Digital Transformation for Flexible Last Mile Distribution
Author(s)Kuppuswamy, Krishna V
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Flexibility in last-mile distribution has become a key differentiator for companies that are obsessed with driving up customer experience. For most fast-moving consumer goods (FMCG) companies like BeverageCo, it is crucial to succeed in fast-growing emerging economies which are dominated by the traditional retail channel, characterized by small stores. With this channel contributing to more than 90% of BeverageCo’s customer base, and its tremendous growth potential, digital transformation to drive flexibility in last-mile distribution is no longer a choice but a mandate. However, the path to digital transformation and the metrics to measure the ‘value’ behind flexible last-mile distribution remains a challenge for BeverageCo. With ‘value creation’ at the core of this transformation, this project implements a Value Stream Mapping (VSM) methodology to map the current and future state of distribution value stream. VSM helps identify the gaps, system inefficiencies, and the metrics impacted in the current state; leverages simulation-based future state design and a multi-criteria-decision-model to assess the digital capabilities required for the transformation. This approach resulted in the design of a 4 to 6-hour distribution model (as against the current 31-hour distribution), with minimal changes to the processes and investments required to run the operations. With clear definition of metrics to measure ‘value’ behind flexibility, the outcomes suggest that more than 90% of the customers will benefit from this flexible and expedited distribution, at a high value-to-cost ratio. This project unlocks the value of digitalization with a frugal investment of time and money versus conventional large scale business transformations.
Data Analytics, Digital Transformation
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