Last Mile Operational challenges in India

Submitted in Partial Fulfilment of the Requirements for the

Post Graduate Diploma in Management- Executive

by
Prashant Yadav
(180301009)

GHAZIABAD, INDIA
December 2019
 Certificate
This is to certify that Dissertation titled "Last Mile Operational challenges in India" submitted by
“ Prashant Yadav ” (Enrolment No. 180301009) for the partial fulfillment of the requirement of
Post Graduate Diploma in Management- Executive is a bonafide work carried out by him, under
my guidance and supervision.

The work has not been submitted by him elsewhere for the award of any other degree/diploma.

Date: Signature of the guide

Date: Counter signed by

Chairperson, PGDM Executive

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 Acknowledgement

I express my deep sense of gratitude to “Prof. Dr. Mrinalini Shah” for his expert guidance and
valuable inputs that gave me an exquisite insight about the Dissertation on “Last Mile
Operational challenges in India.”
I am highly obliged and thus express my gratefulness to her. I share the pleasure of this
achievement with all my colleagues for moral and emotional support in completing this research
work in the area of “Last Mile Operations”, successfully.

Prashant Yadav
PGDM Executive 2018-19 Batch
IMT, Ghaziabad

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 Executive Summary
The study is to analyse the last mile delivery challenges in India.
The gaps in existing operation practices to match the consumer expectations and how these
expectations and last mile challenges can be leveraged to generate huge opportunities and a
differentiating factor for Logistics Service Providers (LSPs).

The study focuses on two major sectors as challenge for last mile:
a.) E-Commerce
b.) Bulk Logistics

The study and reports are based on the UP-East region of India. The cities covered in my project
work includes the city of Varanasi, Prayagraj, Gorakhpur, Ballia, Mirzapur & Sonebhadra.

Challenges for each of the sector along with some common challenges have been identified and
solution for them has been discussed, which may optimise last mile delivery thus enhancing
consumer satisfaction.

The report also discusses in brief the future of Last mile delivery using Drones, pilot test of which
are being done in different countries around the world.
Drones:
The ability to fly drones Beyond the Visual Line of Sight (BVLOS) brings a big opportunity for
commercial drone operators. It’s where the greatest, multi-billion-dollar business potential for
drones is likely to emerge. Most commercial drone applications would benefit from BVLOS. The
operation would be more efficient and cost-effective and could be some applications that would
remain impossible to execute without BVLOS.

Currently, no one is allowed to fly BVLOS in Indian airspace, this means organizations that would
benefit from augmenting their operations with BVLOS drones are locked out of capitalizing on
the technology’s full potential.

In the current scenario, After the launch of the Digital Sky Platform under Civil Aviation
Regulations ("CAR") 1.0 with effect from December 1, 2018, a basic framework for regulations has
been established. Which allows operations for Visual Line of Sight, or VLOS flights, which are
performed with the drones within the pilot’s line of sight.

BVLOS capabilities enable a drone to cover far greater distances significantly improving the
economics and feasibility of many commercial operations.

Yet for all the promise of drone technology, regulations by CAR 1.0 have prevented the operators
from unlocking the full potential of Unmanned Aerial Vehicles (UAV) and reaping its full economic
benefit. Further, the focus of CAR now is on addressing challenges for regulations for BVLOS &
Autonomous Operations.
Ministry of Civil Aviation has constituted a taskforce on the recommendation for CAR 2.0.

