MARCH 202319how much capacity is to be built in order to ensure efficient and transparent last-mile services. In addition to the factor of highly sporadic demand, the planner also has several other factors to consider. For instance, the distance between the fulfilment centre and the customer's location, the route and traffic density, the availability of the customer, and related. These challenges and others like inventory shortages, errors in order tracking can cause process inefficiencies in last-mile logistics. Making the correct estimates and provisions to meet dynamic demand is a difficult job and one that cannot be done with traditional hiring practices. If a logistics player were to employ a model with fixed contract or salaried staff, they may end up with excess capacity, resulting in a sub-optimum cost per shipment. Meanwhile, underestimating demand andcapacity requirements will surely result in service failure and poor customer experience. The traditional hiring model of fixed working hours and salaries does not suit the last mile requirement of fluctuating volume, varying time shifts, and cost sensitivity. Hence, companies are rethinking their hiring practices and building new models for capacity planning and provisioning. These models should enable flexible and cost-effective last-mile services and help manage surges and lean periods better. They require planning that considers the location, the city's population and demography, geopolitical conditions and overall market demand and supply factors, to determine the percentage of staff required at a variable instead of fixed cost. Below Are the Key Enablers for Improving Last-Mile Capabilities:· Mobilization of a Disparate Workforce: The gig economy has already taken over several other industries like hospitality and cab services. The logistics and e-Commerce industry too are embracing this new crowd-sourcingdynamic within the labor market. Logistics and e-Commerce companies must work towards identifying and sourcing individual delivery staff, part-timers delivery 'runners', delivery agents, Kirana stores, and individuals with space and capacity to offer delivery services.· Employing more Variable Pay Structures: Instead of hiring a fleet for delivery and paying executives fixed compensation, companies can develop novel data-driven compensation schemes. Crowd-sourced delivery executives can be compensated and rewarded through remuneration models that consider diverse factors like the probability of acceptance of the delivery task, better customer satisfaction ratings, and overall track record of the number of shipments accepted. Companies can even opt for simpler time-based models.·Transparency in Payments & Remuneration: By digitizing their payment methods, companies can offer their staff more transparency and understanding of their earnings, reducing the room for error and conflict. Building the technology capability to manage and execute these complex transactions and calculations can help manage crowd-sourced staff and their payments more efficiently. For example, a mid-sized logistics company might need to make a pay-out of anywhere between Rs. 20- 45 thousand per day for staffing. To make accurate and transparent calculations for individuals based on the shipments delivered bonuses, applicable incentives, fuel payments and more. can be quite complex and difficult to manage manually.·New & Dynamic Training Methods: Through training and development programs, companies who hire their own delivery fleets may have the benefit of greater control and alignment with company culture, standards, safety and product knowledge. New technologies and digital platforms can offer micro-learning, gamification and reinforced learning modules that help level the playing field, and allow companies to identify, train, retain and conduct refresher programs for their crowd-sourced delivery executives. The Variable pay out scheme benefits both staff and e-Commerce players. It helps last-mile delivery executives earn bettercompensation while exerting more control over their time and income. It offers opportunities for higher rewards and incentives for executives delivering during peak hours and for those who are able to manage more shipments. There is more flexibility as lean periods allow executives to engage in other tasks and employment, ensuring that they can further boost their earning capacity. Service providers meanwhile, benefit from the increased flexibility in their capacity and the overall cost-effectiveness offered by these variable models. Encouraged by evolving delivery standards, logistics and e-Commerce companies are now experimenting with various methods and models to make last-mile deliveries more efficient and cost-effective
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