GHTK has focused on developing this business service with a vision to become the most reliable large-sized package delivery service provider in Vietnam.. The aim of this report is to pro
OVERVIEW ABOUT GIAOHANGTIETKIEM JOINT STOCK
General information
Giaohangtietkiem Joint Stock Company (GHTK., JSC) was formerly known as E- Commerce Development Service Joint Stock Company, established under the business registration certificate number 0106181807, issued by Department of Planning and Investment of Hanoi on May 21,2013
The main business line of GHTK is delivery service in the e-commerce industry, known as e-logistics In particular, GHTK provides Last-Mile Delivery and Cash-on Delivery (COD) for online retailers with wide network coverage throughout the country, especially the strength in researching and applying new technologies for improving delivery activities
Table 1-1 General information on Giaohangtietkiem JSC.,
Company name in Vietnamese Công ty Cổ phần Giao Hàng Tiết Kiệm
Company name in English GHTK JSC
Address GHTK Building, No 8 Pham Hung
Street, Me Tri Ward, Nam Tu Liem District, Ha Noi
(Source: Company profile of GHTK, 2020)
The company operates based on three orientations:
- The main platform is technology
From the beginning, GHTK has determined the motto of development is technology Smart algorithms, mobility technology, smartphones, etc are the most effective tools they use to improve the service quality Especially, GHTK has developed GHTK application (for iOS and Android) with outstanding features:
Transparent disclosure of delivery information such as product name, price, quantity and delivery status for sellers and buyers
Helps sellers and buyers contact directly with GHTK – delivery service provider through G-Chat feature
Allow staff and workers to proceed orders more effectively in warehouses and transportation processes through GHTK Noibo application
Order visibility is one of the main focuses of GHTK, for which information about order status provided for both online sellers and their buyers is always updated real-time through the company system Thanks to this, when an order is being picked/proceeded in the warehouse/in delivery/successfully delivered, it will be updated promptly for tracking If any discrepancies are noticed, the sellers can report them directly on the app
Flexible delivery has become an inevitable trend in the E-commerce industry, especially for last-mile delivery Because of the easily changing order information, the carrier has only two options: being bound by the rules of transport, resulting in leaving behind the e-commerce market or improving a flexible operating system to meet the needs of online trading Understanding this, GHTK has focused on GHTK Smart – flexible operating system to create solutions for each order being taken and delivered more flexibly.
Vision and mission
Starting from when the company had just been established, the vision of GHTK has always been to be the competitive delivery company in Vietnam with fast delivery, nationwide network, and a competitive edge in researching and applying technology into their operations
GHTK believes that their services will be a good deed to the community since the sellers can increase their sales, the buyer, along with this, can purchase more and the shipper can deliver more, making jobs for the market
With this comes the core values of GHTK when they operate their business
- Fast: the goods are delivered constantly, optimizing every stage, based on technology
- Flexible: applying technology for the flexible use of shops and customers
- Friendly: core value of the services industry, increases the customers9 experience.
Establishment and development history
Although GHTK is a start-up company operating since 2013, it has established a strong position in the e-logistics industry, which is in the top 3 e-commerce logistics companies in Vietnam In addition, with the investment of SEA Group, GHTK is making efforts to expand operations to ASEAN in the near future
Table 1-2 Establishment and development history of Giaohangtietkiem JSC.,
May 2013 GHTK was established in Ha Noi with a warehouse, 5 employees,
10 shops and 15 orders July 2013 Introduced order management system and partner connecting
APIs June 2014 Launched 6-hour delivery service in Hanoi
June 2015 Opened the first branch in Ho Chi Minh City and launch 24-hour delivery service from Ha Noi to Ho Chi Minh October 2015 Reached a milestone of 1,000,000 orders and 500 employees March 2016 Released a mobile operating technology platform
September 2016 Became the most favorite last-mile delivery service provider on e- commerce platform with nearly 1,000 employees March 2017 SEA Group – a Singapore company which owned Shopee has invested in GHTK and helped them opened the first 10,000m 2 distribution center in Ho Chi Minh City
September 2017 Opened full-map delivery of 63 provincial centers and to over
