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E-commerce businesses are experiencing accelerated growth (Clement, 2020) leveraged by a shift in purchasing habits. Luxury fashion e-commerce, the industry where the present company competes, is no exception. With the increasing customer demand regarding shopping experience and the number of marketplaces available online, providing a quality service becomes even more imperative. From that perspective, last mile delivery plays an important role, since it is the final link of the supply chain before products arrive to their destination. Assessing its performance and constantly seeking improvements is therefore a vital requirement for those who wish to remain competitive.
In consequence, this project studies the impact of business solutions based on multi-leg, namely working with other carriers or owning a ground fleet to enhance last mile, with the primary goal of uplifting clients’ satisfaction. In a first stage, a method to appraise which regions could be subject to last mile restructuring is developed, considering strategic and operational KPIs. To assist decision making, a DEA model is used to measure operational performance. Given the output, the territory’s last mile processes are scrutinized and relevant information withdrawn. Consequently, a tool is developed using Pythonsoftware to estimate the resources necessary to convey operations, without detailing the routes. Crossing the simulator’s results with the other alternatives presented and the AS-IS situation, the total yearly costs and customer experience enhancement for several scenarios are evaluated and presented in a user-friendly interface.
Findings suggest that in-sourcing transportation improves customer experience and provides savings when order volume is high or time between consecutive customers is low. For one of the cities being evaluated, C3, owning a ground fleet to fulfill a limited amount of shipments proves to be the best overall solution. On the other hand, in C2, using carrier T4 to serve VIPs is a better alternative. Results also indicate that, in the long term, in-sourcing transportation is a feasible option if there is enough order volume and resources are used efficiently.
Globally, this dissertation provides a framework to assess the effect of multi-leg initiatives in last mile. Using the simulator built and following the guidelines here provided allows to analyse different scenarios, change inputs accordingly and assist decision making. The flexibility of the framework enables this structure to be replicated to any city.