Same day delivery process & impact. How Operation management & six sigma use in the same-day delivery process. IIM Raipur group presentation by (group 3)

1. Amazon–SameDayDelivery
Group3Project

2. TREY
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• Balbeer SinghRana
• Abhishek Das
• Nilesh Kumar Bal
• Pallavi Chauhan
• Upamanyoo Kundoo
• Rohit Saran
• Rishi Joshi
• Vijay Kambhammettu
• Vipul VasantNerurkar
TheTeam
2

3. TREY
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ProblemBackground
• Amazon.com, the world’s biggest online retailer
would introduce ‘same-day delivery’ of its orders
asaservice option to its customers and make
next-day delivery standardservice.
• It had to convince customers to put aside their
misgivings about buying perishable food online
and second, it needed to figure out away to
deliver mass-market groceries at prices that were
affordable to customers and profitable to the
company.
UpamanyooK
SolutionBenefits
• Stay ahead of thecompetition
• Amazon is hoping that cutting delivery times to one day
for Prime members will let it outmaneuver rivals such as
Walmart Inc. that have marketed two-day shipping
withoutsubscription fees (source: Reuters)
• Expand market for buying perishable food online.
• Amazon Pharmacy, the new store lets customers price-
compare asthey buy drugs on the company's website
or app.
• Amazon says shorter drive times will help it meet its
pledge on carbonemissions. (Reuters)
Solution to disrupt conventional brick-mortar retailbusiness!

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ProblemComplexitydimensions
Product (Website&
Warehouse)
• The new formatcombines the
storage, picking andpacking
functions ofAmazon’s
fulfillment centers with the
sorting and deliveryfunctions
of other facilities into asingle
building. (reuters)
People (customerservice)
• People want it now, they want
it fast. How much time are you
saving by not going to the
store?
• That people generally did not
prefer same-day delivery
service; they ratherchose next-
day delivery and payless.
• For example: Customers witha
$79-a-year Prime account could
avail of same-day delivery of
eligible items from$3.99
.(reuters)
• The success of suchsystem
being dependent on the
acceptance and usage by
consumers.
Process(delivery)
• Logistical problems, the
necessity forlarge scale of
operations, costs to the
company being high.
• Expanded its network and
placed its merchandisenearer
to bigmarkets.
• Built many more distribution
centers and warehousesright
inside some of the largest
metropolitan areas in the
country.
UpamanyooK
Disruption requires radically different thinking of utilizing People, Process,&Product potential

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BusinessProcess
VijayK
• Amazon has optimized the physical flow of the goods
and the information flow of transactions and digital
marketing user data to create best experience for the
consumer
• Warehouse : Amazon uses heavily automated
warehousing techniques to minimize the time to
delivery. Predominant technologies used are barcode
scanners, automated conveyors, robots for material
handling
• Information Technology:Amazon has constantly
evolved its software for two aspects : Consumer digital
experience & logisticsoptimization
Solution to disrupt conventional brick-mortar retailbusiness!

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AmazonRevenues
VijayK
• 50%ofAmazon’s revenue come from online sales.
• SameDaydelivery for acharge has generated new
revenue stream for Amazon Prime membership beyond
the conventional commission from buyers and sellers
• Customers acquaintance with the Amazon brand has
enabled it to further diversify its revenue streams using
its digitalplatform
• Predominantly in America, but growing fast in rest of
world with the business model economies of scale
Amazon has built around its warehouse & online
platform
• Amazon sees the future asfully Digital and is scaling its
business models in relevance by expanding its reach
Amazon’s CoreBeingOnline SalesHasAlwaysBeenRediscovered YoYTo Evolve

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AmazonSameDayDeliver:NewService(NPD)
PallaviC
Unlike conventional NPDs,SameDaywasDeveloped with FocusasaNew Service w Agile tech.
Idea
Generation
Same day delivery product was generated to achieve the goal to reduce shipping time, which will
satisfy customers and beat competition
Screening Planning strategy are made to remove unsound concept prior to devoting resources to them
Research Research shows that amazon was not fighting for its survival like his competitor's and now is ready
to expand this experience of same day delivery to all his customers
Validation IN 2009 amazon tested the concept in major cities of USA by introducing amazon prime concept
to ship within few hours of delivery
BusinessCase Amazon invested over $920 million in restructure in various sectors and stages and establish its
presence in all cities and also started establishing the concept of grocery shopping through
amazon
Design&
Development
System is designed to make the system more effective in a way to do that amazon took the help
of most effective Kiva robotic solution system to improve timing and reduce error. At this stage
amazon planned to make prices affordable to customers and profitable to company
Testing&
Launch
After successful passing the product from the testing market amazon introduced the same day
delivery into market