10,000 communes/districts nationwide February 2018 Opened over 1,500 distribution centers and post offices with a total area of up to 100,000m 2 , reaching the milestone of 100,000,000 orders with more than 8,000 employees
(Source: Human Resources Deparment of GHTK, 2020)
Human Resources and Organizational Structure
The number of employees at GHTK has been rapidly increasing since 2013 with an average YoY growth rate of 140% from 2014 to 2020 With the strong needs of business development and market expansion throughout the years, GHTK needs to employ more workers to fulfill operational needs and ensure optimal efficiency in operations In particular, the number of employees at GHTK has significantly increased in the period of 2016-2020 with an average growth rate of 150% The reason behind this surge was due to a boom period of the e-commerce industry in Vietnam during 2016-
2020, which offered the company a high chance to grow its business, leading to a higher demand in human resources in operations fulfillment
Figure 1-1 Number of employees at Giaohangtietkiem JSC., from 2013 to 2020
(Source: Human Resource Department of GHTK, 2020)
The rapid development of technology and the fierce competition in the market together with product characteristics and management methods require GHTK to employ young, active and flexible workers The company employees are mainly between 18 and 35 years old, accounting for 95% of the company workforce
The young-aged workforce brings many advantages for the company in creating operating principles, which is a dynamic and hard-working spirit This is a core element in the Slogan 3F of GHTK staff (Fast - Flexible - Friendly) In addition, young workers are always eager to learn new things and are very creative
Table 1-3 Labor statistics at Giaohangtietkiem JSC., by age
Year Number of employees < 27 years old 27-35 years old > 35 years old
(Source: Human Resource Department of GHTK, 2020)
Due to the laborious nature of the work, the majority of goods handlers and shippers recruited are men, whereas the majority of desk jobs are occupied by women In total, female employees only account for approximately 25% of the company workforce from
Table 1-4 Labor statistics at Giaohangtietkiem JSC., by gender
Year Number of employees Number of male employees
(Source: Human Resource Department of GHTK, 2020) 1.4.2 Organizational Structure
The company has utilized the hierarchical organizational structure in management and operations to better define levels of authority and responsibility This is the most common type of organizational structure, in which the chain of command goes from the top down and each employee has a supervisor/leader This structure helps GHTK employees to be specialized in the role and motivates them with clear paths and chances for promotions Furthermore, as the company is organized into a number of small teams under separate management, it allows managers to work more closely with their team members and to better facilitate control over their department The organizational structure of GHTK can be shown in the figure below:
Figure 1-2 The organizational structure of Giaohangtietkiem
(Source: Human Resource Department of GHTK, 2020)
Infrastructure and facilities
As one of the leading last-mile delivery service providers, GHTK owns 1,200+ post offices and distribution centers in 63 provinces nationwide and 1,500+ trucks for receiving, transiting and delivering packages The number of GHTK9s main facilities can be shown in the table below
Table 1-5 Number of facilities at Giaohangtietkiem JSC., by region in 2020
(Source: Operations Department of GHTK, 2020)
With more than 200 distribution centers, GHTK has been able to apply the hub- and-spoke model in last-mile delivery efficiently to deliver a large number of packages everyday and successfully meet the service level agreement for all types of services Furthermore, GHTK also effectively utilizes more than 1,000 post offices (or so-called drop-off points) to help customers directly send and receive delivery more easily The number of post offices and distribution centers at GHTK is increasing throughout the years according to business and operations expansion
In addition, to minimize the lead time and optimize accuracy in parcel sorting, the company has installed advanced automatic systems in more than 30 hubs around the country With the application of more than 30 lego auto-sorters and 1 cross-belt auto- sorter in distribution centers nationwide, GHTK has a strong competitive advantage towards minimizing parcel delivery lead time in the last-mile delivery service market These auto-sorting systems consist of a conveyor belt with the capacity of sorting up to 250,000 packages per day automatically with minimal human efforts These systems also reduce the sorting time by 60%, helping to increase productivity in package sorting, reducing errors and ensuring goods delivered faster and more stable during peak shopping season.
