Grocery Gateway Case
Dominique Van Voorhis, the vice-president of industrial engineering and operations systems for Grocery Gateway has been asked to make recommendations aimed at improving delivery operations at the weekly management meeting in seven days. There he will need to present his new ideas to the CEO and COO of Grocery Gateway.
Dominique has already gathered the delivery time information as well as current average orders being placed. He’s been able to identify that it takes 15 minutes for set up, 30 minutes for stem time, 30 minutes to return to the centre and 15 minutes for close out. Also, 10 minutes were included to meet with the customer of whom almost half was to receive payment and unload. Their current total average order per day for each of their 13 different regions in their zone was 7,818.
There are 5 alternatives to improve the delivery operations:
1) Extend driver shifts
2) Approach Descartes to expand licensing agreement
3) Increase the delivery charge
4) Eliminate drivers taking payment at delivery
5) Status Quo-many not actually improve the delivery options but it is an alternative
Alternative 4 and 2 are the main recommendations as they will assist Grocery Gateway in increasing their deliveries completed per driver as well as speed up each delivery. If the majority of purchases were paid for online as opposed to the driver directly, delivery times would decrease significantly. Offering incentives to customers would assist in the promotion of this strategy. Also, the expansion of their current system would help them become more efficient in assessing route profitability and to determine the desirability of delivery in particular time slots.
Alternative 1 and 3 would be included as part of the contingency plan in case the first recommendations do not go according to plan. With the implementation of extending the driver shifts and increasing the delivery charges, Grocery Gateway would be increasing their deliverable opportunities as well as earning more from each delivery. This would assist in the profit of their business but potentially causing dissatisfaction with both their employees as well as their customers; two of the most important aspects of any company.
Dominique Van Voorhis, vice-president of industrial engineering and operations systems for Grocery Gateway, has been asked by the chief executive office and chief operating office to provide recommendation aimed at improving the delivery operations at the Downsview Ontario customer fulfillment centre.
Two key areas where improvements are needed are with Grocery Gateway’s delivery operations to achieve 4 stops per hour on area (SPHOA) and to reduce delivery windows to 30 minutes. The Downsview fulfillment centre is currently achieving only 2.7 SPHOA and the company offers a 90 minute delivery window.
Dominique also needs to consider the current business plan objectives when making his recommendations. A major objective of the plan is aggressive growth. Grocery Gateway has a target of 5,000 orders per day within 3 years. The Downsview centre currently achieves 1,500 orders per day.
Dominique has only 7 days to come up with a plan before he has to present his recommendations at the management meeting.
Grocery Gateways overall objective is to provide a high quality, reliable and prompt delivery service at a low cost to its customer base. In order to do so they must achieve delivery within tight windows to a densely populated delivery service area.
More specifically, they are trying to become cash flow positive on a variable cost basis while at the same time fine-tuning the operation side if things. Currently, their logistics operations are not achieving the desired delivery times of 4 stops per hour on area (SPHOA), therefore, their current goal is to achieve the 4 SPHOA while simultaneously reducing deliver windows...
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