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 Table of Contents
Certificate ...................................................................................................................................................... - 2 -
Acknowledgement ......................................................................................................................................... - 3 -
Executive Summary ....................................................................................................................................... - 4 -
Introduction ................................................................................................................................................... - 6 -
Last Mile..................................................................................................................................................... - 6 -
1. E-Commerce ..................................................................................................................................... - 6 -
2. Consumer Retail ............................................................................................................................... - 6 -
Objective ........................................................................................................................................................ - 7 -
Last Mile Operation challenges in India ........................................................................................................ - 8 -
Common challenges of Last mile ................................................................................................................... - 8 -
I. No Real Time Visibility & Customer Friction .................................................................................... - 8 -
II. Missed Delivery ................................................................................................................................ - 8 -
III. Address Issues& Customer Nuances ............................................................................................... - 8 -
IV. Low Volume Density & Incorrect Orders ........................................................................................ - 8 -
Challenges in Last Mile delivery-UP East Region ........................................................................................ - 10 -
I. FE route optimization .................................................................................................................... - 10 -
II. Addfix (Misroute) ........................................................................................................................... - 10 -
III. Manpower shortage/absenteeism ................................................................................................ - 10 -
IV. Serviceability Standards ................................................................................................................. - 10 -
V. CPS, Cost per shipment control ..................................................................................................... - 10 -
VII. High attrition rate of Field executive ........................................................................................ - 10 -
VIII. Training of distributed team across whole nation ................................................................... - 10 -
XII. Health & Safety precautions...................................................................................................... - 10 -
Others practices for improvement of Operations ...................................................................................... - 15 -
Future of Last mile delivery using Drones................................................................................................... - 16 -
India drone policy .................................................................................................................................... - 16 -
India- Current drone scenario ...................................................................................................................... 17
Regulatory Framework across the World ................................................................................................... 17
Proposed operational model: .......................................................................................................................... 18
I. Direct Delivery to Automated Dropbox ............................................................................................. 18
II. DC to Automated Dropbox then Last Mile by Field executive .......................................................... 18
Conclusion......................................................................................................................................................... 19
Recommendations ............................................................................................................................................ 20
References ........................................................................................................................................................ 21

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 Introduction

Last Mile
Last mile delivery, in simple terms, is the movement of goods from the last transportation
hub/centre to the final delivery destination. The focus of last mile is to deliver products to end
consumers as soon as possible with least costs, thus optimizing efficiency and enhancing
customer satisfaction. Last mile delivery, today, is where, consumer relationships are made. For
this paper, I had identified last mile delivery problems in the UP-East region, analysing their
causes, identified the major pain points in the last mile delivery.

1. E-Commerce

E-commerce is one of the major sectors involving the role of logistics, particularly in last mile.
Experts believe the share of last mile in E-commerce delivery comes around to be 45%(Figure 2),
which is more than the hauling, collecting & sorting.

2. Consumer Retail

Retailers are the sellers who sells goods to the end consumers in small quantities for consumption
rather than resale. They are the direct point of contact with the customers. There have been a lot
of changes in retail logistics sector due to change in demand for time sensitive distribution. The
situation has changed a lot today; Retailers are no longer the passive recipients of goods given to
them by manufacturers in anticipation of demand but with the integration and advancement of
technology, retailers are in a strong position to organize, control & manage the supply chain
effectively from production to consumption.
In fact, retailers set the pace in logistics systems by reacting to the pull of demand rather than
push of supply.

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 Objective
§ To study the challenges of Last Mile delivery in India

§ To propose solution for challenges faced for improved Last mile delivery

performance.

§ To propose a model for implementation having advanced infrastructure and

governance within framework of CAR 2.0 (Civil Aviation Regulation), for last

mile operations using BVLOS drones.

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 Last Mile Operation challenges in India

Common challenges of Last mile

I. No Real Time Visibility & Customer Friction

II. Missed Delivery
III. Address Issues& Customer Nuances
IV. Low Volume Density & Incorrect Orders

- No Real Time Visibility & Customer Friction

Problem
Customers want full, real-time visibility of their orders including the exact time of delivery.
Presently status shows out for delivery but has not real time feed.

Current State
Realtime visibility is available for trains/trucks and cabs, but not for parcels. Differentiating

Solution
Usage of GPS enabled vehicles, real time tracking (on maps) can be provided. Uber revolutionized
taxi services by providing real-time location of the cab.

- Missed Delivery

Problem
For every 100 deliveries, the delivery person makes 140-150 visits. These gets increased in case of
small towns and rural areas. Reasons for this can be rescheduling or receiver not available, etc.
This significantly add to the CPS (cost per shipment).