Business activities
GHTK focuses on providing transport and delivery services for e-commerce goods with several standard choices in order to meet the diverse needs of customers
1.6.1.1 Categorized by parcel’s departure point and destination point
Intra-city delivery is one of the most standard and core services for delivery express packages at GHTK Intra-city delivery (or so-called 6-hour delivery) can be interpreted as delivery services of less-than-20-kilograms packages within big cities such as Hanoi, Hochiminh City and Danang Packages will be picked up in the morning and delivered in the afternoon of the same day or be picked up in the afternoon and delivered in the next morning GTHK is the pioneer company in establishing and developing the fast intra-city delivery service
Intra-region deliveries, which means deliveries of orders with sender9s address and receiver9s address are in the same region such as the North, the Central or the South, will be completed by GHTK within 24-36 hours The lead time consists of picking lead time, transiting lead time and delivering lead time
Inter-region deliveries are deliveries of packages with the sender's region different from the receiver's region (Central – South, Central – North, North – South, North – Central, South – North, South – Central) These deliveries will be completed within 48-
60 hours depending on types of packages and transiting lead time
1.6.1.2 Categorized by types of parcels
Express package is the main type of parcels delivered by GHTK, which refers to packages with less than 20 kilograms in weight and less than 80cm in width, height and breadth This type of package will be picked up and delivered by motorbikes and completed within the standard lead time of 6 hours for intra-city delivery, 24 hours for intra-region delivery and 48 hours for inter-region delivery
Large-sized package delivery service has been established by GHTK since 2020 and has become a focused service to expand the company's market share in the last-mile delivery market Large-sized parcels are more-than-20-kilograms parcels and will be directly picked up and delivered by trucks from sellers to buyers The service level agreements for large-sized package delivery service are 12 hours for intra-city delivery,
36 hours for intra-region delivery and 60 hours for inter-region delivery
- Cash on delivery (COD): Collect goods value from buyer when delivering
- Goods refund: Compensation policy for lost or broken goods
- Goods insurance service: Orders are declared the value of goods and insured
- Verification service: Goods inspection service before picking up packages for buyers
- Re-delivery service: Flexible in the delivery process, minimizing the return rate for the seller
In the past 3 years, with the vision of becoming the leading e-logistics company in Vietnam, GHTK has reached several important milestones and achievements, being on the way of expanding its operating scale This can be clearly shown in the company9s business performance in the period of 2018-2020
Table 1-6 Financial performance of Giaohangtietkiem JSC., in the period of 2018-2020
(Source: Financial report of Giaohangtietkiem JSC., 2018-2020) 1.6.3 Business evaluation
According to Table 1-6, the company9s net revenue gradually increased over the years with an average growth rate of 68.75% In particular, GHTK9s sales revenue and profit had a hot growth of 106% and 380% respectively in 2019 as Vietnam has witnessed remarkable development in e-commerce industry, both in terms of growth rate and scale, leading to a surge demand for last-mile delivery services and cash-on- delivery (COD) service With growing popularity of online businesses, GHTK9s profit continues to reach nearly 1,000,000 million VND in 2020, despite the severe impact of COVID-19 on the overall Vietnam economy The company9s total assets also recorded an average growth of 39% in 2020 with the expansion of distribution centers and warehouses across the country, especially by putting auto-sorting and cross-belt sorting systems into operations
With the company current growing trend in terms of profit, Giaohangtietkiem is expecting to reach total revenue of 10 billion VND in the next 5 years The board of directors is investing in sorting machines, trucks and other assets with the aim to shorten delivery lead time and increase service level to 95% in 2025 to achieve the revenue goal aforementioned As the e-commerce market is growing rapidly in Vietnam, it is forecasted that e-logistics company such as Giaohangtietkiem will have more rooms to develop and expand further.
MID-TERM INTERNSHIP DIARY AT GIAOHANGTIETKIEM
Introduction
2.1.1 Overview about the Operations Department
The Operations Department at GHTK is responsible for implementing, managing and optimizing the transporting and warehousing activities The company9s Operations Department structures is as follows:
Figure 2-1 Departmental structure of Operations Department
(Source: Human Resources Department of GHTK, 2021)
The Operations Department can be considered as the key value creator of the company As all functions of the firm must be well coordinated for value to be created and competitive advantage to occur, the cross-functional coordination of decision making is facilitated by an operations strategy that is developed by a team of managers from across the entire business The Executive Board of Managers and the Operations Managers are mainly in charge of setting operational objectives and key performance indexes, monitoring daily operational activities and ensuring the operational quality to meet the business objectives The Operations Department is also the ones who directly improve operational processes, solve problems arising flexibly and quickly to obtain the best performance to the delivery services
2.1.2 Overview about the Internship Position
My internship position at GHTK is Business Operations Analyst Intern in the Executive Board of Managers at Operations Department My main tasks include, but are not limited to:
Work with Operations Manager to set specific operational goals and objectives, from which outline the specific data needs for each project
Monitor daily operational progress, set operational KPIs and take actions to improve operational quality
Use statistical methods to analyze data and generate useful business reports; create models that depict trends in the customer demand and develop strategic business plans
Recommend improvement methods to reduce costs by streamlining operational processes
Collaborate with IT and product development departments to propose solutions for technology product features to optimize operational activities
During my internship, I had a chance to work directly with the Operations Managers to closely monitor the performance of the large-sized parcel last-mile delivery service of the company and propose improvement methods to reduce lead time and minimize service costs.
