replenish his cart and small trailer. It turns out that UPS uses pods throughout the state of Florida where it makes the most sense for golf cart deliveries.

Here are some of the advantages:

(1) Part-time employees are hired to help with this effort, creating jobs.  (2) The environmental benefit to the community includes reduced noise. (3) Customers and employees like the approach. (4) UPS reduces energy usage, fuel consumption and emissions while providing an economical way to conduct business. (5) Golf cart helpers provide earlier delivery times. The majority of golf cart deliveries are made prior to 4 p.m. During the holidays, residential deliveries made using a UPS package truck driver are generally made in the late evening due to the additional volume spikes. (5) Golf carts pose an environmentally friendly method of delivering packages–the average golf cart gets 20+ miles per gallon.

A local UPS manager said: “It’s a lot more effective. We can keep the big, noisy trucks away at night by making holiday deliveries during the day. Safety is the main reason why we do it. And with blended in savings of fuel costs, we figured why not?”

Classroom discussion questions:

  1. From an OM perspective, what are the advantages and disadvantages of the golf cart approach?
  2. Should they be used all year round–or just seasonally?