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CauseAnd EffectAnalysis
RohitS
PlanningMitigations For FactorsInfluencing the LastMile Delivery EnsuresSuccess
Environment
OtherFactors
• WeatherDriven
Logistics Impact
• Detours
• 3rd Party Logistics
Support Failure
• TechnicalFailures
Equipment Channels
• Warehouse
Automations
• Trucks / CarFailures
• AirTransportation
• Last Mile
Transportation
Human
LASTMILE
DISTRIBUTION
• Mistakes ByCustomer
• Mistakes ByDelivery
Person

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CauseAnd EffectAnalysis
RohitS
FreightCharges
Rise
“Implemented Business-To-Business prime, free shipping on eligible orders for businesses that creates
sudden demand. Therefore, Amazon needs to request 3rd party logistics providers to ship their products.”
(Website, 2020)
“Every product has different dimensions. Therefore, while shipping in containers it is very difficult to manage
space which ultimately affects transportation costs.” (Donnelly, 2020) Goods handled by Amazon are ship
through the distribution centers that include the cost to manage the distribution centers and pay wages to
employees
DependenceOn
3rd Party
Logistics
Companies
“Amazon is dependent on other logistics providers such asUPSand FedEx.” (Richter,2017) “Amazonprime
deliveries can not keep up with the demand for shipping in holidays.” (Herrick, 2019)"Additionally, UPSor
FedEx was unable to deliver the parcel to the customers on Amazon’s required period. Therefore, Amazon
lost millions due to delivery issues and refunds.” (Duffy, 2018)and Amazon failed in customer satisfaction
during the busy seasons. “Amazon encroaching to 3rd party logistics providers” (Duffy, 2018) that may affect
the sharing portion of margin
DisruptionIn
LastMile
Delivery
Amazon has been struggling to find a solution for last-mile delivery utilization that includes, utilized cost and
on-time delivery. Amazon’s concept of prime membership disturbs the shipping patten. “The only available
alternative for Amazon is 3rd party services. Though they are providing on-time delivery but take alarge
portion of margin from the overall profit.” The fishbone diagram isexplained factors affecting last-mile
deliveries which canbe found in the previous slide Aswe cannot remove or solved these noises, it is better
to focus on experimental and constant factors. The noises are environment conditions including, weather
conditions, risky road, environmental aspects,etc

10. TREY
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CauseAnd EffectAnalysis
RohitS
Focusingon
AWSvs Online
Store ForFuture
"Amazon is focusing on the development of the store with no check-out required." (Amazon, About Amazon
Go and Amazon Go Grocery, 2020) Amazon is focusing on automation and advances retail technologies to
compete with large stores like Walmart. Moreover, “Amazon Web Services is primary source of income to
Amazon that gets primary focus because of having number of clients for cloud support. Among many
customers, Coursera, McDonald’s, Honeywell.” (Containers Customer Stories, 2020) “Amazon is more
focusing to provide the most excellent service to these clients rather than concentrating on logistics
development.”
Lossof supplies
due to Covid-19
pandemic
Currently, as a pandemic is not affecting every logistics providers, few manufacturing facilities are yet to
open. “Amazon has applied specific restrictions on its items and quantity of purchase. i.e. in India, delivery of
the non-essential product had stopped in the beginning." (Emont, 2020) “A Shipping delay is the current
issue as supplies got disrupted. The reason for this late delivery of the product is because of the high demand
for online shopping with having fewer resources to fulfill it” (Paler, 2020)

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SIPOCDiagram:Improvesamedaydelivery
VipulN
SUPPLIERS INPUTS PROCESSES OUTPUTS CUSTOMERS
S I P O C
Customer
Place order for
products
Order received
Confirmation of order&
process request
Warehouse / Fulfillment
Center
Vendors Forecast of demand
Logistics capacity
planning at Warehouse/
Fulfillment Center
Adequate capacity to
meet demand &same
or on-time delivery
Warehouse / Fulfillment
Center
Warehouse / Fulfillment
Center
Order / Inventory
delivery
Sort/pack & dispatch
required order from
Warehouse/Fulfillme
nt center
Suitable delivery boy
Driver / deliveryboy
coordination at
Warehouse
Delivery Boy Delivery Schedule Product delivery Product dispatch
High customer
satisfaction with same
day & on time delivery