Internship diary
Week Date Activities Self-evaluation
- Get familiar with the company working environment
- Learn about the company establishment and development history and business services
- Clearly understand my main tasks and responsibilities
- Came to the company head office to sign and complete required documents, set up the company9s
- Received a guide tour around the company head office
- Joined the company overall training orientation by HR Department on the company9s development, organizational structure, business services
- Joined the company introduction training by Operations Department about the company9s operations department structure and responsibilities
- Attended a private meeting with my leader and other Operations Managers to discuss about my scope of work
Got the desired result of well understanding my role in the function and getting used to working with others
Gain understandings about the overall operational flows and activities of the company
- Took business trips to 3 distribution centers of the company, including 2 local hubs (Lang Ha DC, Pham Van Dong DC) and 1 transiting hub (Cross- belt Sorting DC) to learn about the company operations
- Asked and discussed with Module Leads and Warehouse Operators about the operations flows and
Able to learn much more about the distribution network and operations flow of an e-logistics company warehouse activities for each type of delivery service
- Actively joined the warehouse and delivery activities with the package handling staff, shipper and drivers to understand about the operational processes
Deeply understand about the company data analytics tools to efficiently apply in operational problems analysis
- Received thorough training on basic use of data analytics tools (SQL, Python) and get to know about the compay9s Big Data system
- Practice using data analytics tools to handle ad-hoc operational data requirements and generate automatic reports on operation performance Some of my remarkable business reports generated by Big Data system and tools were:
- Daily report on current KPIs of package handling staff at transiting hubs
- Weekly report on current truck capacity utilization at Hanoi and HCMC post offices
- Daily report on current delivery lead time of Hanoi local hubs
Deeply acquired knowledge about data analysis and its usage in logistics and supply chain field
Generated useful data reports that help to make operational improvement decisions
- Gain insights about the current performance of large-sized parcel last-mile delivery service
- Be able to identify current problems in the service operations and propose recommendations
- Joined the operations team which is currently in charge of the large- sized parcel last-mile delivery service optimization Received brief introduction about current
Worked well with the new team, improving my communication skills and problem- solving skills
Gained insightful knowledge about a special service of the company performance and the vision of optimizing the service
- Analyzed historical data about the service operations and generated reports to identify main problems about long delivery lead time and high operational costs
- Discussed with team members to identify root causes of the problems and thus brainstormed about the improvement suggestions
Successfully launch the project of the large-sized package distribution network improvement in 2 main cities:
- Conduct a proposal on the distribution network improvement for large-sized parcel last-mile delivery for two big cities
- Launch new project of applying milk-run model in delivering large- sized packages from local hubs to local hubs, help reduce lead time by 40% and reduce total costs by 20%
(which is calculated through self- generated reports on Big Data System)
Youngest Outstanding Employee of the Month
Able to apply major knowledge into the company operations and made remarkable impact on the service level of the company
During my internship at Giaohangtietkiem Joint Stock Company, I was able to gain valuable insights about the operations of an e-logistics company in Vietnam, and thus apply knowledge from university courses into practices Furthermore, I have learnt about the importance of utilizing data analysis in making business decisions, especially in logistics and supply chain field Finally, the internship also helped me develop my personal growth as I have been able to improve my interpersonal skills, problem-solving skills and develop a professional working style.
