CASE APPLICATION 1

Hermès: Delivering change

Hermès is a pan-European courier company with over 40 years’ experience in the business. It operates
primarily in the United Kingdom, Austria, Germany, Italy, and Russia. In the United Kingdom, Hermès
handles more than 245 million parcels a year. It relies on the growing “gig economy” employment trend
with over 10,000 self-employed couriers and a network of 4,500 Parcel Shops. Hermès provides door-to-
door services for any leading retailers including Next, ASOS, John Lewis, and Tesco. With a large and
disparate workforce, planning and control is the key element in ensuring that the network remains
effective and robust. Hermès needed a way to move the day-to-day management of their U.K. courier
network to decision makers on the ground. Given the unpredictable demands on the courier network,
Hermès needed to be able to reallocate delivery rounds quickly if one courier was overloaded and another
in an adjacent area had capacity to take up the extra work. In the United Kingdom, there are 1.8 million
unique postcode addresses. Hermès has allocated the 10,000 couriers to a number of these postcodes.
The network is, therefore, extremely granular and subject to enormous changes on a daily basis. While
initially employing a centralized system to create and update courier rounds, Hermès realized this was
time consuming and that the delivery maps produced became outdated by the time the couriers started
their deliveries. Hermès needed a management planning tool to optimize its network and assess what-if
scenarios. In designing the new tools, Hermès decided to opt for a dynamic online mapping system that
allowed them to create, view, organize, and manage the courier rounds. The key elements include the
viewing tools (allowing users to visualize the territories and courier rounds), the planning and operations
tool (allows field management to change the structure of territories and submit their suggestions for
approval), and the scenario planning tool (allows the central operations team to optimize and model
territories to identify any possible efficiencies to the structure). The new planning system enables the 200
field managers to make subtle and real-time adjustments to their operative areas on a local and tactical
level. It also allows the central management a chance to look at the impact and effectiveness of the
changes and then approve the changes in a matter of minutes. The key benefits of the new planning tools
had a direct and positive impact on the goals of the organisation. There were operational savings
(expenses and delivery costs were cut) and an improvement in service performance and efficiency. Courier
turnover dropped as network members had a more even workload. It provided a holistic view of the
network, allowed peak planning, and a continuous review of the network. Field managers can access the
system via an iPad and they can make and see their planning changes immediately. The new planning
system is scalable; so as Hermès continues to grow, they recognize the need to make continuous and
significant changes to their network structure. The system allows Hermès to visualize and identify existing
and potential problems and model solutions for them. The system allows Hermès to pledge that every
parcel entering the U.K. Hermès network by December 21, 2016, would have at least one delivery attempt,
or Hermès would refund the delivery charge.

Discussion Questions

1. How can a planning and mapping software help Hermès to achieve a 95 percent first-time delivery
target?
2. How can planning ensure that Hermès continues to meet its delivery targets in the future and at
times when there is bad weather or high peak-demand?
 3. How can a planning and mapping software help Hermès to achieve a 95 percent first-time delivery
target?
4. How can planning ensure that Hermès continues to meet its delivery targets in the future and at
times when there is bad weather or high peak-demand?

CASE APPLICATION 2

Shifting Direction

As the global leader in satellite navigation equipment, Garmin Ltd. recently hit a milestone number. It has
sold more than 100 million of its products to customers— from motorists to runners to geocachers and
more—who depend on the company’s equipment to “help show them the way.” Despite this milestone,
the company’s core business is in decline due to changing circumstances. In response, managers at
Garmin, the biggest maker of personal navigation devices, are shifting direction. Many of you probably
have a dashboard-mounted navigation device in your car, and chances are it might be a Garmin. However,
a number of cars now have “dashboard command centers which combine smartphone docking stations
with navigation systems.” Sales of Garmin devices have declined as consumers increasingly use their
smartphones for directions and maps. However, have you ever tried to use your smartphone navigation
system while holding a phone to look at its display? It’s dangerous to hold a phone and steer. Also, GPS
apps can “crash” if multiple apps are running. That’s why Olathe, the Kansas-based company, is taking
explicitly aggressive actions to team up with automakers to embed its GPS systems in car dashboards.
Right now, its biggest in-dash contract is with Chrysler, and its Uconnect dashboard system is found in
several models of Jeep, Dodge, and Chrysler vehicles. Garmin also is working with Honda and Toyota for
dashboard systems in the Asian market. Despite these new market shifts, customers have gotten used to
the GPS devices, and they’ve become an essential part of their lives. That’s why Garmin’s executive team
still believes there’s a market for dedicated navigation systems. It’s trying to breathe some life into the
product with new features, better designs, and more value for the consumer’s money. For instance, some
of the new features include faster searching for addresses or points of interest, voice-activated navigation,
and highlighting exit services such as gas stations and restaurants.

Discussion Questions

1. What role do you think goals would play in planning the change in direction for the company? List
some goals you think might be important. (Make sure these goals have the characteristics of well-
written goals.)
2. What types of plans would be needed in an industry such as this one? (For instance, long-term
plans or short-term plans, or both?) Explain why you think these plans would be important.
3. What contingency factors might affect the planning Garmin executives have to do? How might
those contingency factors affect the planning?
4. What planning challenges do you think Garmin executives face with continuing to be the global
market leader? How should they cope with those challenges?