12. TREY
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IdentifyStakeholders&VOC
Stakeholder Who Voice
Customer
Warehouse /
Fulfillment Center
Eliminate Saleslosses due tolate
deliveries
Sorting Team
Warehouse /
Fulfillment Center
On time order confirmation&
process request
ShippingPersonnel
Warehouse /
Fulfillment Center
Want accurate deliveryschedule
DeliveryCo-
ordinators
Warehouse /
Fulfillment Center
Want On time dispatchinformation
& correct capacity planning of
delivery boys
Delivery Boy
Warehouse /
Fulfillment Center
Want accurate delivery address &
on time dispatch from warehouse/
fulfillment center
Suppliers of
inventory /Products
Suppliers
Want accurateforecast & inventory
levels at warehouse / fulfillment
centers
VOC:Improve sameday& on time delivery
CTQ Drilldown
VipulN

13. TREY
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BaselinePerformance
Data collection purpose :Tomeasure and baseline the projectXsand Ys
Measure
Xor
Y
DataType Operational Definition How to measure Data Source
Total Deliveries X Discrete #total deliveries perday -
Dailydelivery
report
On Time
deliverie
s
X Discrete #on time deliveries perday -
Dailydelivery
report
OTD% Y Continuous
Calculated %of on timedeliveries
per day by total deliveries per day
(Number of on time deliveries
per day / Total number of
deliveries per day) x100
Dailydelivery
report
Period TotalDeliveries Ontime deliveries OTD% Late deliveries(Defects)
Jan 2020 – Dec2020 4630 4071 87.9% 559
Process Defects Units
Opportuniti
e sper
unit
DPU DPMO SigmaLevel ProcessShift
On time
deliveries
559 4630 1 0.120 120734 2.67 1.5
BaseData
BaseLineDPMO & SigmaLevel
VipulN

14. TREY
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Schedul
e
Variatio
n
Irregular
Replenish
m
of
Breakdown
Delivery
Boy Shortag
e
Late
Dispatc
h
Late
Turnaroun
d
Late
Deliveries
ent Truck/Bike
207 157 101 50 28 16
Cumm% 37% 65% 83% 92% 97% 100%
0
%
20
%
40
%
60
%
80
%
100
%
120
%
0
50
10
0
15
0
20
0
25
0
Same Day & On time deliveries : Pareto Analysis
(Causes)
ParetoAnalysis Vital X’sSummary
Sr.No. Vital X
1 Low forecast accuracy
2 Market trends notfactored
3 Warehouse/Fulfillment center levelsinaccurate
4 Breakdown of vehicles
5 Misplaced trucks/bikes atW/H
6 Driver/delivery boy shortage
7 Dispatch time islong
Period TotalDeliveries Ontime deliveries OTD% Late deliveries(Defects)
Oct 2020 – Dec2020 1520 1501 98.7% 19
 Improvement in process :
 Share schedule with shipping coordinators in real time to reduce lead time & error
 Locate suitable trucks/delivery boys thru GPSsystem
 Large scale of deliveries withhigh volume
 Amazon Fulfillment Centers & WarehousingNetwork
 After Project (Data) :
VipulN

15. TREY
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LeanOperationsEliminatingWasteOf“Time”InSupplyChain
15
Nilesh
Possibilities of multiple
wastage exist for same day
delivery. Lean operations
governance define 8 critical
wastages which need to be
eliminated to improve
efficiency, productivity &value
to customer.
In terms of same day delivery
these 8 wastages are
summarized which may lead
to increased costs & drag
CSAT
.
Nilesh B

16. TREY
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LeanOperationsEliminatingWasteOf“Time”InSupplyChain
Defects Transport
• Same day delivery priority may result in casual or no
final inspection of product received from supplier,
which may bedefective
16
Over Production
• Perishable consumables over stocked, to support
same day delivery will lead to wastage asthe shelf life
will be over at warehouse itself
Waiting
• Waiting time may increase during last mile delivery
due to issues like machinery breakdown ,manpower
shortage or human error, bad weather conditions
Non-utilizedPotential
• Delivery services are taken care by 3rd Party
manpower who are not well trained & lack
knowledge.
• Multiple steps in inventory flow will lead to huge
costs as Amazon is supported by 3TPLfor logistic
requirements
Inventory
• Advance stocking to support same day delivery will
add the inventory holding costs
Motion
• Huge amount of manpower to support same day
delivery is anon value add to customer and also big
cost to Amazon. Multiple process points leading to lot
ofmanpower movement also
ExtraProcessing
• Asno waiting is intended at Amazon facility to
support same day delivery, number of process points
increases during cross docking viz barcode scanner,
automated conveyoretc.
RishiJ