DELIVERIES OF LARGE-SIZED PARCELS AT
Current practice of large-sized parcel last-mile delivery at Giaohangtietkiem
3.1.1 Overview of large-sized parcels last-mile delivery service
As aforementioned in the first chapter, GHTK offers two main types of delivery services categorized by types of parcels, including express package deliveries and large- sized package deliveries The large-sized parcels refer to parcels with more-than-20- kilogram and less-than-5-ton in weight and more-than-80-cm in width, height and breadth These parcels are usually bulky, hard to handle and sometimes fragile, therefore it requires a high level of carefulness in transporting and loading these types of parcels Due to the growing demand of delivering big and heavy parcels nationwide, large-sized parcel delivery packages have been a focused business service of the company since
Table 3-1 Service level agreement for large-sized parcel delivery at
Types of delivery Intra-city Intra-region Inter-region Service level agreement
For large-sized parcel delivery, the committed lead time is 12 hours for intra-city delivery, 36 hours for intra-region delivery and 60-hours for inter-region delivery The committed lead times for bulky items are longer than lead times for express packages due to constraints in goods handling and loading
3.1.2 Distribution networks of large-sized parcel last-mile delivery
For last-mile delivery of both express parcels and large-sized parcels, GHTK has utilized the hub-and-spoke model of transportation – a form of transport network optimization in which transport routes are organized as a series of 8spokes9 connecting distant points to a central 8hubs9.
Figure 3-1 Hub-and-spoke model with multiple hubs
Hub-and-spoke model has been widely used by carriers around the world to optimize last-mile delivery for its flexibility, cost utilization and productivity maximization throughout the network At GHTK, spokes can be defined as sellers9 and buyers9 places in 63 provinces in Vietnam, while hubs are the company9s distribution centers Each city has two types of hubs, which are local hubs and regional hubs While local hubs receive packages from sellers and deliver them to final customers (both within the city), transiting hubs consolidate packages from local hubs that are delivered to other cities and distribute them to local hubs in the destination province
Each package will go through several hubs from seller9s place to buyer place and be handled through multiple repetitive stages including Picking, Sorting, Transiting and Delivering However, the number of hubs needed for delivery varies depending on the type of package The process of current large-sized last-mile delivery can be shown in the flowchart as below:
Figure 3-2 Large-sized parcel handling procedure at Giaohangtietkiem JSC.,
After the order of the seller is officially received by GHTK, the packages will be delivered to GHTK9s nearest hub from the seller9s place – later be called the pick-up hub As a distributor in the last-mile delivery distribution model, the packages must be at the hub of GHTK for the next step There are 2 ways that the packages can be picked The sellers can bring their packages to one of the nearest post offices of the company, and then they will be transported by trucks to the pick-up hub or the packages can be transported directly to the pick-up hub by truck This is also the most common choice for large-size parcel pick-up as it is more convenient for the seller
At the pick-up hub, the packages will then be sorted and labeled by their province destination and consolidated into several baskets for categorization Nevertheless, large- sized parcels are usually loaded onto trucks after being sorted instead of being put into baskets to optimize spaces in the warehouse
The packages with the same province destination will then be delivered to the transiting hub if it is intra-region or inter-region delivery, usually located at the suburb of the city, and then be sorted again by their final destination in the transiting hub The transiting hub acts as a central hub for consolidating packages and distributing them to multiple destination hubs For intra-city delivery, the package will move directly to the next step without being transported to the transiting hub
After the packages arrive at the destination hub, the truck drivers will deliver them directly to the buyer9s place and complete the delivery.