Current State
If delivery is missed, reattempt is done. (3 reattempts then shipment is marked RTO- return to
origin).

Solutions
a) Self-collecting Lockers, A digital locker at a location like local market a colony, institutes, big
building or malls or kirana stores, will allow the customers to pick up the parcel as per their
convenience. A barcode can be used to unlock the locker and get the shipment in a safe and

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secure manner. This will not only help in reducing the rescheduling costs but will also offer
flexibility to customers.
b) Premium Scheduled Deliveries, customers are ready to pay extra charges if the delivery slot is
as per their convenience. So, either LSPs can schedule delivery with the desired time slot or by
taking prior appointment with customers.

- Address Issues & Customer Nuances

Problem
Median area covered by a pin-code in India is 90 sq.-km which may contain up to a million
households. Additionally, there are house numbers and landmarks which are either inaccurate or
confusing. Finding the address is time consuming and frequent calling to customers for directions
often irritates them.

Current State
The LSPs rely on help from nearby people or calling the customer to get the address which results
in waste of time.

Solution
The customer can share the live location and hence be tracked using GPS thus reducing the need
for frequent calling. This will enhance consumer satisfaction.

- Low Volume Density & Incorrect Order

Problem
This challenge can be presented in three different scenarios:
i)A typical route having very less volume of deliveries, especially in case of rural & suburbs
ii)Delivery vehicle going partially empty
iii)Consignment bookings being taken by LSP but not being delivered to consignee due to
no delivery location.

Current State
There is huge dealignment and mismanagement in these cases. There are many instances of such
cases still happening.

Solution
Crowdsourcing is the solution to most of these problems. And this domain is scarcely explored in
India. It can be done in two ways:
Collaborator or Service Provider.
By being a collaborator, a firm can connect shippers with carrier companies who have extra space
in their vehicles thus delivering through them.

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 Challenges in Last Mile delivery-UP East Region
Listed down are most common issues faced by LM team, on a day to day basis.

I. FE route optimization

II. Addfix (Misroute)

III. Manpower shortage/absenteeism

IV. Serviceability Standards

V. CPS, Cost per shipment control

VI. Handling of BFSI shipments

VII. High attrition rate of Field executive

VIII. Training of distributed team across whole nation

IX. LPMA- Lost package & Missing shipments in Audit

X. RT Not Bagged

XI. Huge number of cancellation of COD shipments

XII. Health & Safety precautions

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 1. FE route optimization. - Field Executive route optimization is one of the major
challenges faced in country like India
Field executives plan for route based on pin-codes, the route is made by Fe based on his knowledge,
this task is easy for native person to plan his route, challenge is when the person is on leave and we
need to replace the person. Also, during the time of sale and festivals season the DC are handling 2.5
times of their capacity and making use of adhoc FE is used so the services are impacted as the new
FE is not that capable of route planning.
The challenge is not only if the person knows the route, in a locality like UP east even Local FE who
know the route also faces the issue as addresses and localities have landmark identification issues as
many addresses have landmark elaborated addresses.

Solution:
Use of GPS based live location when customer called placed by the delivery executive when customer
delivery attempt is made.

2. Addfix (Misroute) cases reductions

Shipments being sent to incorrect DC from where the location is greater than when compared
to the other DC.
The cases of misroute lead to not delivering of shipments as per the PDD (promise date of
delivery), the misroute applied by one DC leads to shipment returning to the HUB then being sent
to the other DC.

Solution:
It is a model developed by organisation from where I have taken the data, the address is mapped
not only to a particular pin code but also to the nearest DC, where the program first looks for
nearest DC then pin code for locating the address of the customer.

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 3. Manpower shortage/absenteeism
As the load at a DC varies throughout the year,

The issue is taken care as - FE are of 2 kinds regular FE (on roll employees of the organisation), and
the other workforce known as Agent FE- deliveries paid on per packet basis on successful delivery
by the agent FE, here one of the noted issue is that when the dispatch ID (DSP)- dispatch against
a particular FE or agent is made, which has information of no. of shipments with details that a FE
takes.