17. QUALITYOFAPRODUCTCHIEFL
YDEPENDSONTHEPERCEPTIONOFTHECUSTOMER
SIX‘C’sOFTQM IMPLEMENTATION OFSIX‘C’sBYAMAZON
17
COMMITMENT OFTOPMANAGEMENT
QUALITYCULTURE
COPERA
TION
CONTINIOUSIMPROVEMENT
CUSTOMERFOCUS
CONTROL
Q
 Bezos has set the company's vision & mission : “to be earth's most
customer-centric company.”
 Amazon's distinctive organizational culture fosters a performance-
driven environment that motivates employees to innovate in pursuit
of an outstanding customer experienceand quality service.
 Reuters, Mexico 22Oct 20: Amazon announces $100Mn logistic
investment inMexico.
Reuters, Milan 18Jan21:Amazon to open 02 new hubs in Italythis
year to expedite delivery.
 ReutersBerlin, 16Aug20:In GermanyAmazon had blocked some
traders becauseof allegedly high pricesduring Covid 19pandemic.
 Amazon uses ERPsoftware to conduct regular monitoring and
control over its internal business processes and marketing
performance as well as other elements of its organizational
performance and businessdevelopment.
QUALITYASSURANCEFORSAMEDAYDELIVARY
AbhishekD

18. QUALITYASSURANCEFORSAMEDAYDELIVERY
18
IMPEDIMENTSIN ACHIEVINGSAMEDAYDELIVERY
Sipping costs incurred byAmazon in NorthAmerica for adecade from
2006-2016.
Outbound Shipping Revenue : $08.91 Bn
Out BoundShipping Cost: $16.10Bn Net
Shipping CostIncurred : $07.19Bn
EFFORTSPUTIN BYAMAZON FORSAMEDA
YDELIVERY
 ReducedTakt time by :
 Expanding its network by constructing more warehouses and
distribution centers through out the world.
 Improving shipping time and reducing losses incurredby
Reverse logistics by reducing errors at warehouses.
 Amazon incorporated picking robots Kiva and Robo Stow.
AMAZON’SDROPBOXCONCEPTFOR
QUICKERAND FASTERDELIVERY
KIVATHEPICKINGROBOT
ROBOSTOWTHESTACKING ROBOT
AbhishekD

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ServiceDeliveryLayout&Facility–WarehousePlan
BalbeerR
TASK NAME
STAGE-1 STAGE-2 STAGE-3 STAGE-4
WK-1 WK-2 WK-3 WK-4 WK-4 WK-5 WK-6 WK-7 Wk-8 WK-9 WK-10 WK-11
Warehouse Design
Space Planning B
Equipment Planning C
Operations Setup D
TASKA
Warehouse Strategy
Operational data
BuildingRequirements
Draw blueprint
TASKB
Receiving and ShippingAreas
Inventory Storage Areas
Production and Work Areas
Office & UtilityAreas
TASKC
Storage Equipment
Material Handling Equipment
Packing & ShippingEquipment
TASKD
AisleLayout
TrafficFlow
ManagementSoftware
Resource planning
Fulfilment

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SettinguptheLayout
BalbeerR
Facility Layout Service Deliver Layout
The warehouse layout is focused on providing sufficient storage space for inventory and balancing to give employees enough space
to move around and complete their tasks

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ServiceDeliveryLayout&Facility
BalbeerR
Key Strategy to Improve Space Efficacy
LOADING
&
UNLOADING
Dedicated &adequate
space
For the loading&
unloading
Area to prevent
bottlenecking
RECEPTION
Separatereception
for shorting and
inspection
STORAGE
Utilized every inch
of space, including
vertical area
PACKING
Warehouse hasa
picking area nextto
storage for easier
access to items
SHIPPING
Shipping or
packing area
separated from
the rest of the
warehouse for
better
organisation and
traffic flow
1 2 3 4 5

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ThankYou
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