CASE WRITE-UP:
11/25/2021
GROCERY GATEWAY:
CUSTOMER DELIVERY OPERATIONS
CHARANJEET SINGH
62110642
1. What is the supply chain strategy of the firm? What capabilities must the firm
develop?
Answer:
The company focuses on low-cost, high-service logistics execution in one market. Unlike
others companies that focus on technology on merchandising, the company focused on
efficient logistics execution to provide best-in-class service for their online customers. The
company has two core capabilities within its business model, broken case picking and direct
delivery. They have optimized our facility only for the broken case and for a pick-per-SKU
profile of close to a ratio of 1:1. To sustain its positioning as a low-cost, high-quality firm, the
company relies heavily on a variety of technology solutions that are built around five main
systems such as RIIMS, WMS, WCS, OPS, and Delivery.
Capabilities the firm must develop:
1. Smaller warehouses need to be created and the larger warehouse in places with higher
traffic and more no. of orders. This strategy would result in considerable cost and time
savings as the driver would not have to return to a larger warehouse every time for re-
stocking orders for delivery.
2. As of now, the clients need to pay for the request on conveyance. There is some time lost
along these lines, as the driver needs to gather the cash from the client. With settlement ahead
of time choice, this time misfortune can be saved.
3. Right now, Grocery Gateway has a fulfillment center at Downsview that caters to the
whole city of Toronto. Considering the future strategies of accomplishing 5000 orders each
day, they should check out setting-up other facilities/ facilities. This will help attend to more
clients and would help in expanding the SPHOA from 2.7 to 4.
4. The company should try to increase its capacity, not by expanding its fleet size but by
entering a contract with third-party logistics and hiring trucks as and when the demand
increases.
5. Grocery gateway should decide on topographical regions based on volumes, item
assortment, returns, Delivery time window, and reaction time. Geographical regions can be
further divided into clusters and served by building network capacity or dividing fleet to cater
to different clusters.
6. Grocery Gateway can customize routes so that they are flexible enough to be adjusted as
and when any hindrance arises. Customizing routes can be done carefully considering
geographical zones, constraints, and time windows. This strategy will help them in saving
cost and time. Hence would help in stabilizing profits.
2. What are the pros and cons of the 3 options suggested by Dominique?
Answer:
Option 1: Keeping trucks on the road longer by extending driver shifts:
Its upsides would empower even more no of trips can be made by broadening the driver's
shift. Time utilization would be better as trucks don't need to return to the fulfilment center
after completing fewer deliveries. The strategy would further lead to better utilization of the
trucks. On the flip side, the drawback would be that the operational costs would increase, and
since the drivers stay on the roads for long, there would be increased chances of accidents
caused by inappropriate rest and fatigue.. Also, there might be circumstances when the
drivers have no deliveries to make and would stay at their shifts idle because the demand is
seasonal and peaks between November to April.
Option 2: Approaching Descartes to extend licensing arrangement:
Its advantages can be profitability attained through the most cost-effective delivery
routes based on parameters such as dwell time at the door, vehicle speed, and
internal vehicle capacity utilization. Time slots can be arranged ahead of time, and orders can
be clubbed to choose the most optimum course. Better time slot sorting would result in
reduced operational costs. Nonetheless, the disadvantage would be the added extra cost of
$250000for extending the license.
Option 3: Increased delivery charge:
Since Grocery gateway’s customers are attracted to convenience, charging a slightly higher
delivery charge would increase profits for the company without investing extra capital. The
disadvantage would be that Grocery Gateway has positioned itself as a low-cost, high-quality
company. So, if the company increases the delivery charge, then the strategy would hamper
its brand image. Also, charging higher delivery charges would further increase the overall
cost of the orders, prompting decreased sales.