Further the challenge that arises is,

The agents are given more load of nearby location by the Team Lead of that DC, which leads to
higher CPS (Cost per shipment), as the success rate is more of Agent FE and for each FE successful
delivery the cost of fuel is more as they travel greater distances.

4. Serviceability Standards, while facing uncontrollable factors , rain/fog/carting vehicle

breakdown/delay etc.
As the last mile trip is mostly by two-wheeler the uncontrollable factors cannot be ignored.
This also leads to no delivery on a single day leading to piling up of shipments for next day.

5. CPS, Cost per shipment control

It consists of numerous factors, majority of which are beyond span of control and unexpected.
The control of CPS is one of the biggest performance matrices for any DC.

Solution:
Vigilance, Auditing and complete supervision along with a team of non-corrupt people is an
important requirement for this, as the DC team has many known unethical practices that hampers
the over all cost.

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 6. Handling of BFSI shipments
The shipments being very critical, misuse of which may lead to huge loses financially and defaming
the reputation of the organisation.

Solution:
BFSI shipments only to be handled by regular and trained FE.

7. High attrition rate of Field executive

This factor impacts a lot on quality of service, high attrition rate leads to new hiring of field
executives which brings a challenge of training a team. This especially becomes an issue when
from a particular DC majority of team leaves.

Solution:
Training, Townhall for all, Online query solution system.

8. Fragmented Team across the country

Distributed team across whole nation, teams are trained but information gaps leading to service
standard issues.
Training is mostly conducted via webinar, or print outs, this creates a gap between the content
delivered and the content received.

Solution:
Integrated classroom training on rotational basis of Teal Leads of DC and of higher management,
dedicated tests on quarterly basis with weighted against annual performance evaluation.

9. LPMA- Lost package & Missing shipments in Audit

On everyday basis audit is done at every DC for reconciliation of shipments, we encounter huge
shipments that are missing on everyday basis, be it a FE has taken extra or is missed by TL while
scanning.
This has huge impact when the shipment is not found the very day as it is marked LOST and is is a
cost to company.

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Solution:
Instead of 1-time audit, audit to be done 2 times one after the FE’s go on route and once after they
come and at EOD and closure of DC. This would help in reduction of LPMA cases on daily basis as
the visibility has been increased and update of missing is reported.

10. RT Not Bagged

The return are shipments that are cancelled by customer or returned by the customer,
RT bagging is very important the very same day and the returns are 25-30% of fresh shipments, if
the same are not cleared very same day it would lead to more LPMA cases and additional work
and extra space utilization at every DC.

11. Huge number of cancellation of COD shipments

One of the major issue that leads to less FDDS (First dispatch delivery success), as performance
parameter for a DC, this one leads huge impact in performance and also leads reattempts as in
many cases of COD shipments the customers asks for a rescheduled delivery of an item.

12. Health & Safety precautions,

This is especially for unexpected heavy/B2B shipments at DC level. The work force is not highly
skilled for lifting of heavy equipment.

Solution:
An 2-3 days prior alert for any such shipment, along with training for the same and deputation of
a skilled supervisor from any nearby location.

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 Others practices for improvement of Operations
§ Power Sessions
Every day in every DC power session is conducted by Team Lead, we can slightly change the same
as, each DC to have a register of power session, that should be made a part of audit when visited
by the manager under whose area od responsibility the DC comes

Change:
The session must be taken by not only TL/ATL, but on rotation basis, each FE is trainer for 1 day,
with a register having - date-name-major topic- daily talk- signature & employee code of the
person taking power session.

By this TL will also come to know how much his team is clear about which topic, this would also
boost team at DCs to speak and share.

§ Building the right team

As most of the Fe recruited are from local area of the place, it is very important to identify the
non-performers put them on PIP (performance improvement plan), and if needed asking them
to leave.
For this, a list has to be maintained at every level of operation as a manager with “N” number od
DC, he needs to fix the team first and one has to understand this.
Continuous evaluation and monitoring of performance must be done FE Wise, then DC wise,
with list of the people and DC, we have to train people and take corrective actions.
Listing of:
1. Bad performers in good DC.
2. Bad performers in bad DC
3. TL whose DC is not performing well.