The common process for every package is as described, however the number of hubs and trucks needed varies depending on the types of delivery The distribution networks of different types of large-sized parcel last-mile delivery can be shown as follows:
Figure 3-3 Intra-city distribution network of large-sized parcel last-mile delivery
(Source: Self-synthesized) Figure 3-4 Intra-region and inter-region distribution network of large-sized parcel last-mile delivery
Performance of large-sized parcel last-mile delivery service
On average, the current volume of large-sized parcels handled by GHTK has reached approximately 20,000 packages per day for all types of delivery services, including intra-city delivery, intra-region delivery and inter-region delivery However, the demand for large-sized intra-region delivery is significantly higher than that of other types of delivery, accounting for more than 50% of total large-sized packages per day at GHTK The main metrics used to evaluate the performance of large-sized parcel last- mile delivery service at GHTK are average volume of parcels delivered per day and service level
Average volume of parcels delivered per day (parcels) = Total volume of parcels delivered in month/Total working day in month
Service level (%) = Total parcels delivered within committed lead time/Total parcels delivered
Table 3-2 Large-sized delivery service average volume and service level by type of delivery
Metric Intra-city Intra-region Inter-region
Average volume of large-sized parcels per day (parcels)
(Source: Operations Department of GHTK, 2021)
According to Table 3-2, we can interpret that intra-city large-sized package delivery has not achieved the optimal service level with only 65% of deliveries can be transported in the committed lead time of 12 hours, which is the lowest service level among three types of delivery, despite the lowest volume needed to be handled On the other hand, inter-region has reached the highest service level of 80%, accounting for nearly 40% of total large-sized package volume However, the un-optimal service level of all types of deliveries indicates that there are still existing limitations in operating bulky goods distribution networks, thus improvement and optimization are needed to be taken into consideration
Table 3-3 Large-sized delivery service average volume and service level by seller’s region
Average volume of large-sized parcels per day (parcels)
Evaluation on current performance of large-sized parcel last-mile delivery
(Source: Operations Department of GHTK, 2021)
In terms of seller9s region, large-sized packages arriving from Northern cities has the best performance with 85% of packages delivered at the committed lead time However, 36,7% of total packages which originate in Southern cities only reached an average service level of 60%, which is due to the severe impact of COVID-19 on Southern cities in the last 3 months
3.3 Evaluation on current performance of large-sized parcel last-mile delivery service
Firstly, the efficient application of the company9s hub-and-spoke distribution network helped the company satisfy a variety of customer needs With its wide delivery network which has more than 500 post offices covering 63 provinces and 11,000 communes and districts; warehouse infrastructure on 220,000 m2 stretching across the country, the company has been able to reach a large number of customers more easily and enhance brand image nationwide Although large-sized parcels are hard to handle, bulky and heavy, GHTK still offers intra-region and inter-region delivery services with the service level agreement of less than 3 days by utilizing its hub-and-spoke delivery network Compared to other competitors such as Giaohangnhanh (GHN), J&T Express, etc., GHTK has an outstanding competitive advantage in the volume of large-sized parcel orders and short committed lead time for all types of delivery services
Secondly, technology application in operations is an outstanding advantage of
GHTK9s services in handling large and bulky packages GHTK has applied smart algorithms, mobility technology, smartphones applications, big data in transporting and package sorting activities to bring best performance to goods handling
GHTK developed their own software and mobile applications to facilitate distribution management Its entire management system (Giaohangtietkiem MS) is digitalized, including operational management, asset management and customer management Giaohangtietkiem also developed mobile apps for employees, such as Giaohangtietkiem Drivers (for drivers), Giaohangtietkiem Noibo (for goods handling staff and shippers), and Giaohangtietkiem Buu Cuc (for post-office staff) These mobile apps and barcode readers are utilized in every warehouse and transportation activities to proceed orders more effectively and increase visibility in order tracking throughout the process Every action relating to goods handling and transporting will be stored real-time through barcode scanning and other mobile applications9 features This helps store accurate data and transmit them to the Big Data system of the company, which is used for further analytics and improvement processes In large-sized parcel delivery, mobile application is also utilized by pre-notifying truck drivers the number of packages ready to be loaded in the upcoming distribution centers/post offices, which help them better arrange their trunk effectively to make spaces for bulky items By using technology-centric approach, GHTK are able to lower costs, reduce lead time and outperform traditional couriers in committed delivery time
Despite the efficient application of distribution networks and technology in delivering large-sized parcels, there are still existing limitations in delivery lead time, cost utilization and quality control system in the company9s operations These issues should be tackled as soon as possible to help the GHTK achieve the highest service level and optimize operating costs
Firstly, the service level of intra-city and intra-region large-sized parcel delivery is still at the rate of lower than 80%, which means the actual average lead time is lower than the service committed lead time To identify the root causes, we need to break down the total lead time as follows:
Total lead time = Transporting lead time + Sorting lead time
