Last Mile Delivery: On-demand vs Scheduled
On-demand or instant delivery, the delivery process is initiated as soon as the order is prepared.
In this post, let's see the fundamental differences between on-demand and scheduled deliveries and how that impacts how you design and execute your processes. If you are new to "last-mile" or "Hyperlocal" deliveries, start here.
By the end of your post, you should have a good idea on how to choose what type of delivery works for your business, how to set it up and how to start measuring the performance.
Imagine you are running a restaurant. The customer calls at your restaurant and orders a meal + drink to be delivered at their work place. Now, you can't delay the order for obvious reasons. As soon as the food is prepared, you get your runner and take it to the customer. This is an example of On-Demand Delivery.
On-Demand - When the demand is initiated.
So, in On-demand or instant delivery, the delivery process is initiated as soon as the order is prepared.
Examples are DoorDash, Postmates, Swiggy, Gorillas etc
Another case, let's say you have a cake shop. Customers call you and make orders for Birthday cakes. Birthday cakes can be delivered on-demand. But mostly, they are booked ahead of time. So, the customer calls and lets you know that the delivery should happen the following Tuesday between 8 and 9 am. This is an example of Scheduled Delivery.
Scheduled - Delivery scheduled for a give timeslot.
So, in the case of Scheduled Delivery, the delivery is planned ahead of time for a specific future timeslot.
Examples are Amazon, UPS, BigBasket etc.
The way to approach On-Demand and Scheduled deliveries are entirely different. This makes it very difficult for a company to do both effectively since every aspect of the Operational workflow needs to change according to the needs of these two types of deliveries.
Hence, it is inherently difficult for Amazon to pull off an on-demand grocery delivery and Postmates to do an Intercity e-commerce delivery.
Depending on the structure and needs of your business, you will need to implement one or a combination of these processes.
We will talk about how these two processes differ across the following dimensions.
The planning activity involves the preparation that needs to be done ahead of the actual execution of a task. The objective here is to optimally use the fleet so that all the orders are delivered in the right manner to reduce the overall cost and deliver all orders on time. And this process is different for these two types of deliveries.
On Demand
With On-demand, you do not have any heads up for the number of deliveries you get. So, the planning process involves predicting the deliveries based on past data and preparing
Scheduled Delivery
In the case of Scheduled delivery, we know ahead of time what is the number of deliveries. The caveat over here is that, businesses might allow customers to schedule deliveries as close as the next hour. The closer the delivery slot is, the more it resembles On Demand.
In the case of Scheduled deliveries, most of the deliveries are done in batches. Where the delivery personnel picks up products for multiple deliveries and deliver them one after the other.
In this case, you need to plan for
In the case of delivery task creation, businesses do it in different ways.
It can happen in both ways and both methods are applicable to both the delivery types. This is typically chosen depending on specific business use cases.
The way you design routing is entirely different for both on-demand and scheduled deliveries.
The objective of routing is
On-Demand
In the case of on-demand deliveries, the routing systems are (near) real-time that picks up all the available tasks and agents and send the right agent to do the right task.
In the simplest manner, the routing process can be an operations manager allocating a task to the nearest agent who is free.
Scheduled
In the scheduled delivery process, a route is generated with allocating a bunch of tasks to a given agent and arranging them in a sequence so as to adhere to the customer request.
In its simplest structure, the ops manager allocates tasks in each cluster (a small geographical location where tasks are located) to a given agent and arrange them in a way that creates the shortest distance.
By now, you should have a hang of how the execution happens.
On-Demand
In the case of on-demand deliveries, the delivery personnel is allocated a task in near realtime. Once the task gets assigned, the agent starts the task and follows the SOP. It typically is to go to the pickup location, pick up the item and go to the customer location to deliver.
Scheduled
In the case of scheduled deliveries, the agent picks up all the products that need to be delivered in a route and starts delivering in the order given in the route.
At the end of the route, they either close the day or come back to the warehouse to pickup the next set of items.
Let's look at some of the typical metrics used in these two different formats of deliveries. We'll look at them from the lens of the post where we describe Choosing the right metrics for your operations.
On-Demand
Volume - No of orders created per hour | orders per agent per hour
Variety - Priority delivery vs normal | Short distance vs long | Payment on delivery vs online payment
Time - TAT for each delivery
Quality - % orders delivered within SLA | % Orders picked up of total orders created
Cost - Cost per delivery
Scheduled Delivery
Volume - No of orders to be delivered per day per agent
Variety - Express delivery vs normal | Small order volume vs large
Time - No of orders delivered per shift
Quality - % orders delivered within the timeslot | % Orders fulfilled
Cost - Cost per delivery
I hope this post gave you a good idea about how the two large types of delivery operations are run. As always, there are plenty of nuances in these models which you will figure out as you start implementing them. The nuances never end and that is the beauty of operations.
If you are jumping into operations and want to discuss about any of these, feel free to give me a buzz on bala@zorp.one or DM me on Twitter/LinkedIn.
And don't forget to checkout ZORP. We make it dead easy to start, run and scale your operations. If you have either of these models in your business (or both), we help you run things at scale.
Learn more about the supply chain process of Big Basket here.
Use this calculator to calculate the cost of your delivery business using this delivery calculator.