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 Future of Last mile delivery using Drones
India drone policy
After the launch of the Digital Sky Platform under Civil Aviation Regulations ("CAR") 1.0 with effect
from December 1, 2018, a basic framework for regulations has been established. The focus now has
been on addressing challenging frontier issues such as Beyond Visual Line of Sight ("BVLOS") &
Autonomous Operations. Ministry of Civil Aviation has constituted a task-force on the
recommendation for CAR 2.0.

Recommendations for the purpose of CAR 2.0 may include:

(a) BVLOS Operations: Expansion of
operational airspace for UAS (Unmanned
Aircraft System) operating beyond the visual
line of sight and above the current limit of
400 ft.
(b) Autonomous Operations: Use of
algorithms for piloting may be permitted, but
only if adequate safety, security and privacy
principles are demonstrated in the design of
operations.
(c) Drone Corridor: A segregated airspace
defined by the appropriate authorities in
consultation with the airspace designers to
keep commercial UAS operations out of the
non-segregated airspace in which manned
aircrafts operate.
(d) Airworthiness: New principles of air
worthiness can be introduced to include
safety by design, security by design and
privacy by design.
(e) UAS Traffic Management (UTM) : A UAS
Traffic Management should be responsible
for managing UAS induced traffic, especially
in the Drone Corridor.
law enforcement authorities and/or any other
stakeholders.
(g) Pilot Training: Improved and advance
pilot training methods should be introduced
to meet the professional requirements under
CAR 2.0.
(h) Drone-ports: Designated areas dedicated
to facilitate take-off and landing of the UAS.
(i) Payload / Cargo: Commercial UAS
operations will foster various new forms of
air freight capabilities.
(j) Make in India: 100% FDI in UAS and RPAS-
based commercial civil aviation services
would provide a boost to the make in India
initiative in this industry.
(k) Insurance: Considering the increased
exposure due to commercial operations, it
becomes important for UAS operators to
have a professional liability insurance to
cover the cost of legal fees and damages
awarded against such operators

(f) Digital Sky Service Providers: DSPs may

engage in providing enabled services to the
UAS Operators, Digital Sky Platform, relevant

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 India- Current drone scenario
Drone-based applications being explored in India

*Source: PwC India

Regulatory Framework across the World

The table below presents the characteristics of the regulatory framework in force
today in different countries, on five continents.

Territory Possibility of Licence Training Insurance Possibility to License

commercial required to required for required for perform required for
Flights fly pilots in order to commercial BVLOS flights BVLOS
obtain licences flights flights

Poland "
# "
# "
# "
# "
# "
#

UK "
# "
# "
# "
# "
# "
#

China "
# "
# "
# "
# "
# $
%

Canada "
# "
# $
% "
# "
# $
%

Germany "
# "
# "
# "
# $
% $
%

India "
# "
# "
# "
# $
% $
%

France "
# "
# "
# $
% "
# $
%

South "
# "
# "
# $
% "
# $
%
Africa

Indonesia "
# "
# "
# "
# $
% $
%

Australia "
# "
# "
# "
# $
% $
%

Brazil "
# "
# $
% $
% "
# $
%

*Source: PwC India

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 Proposed operational model:
I. Direct Delivery to Automated Dropbox

II. DC to Automated Dropbox then Last Mile by Field executive

1. Drones for delivery from Fulfilment Centre to Automated Sorter Dropbox (Self
Collect by Customer)

2. Drones for delivery from Fulfilment Centre to Automated Sorter Dropbox-further

Last mile delivery by field delivery executives.