Currently, the number of nodes required in delivering large-sized parcels is unnecessarily high (2-5 nodes), which leads to longer transporting lead time and create excessively sorting lead time Since large-sized parcels are loaded right onto trunks instead of being put into different packages like small express packages, the sorting stage is not required and can be omitted High number of nodes in the delivering process also causes longer time in transporting since it leads to more truck stopping points during its routes
Secondly, there is an un-optimal utilization of truck capacity in large-sized parcel last-mile delivery Currently, there are only 40% of trucks moving with more than 80% fully-loaded containers while there are still remaining packages needed to be loaded The root cause is that large-sized packages are delivered by specialized trucks which are not used for express package delivery; however, there are some cases that large-sized packages with the same destination as express packages are not able to be loaded onto trucks even though the trunks are still available for more loads and vice versa This usage of trucks led to higher costs incurred in transportation since it required more trips of trucks for both large-sized parcel delivery and express parcel delivery
Thirdly, GHTK also does not have a comprehensive quality control system, thus the service provided does not meet customer needs for the safety of the goods transported In particular, the cases of lost, broken orders or goods that are electronic goods, fragile goods not guaranteed safety when delivered to the receiver still exist On average, the compensation costs for broken large-sized items take up to 5% of the operating costs every month Large-sized packages are mainly bulky, high-value and fragile products, therefore it is critical to boost up the quality control for those types of goods to higher service level and reduce compensation costs incurred
CHAPTER 4.SUGGESTIONS ON OPTIMIZING LAST-MILE DELIVERIES
Suggestions on the distribution network of large-sized parcel last-mile delivery
To overcome the aforementioned challenge of cost in-optimization for truck routes in delivering large-sized parcels, the company should consider applying a milk-run model to their operations with a multi-objective path optimization method which generates shortest distance at the lowest cost, instead of adopting old-fashioned delivery methods and not forming a scale The milk-run approach can reduce the number of nodes to GHTK9s current distribution networks, and furthermore optimize the capacity of trucks
There are certain reasons why this model matches the company9s distribution networks: Firstly, the fill rates of trucks from each transiting hub to local hubs has not even reached an average of 60%, which means there are still spaces for further loads Secondly, milk-run will optimize the truck routes and reduce the number of trips needed to directly deliver the packages to customers and thus reduce delivery costs By route optimization, truck capacity can be efficiently utilized and thus lower transporting costs incurred
Considering those factors, the writer suggests a demo truck routes for milk-run model in Hanoi as follows:
Figure 4-1 Proposed distribution network for intra-city large-sized parcel last-mile delivery
Instead of using a point-to-point model between multiple hubs, the proposed model uses a milk run strategy to reduce the number of trucks stopping points needed and better utilize the truck capacity to deliver large-sized packages directly to the customer The trucks which used to be specialized for large-sized package delivery can also be used to consolidate express packages from the local hubs in the milk-run routes to maximize the truck capacity Furthermore, bulky items should be directly transported to the buyer9s place if it is within 3km away from the local destination hub to reduce the number of nodes in truck routes and reduce the excessively sorting lead time
However, this model necessitates comprehensive information sharing between the logistics center and each distribution point, as well as high accuracy within the information, so that the logistics center can arrange distribution appropriately based on the information accurately planning the path Therefore, GHTK should further devise smart digital strategies to cut costs through advanced technological models and expanded business sources, to be more specific, is the utilization technology to maximize the volumes handled in each trip of each vehicle as orders come in real time But if there is no regular standard, the processing time when discharging products will be increased, efficiency will be reduced, delivery time will be delayed, and even service quality will be affected As a result, in order to reduce excessive waste during the delivery process, developing a unified standard for express packing not only makes loading and moving easier, but it also helps to organize vehicle load space more efficiently Standardized operations could reduce fault rates while also increasing delivery staff's quality and delivery service quality
Through the above GHTK distribution network analysis, it can be concluded that the milk-run model applied to express delivery industry can improve load factors, shorten shipment distance, advance time efficiency, fulfill transport demand, and reduce logistics transportation cost.
Suggestions on the quality control system improvement of large-sized parcel last-mile delivery service
To reduce the proportion of delivered products that are lost or damaged, the author proposes two solutions as follows:
Firstly, creating an inter-regional and intra-regional operation control feature on the mobile application of warehouse coordinators and module leaders At the moment, the order is lost or broken without strict control In particular, only when the coordinators find out or the customers complain, the coordinators will open the camera at the warehouse to check the order and solve the problem Therefore, it is necessary to create feature warning orders that are missing or broken automatically appear at the coordinator's system on the mobile app as soon as goods arrive at their warehouse so that they can easily control the order status Also, this will help to avoid the situation where it is discovered that goods are lost and arrive at the destination warehouse and cannot be delivered to customers since the status of each order has been updated automatically on each warehouse they come Each order like this will be created corresponding to a unique code called