Training pills — Ep 12. — How to start with the last mile distribution in the middle of COVID-19 and not die trying

We know how hard your day to day is. Planning routes is a tedious job that requires a lot of concentration and experience. From Routal.com we want to help you, that's why we launched a series of training pills to help you improve day by day. Our goal is for you to plan better, faster and more successfully.

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In this pill we are going to teach you How to start with the last mile distribution in the middle of COVID-19 and not die trying. In short, we'll teach you how to design a distribution unit step by step for a small company that wants to start distributing its products at home. (This article is a quick summary of the video you'll find at the end.)

This is the first question we must ask ourselves. Since everything will be developed based on this objective. So we have to be ambitious, but maybe then we have to review this premise and see if it's economically viable or simply doesn't make sense.

In this case we are going to design a next-day delivery experience. A lot of questions will arise, which we will try to answer little by little.

The first thing we have to do is not want to create a rocket that goes to the moon. For this purpose, the LEAN methodology continuous improvement must help us to design the first operation in a simple and, above all, FAST way. That is the objective, to come up with something that works “more or less” and to learn from it. Because no matter how much we think about it, until we start it, we are not going to really learn how the market will behave. Mike Tyson has a very famous quote: “Everyone has a plan, until I punch them in the face.” Let the market hit you in the face and be able to avoid problems as they appear.

The main hypothesis that we are going to assume is the number of shipments that we are going to have to make. This data will determine the rest of the exercise, so we have to imagine this data with the utmost precision. The problem is that it is very difficult to specify without experience and in the middle of a situation as abnormal as the current situation may be. So with 99.9% security, we'll be wrong, but this is where we have to be flexible enough to know how far we have to go and correct with the maximum possible speed.

The rest of the questions are necessary deductions based on the premise. How many delivery people do we need to deliver 20 orders in one day? , How are we going to prepare 20 orders a day? , Who is going to manage this new business? , How do we get all 20 orders a day? For me, this last question is the basis of everything, because without customers the rest doesn't make sense. Therefore, it is very important to know how these customers are going to be obtained. Faced with an avalanche of customers, have enough strength to say no and not compromise the experience of others. There are PREMIUM products that use this strategy to value your product or service more. So if you say no, it can be your greatest ally.

Right now we have to begin to analyze at an economic level what the estimated costs of launching a new business unit in the company are going to be. In this example, we have assumed a market price in Spain for both the costs and the average profit of a fruit and vegetable store. The important conclusion is that in order not to lose money on this new unit, we must be able to sell at least 15 orders a day. That is our minimum objective. So scaling the company to fulfill 20 orders seems reasonable.

Right now we have to analyze the evolution of costs based on the number of deliveries. We can see how the analysis suggests that if we make less than 15 deliveries a day we will lose money. The analysis tries to represent that at a level of orders it is necessary to hire more staff, so one more delivery generates losses due to this need for service. This aspect is important, but as always there is a certain amount of flexibility in this area that must be addressed particularly in each case. Just as not everyone performs the same, plans are those plans, but they give us a rough idea of how reality will behave.

In the following link you can download the excel with which we designed this graph so that you can play with the model, and see how it behaves. Remember that maybe your average ticket is different, or your operating margin per sale is higher, review it and see how it affects your profitability.

Ask us in the chat and we will send it to you immediately

From now on, we will evaluate if our home delivery business can generate profits and how many it will generate.

Let's get to work, now we have a plan, now all that remains is to execute it. First we'll need a system that allows us to capture orders, and that can be something as simple as a notebook and pen, a WhatsApp message, the phone or an online store. There are many solutions on the market such as Shopify, 20 Bananas, or Hikeup among hundreds or thousands of other solutions.

The next step is to organize the cast, and this is where Routal.com can help you organize daily routes in a simple, fast and efficient way. In the full video you'll see a small demonstration, but if not I'll leave you a few other videos (YouTube) where you can see more details.

The benefits of using a route optimization tool like Highway are many. For example, the improvement of productivity by more than 27%, the reduction of problems and delays in deliveries (96% success), detecting in real time when problems arise and being able to respond to customers. As well as a reduction in CO2 emissions by more than 30%. All of this on a platform where it will take you less than 30 minutes to master.

In short, this entire article is aimed at improving the delivery experience. It's our vision as a company. Be part of this experience by offering the best tools so that every day we can enjoy better service and make it more efficient. For our customers, the environment and the rest of the inhabitants of our cities.

We hope it was useful and we look forward to seeing you next week with more pills to improve your daily efficiency!