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 Conclusion
The last-mile delivery is the most crucial step in the journey to the customer. At the same
time, owing to all the costs, complications and unpredictable variations, it is admittedly
the most unexpected part of the business too, the importance is: the on-demand industry
has grown, and continues to grow at an unprecedented rate. The on-line consumer today
does not like waiting. They have come to believe that everything is just a click away

Currently the scope lies for improvement in present structure including proactive route
planning, to develop realistic delivery timelines and select the most efficient driving route
before parcel meets the road.

Cost reduction at every step and greater consumer satisfaction with more autonomy to
them will be the differentiator. The LSP which will explore the scarcely explored avenues
and adapt to the changing needs will survive.

The Internet of Things, will enable parcels, vehicles, and collection points to be digitally
tagged and tracked. Transportation Management Systems, Analytics, Artificial Intelligence
and Blockchain are few technologies which would play a major role in Future Solutions for
Last Mile. These advanced technology will help LSPs in choosing the right carrier mix,
choosing optimal fleet size/location and exploring different fleet optimisation strategies.

Last-mile deliveries are the core of your supply chain process. Hence, one must pay extra
attention and work on ways to make the process more effortless for faster deliveries and
for enhanced customer fulfilment.

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 Recommendations

§ GPS Technology tied to the driver’s cell phone will enhance the in – transit shipment
visibility and better control.
§ Monitoring Vehicle status using IOT (Internet Of Things) Integrating the vehicle
with sensors connected to internet will keep a track about the vehicle’s condition
and intimate about any unusual occurrence.
§ Poor roads add to the wear and tear of the vehicle and lowers its efficiency,
resulting in more costs per km and added risk to cargo health. So, with less
investment on owned fleet and more focus on data and technology would lead to
asset lite model of organisation, for cargo health and safety insurance of cargo
would lead to lesser losses.
§ The B2B delivery cargo loads can be of special nature i.e., toxic, fragile, perishable
or flammable which with inexperienced manpower may lead to vulnerable and
dangerous situations. Hiring and Provision of extensive training to manpower,
customised training programmes can be conducted which equip the manpower
with the requisite knowledge about the measures which need to be taken while
transporting critical cargo.
§ Quarterly Assessment Tests will ensure for the smooth continuity of operations and
if any offsets are found, they can be dealt beforehand.
§ Currently, manual labour is still used majorly in cargo loading, this leads to wastage
of valuable time and puts pressure on day to day activities. Possible solution would
be mechanisation of loading and unloading activities, use of appropriate machines
such as pallet jack, fork lift etc. could smoothen out the process and save time.
§ Collaborative effort between the fleet team, DC and contract labourers would build
a conducive environment, as one of the issue of non-loading of vehicle happens due
to lack of coordination between fleet ETA (Estimated time of arrival) and available
contract labourers, better coordination will ensure that there is understanding
among the parties ensuring better results.

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 References
i. https://www.globalaviationsummit.in/documents/DRONE-ECOSYSTEM-POLICY-
ROADMAP.pdf
ii. http://www.nishithdesai.com/fileadmin/user_upload/pdfs/Research_Papers/India-
Opens-Skies-for-Drones-Legal-Tax-Analysis.pdf
iii. http://www.nishithdesai.com/fileadmin/user_upload/pdfs/Research%20Papers/Unr
avelling_The_Future_Game_of_Drones.pdf
iv. https://www.aviationtoday.com/2019/08/09/following-wing-ups-amazon-seeks-
approval-prime-air-drone-delivery/
v. https://www.intermap.com/blog/a-beginners-guide-to-drone-regulation
vi. https://www.pwc.in/consulting/financial-services/fintech/fintech-insights/data-
on-wings-a-close-look-at-drones-in-india.html
vii. https://www.pwc.pl/pl/pdf/clarity-from-above-pwc.pdf
viii. http://www.dgca.nic.in/misc/draft%20cars/CAR%20-
%20UAS%20(Draft_Nov2017).pdf
ix. https://www.youtube.com/watch?v=vNySOrI2Ny8
x. https://www.youtube.com/watch?v=98BIu9dpwHU
xi. https://www.youtube.com/watch?v=0yMv16p8FO8
xii. https://www.youtube.com/watch?v=ThmL9jDRiUc

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