Executing “On-Demand” is easier said than done. Running the delivery operations along with order-lifecycle management is an intense process. And if one wants to run this end-to-end operation in an optimal way with viable unit-economics, it layers in an all-new level of complexity into the execution.
To get a perspective on why it’s important to execute right, we need only see the unit economics of typical on-demand businesses. A Zomato blog post by its founder reported that despite all it’s tech interventions and automation, it was facing gross losses to the tune of ₹ 9.1 per delivery order it processed (not taking into account customer acquisition and other marketing costs). The same article mentions that the average delivery cost to Zomato’s at-scale delivery partners with optimized resource utilization was ₹ 62 per order and further optimization opportunities could drive it down to ₹ 50 per order. In the US, delivery service providers like Grubhub charge $ 4 per order or even higher. UberEats charges 30% commissions (to restaurants) on orders it brings and fulfils.
To reiterate from our previous article, running optimal operations for moderate to large volumes of on-demand business, if done manually, can be operationally limiting and economically unviable. If unit-cost economics for on-demand business must make sense, then it becomes necessary to execute operations and processes to timed perfection.
In this article, we will briefly look at important aspects on how to execute and choreograph an on-demand operation.
A generic overall process that an order undergoes is as follows:
Once received, an order may require appropriate allocation to the right fulfilment center. Processing may involve making (e.g. food) or picking/ packing (e.g. grocery, e-com) or some other form of processing. Assignment involves matching the order to the best fulfilment agent. Undelivered orders may be re-attempted or handled in a pre-determined way. Feedback with insightful and actionable analytics is critical for continuous improvement.
Robust automated process handling will ensure that all orders/ jobs get executed efficiently and none get dropped or delayed at any stage. Technology tools can be used to automate this process handling with high degree of accuracy and reliability. Key functions they perform include:
- Live visibility with easy-to-use dashboards
- Predictive planning
- Pipeline management
Field-ops design and orchestration
When high volumes of orders/ jobs are moving through short life-cycles and it is important to optimize operations, it becomes imperative to plan and orchestrate fulfilment smartly and diligently. Orders/ jobs are spread in location, with distributed promised time of deliveries and operate under different constraints of resource availability, capacity, capability, etc.
To process all these factors and execute optimally is manually next to impossible. This automation requires core technologies that are able to ingest all relevant data and compute in real-time the best possible optimal solution. Key functions they perform include:
- Scheduled and Real-time optimized planning
- Real-time automation of key activities like planning, monitoring, assignment, dispatch, customer communication, etc.
Ensuring that all processes run efficiently in turn requires all people to be functioning optimally as well. Orienting and focusing all work-force in the right direction may need careful monitoring and motivation.
Manual supervision and management can be intrusive, non-objective and ineffective. Self-monitoring and gamified motivation tools can make people perform more effectively, boost productivity and result in smooth operations. Technology tools are best suited to aid ops monitoring and productivity enhancement. Key functions performed are:
- Live tracking of mobile units/ field-agent
- Mobile asset and resource management
- Task management
- Real-time alerts
- Gamification of field-force performance
- Skill assessment and training of field-force
- Performance and product/ service Information access for field-force
Customer experience management
At the end of the day, it is all about ensuring that customers get a great product/ service experience. Flawless execution in turn leads to a delighted customer. Even when things go wrong, and sometimes they do, to anticipate exceptional problems, flag them and manage them is key to a good experience.
Tracking all operations in progress, recognizing potential problems and constantly communicating to customers can be manually very challenging. Technology tools and solutions can predict potential issues, flag them for early intervention and monitor to ensure resolution. When things are going fine, automated unobtrusive order/ job updates keep customers engaged. When things go wrong, tools can enable early communication to prepare customer and hand-hold them all the way to resolution. Key functions performed include:
- Live tracking of order/ job status and service delivery
- Pro-active customer engagement
- Configured and real-time communication and feedback
All successful operations need to objectively assess performance and constantly improve. In order to do this large volumes of relevant data needs to be captured at the following broad levels: Orders/ jobs, Store/ Hub, Workforce/ Fieldforce, Corporate, Customer. Data captured at all these levels needs to be analysed to generate appropriate insights.
Technology tools can play a key role in capturing a wide range of relevant data, presenting it objectively, recognizing key insights, enabling corrective action and tracking progress/ improvements. Key functions performed include:
- Data capture and presentation
- Key performance indicators tracking dashboard
- Insight generation for continuous improvement
As can be seen, executing an on-demand business with moderate to high volumes of order/ job flow in real-time can be extremely challenging when done manually or with the wrong tools. Several piece-wise technology solutions address different challenges discussed above. However, few solutions like LOOP and MONK address these issues holistically and in an end-to-end integrated manner. One must explore and adopt such tools to execute the on-demand operations effectively and efficiently.
To reiterate from our previous articles, as industries get disrupted by the “on-demand” trend, old businesses are struggling to adapt while new businesses are embracing new opportunities it brings. To build an on-demand business means careful creation of business strategy & vision (discussed in Breaking down same-hour to same-day deliveries: Should I door-deliver/service?), business model & planning (discussed in Last Mile Delivery: 3rd Party or Insource?) and operating model & execution (discussed in Managing “On-Demand”: What does it take to execute in real-time? and Managing “On-Demand”: How should I execute in real-time?).
These articles should have provided an overview and walked one through key aspects of conceptualizing, building and executing an on-demand business. On-demand consumption is likely to grow while businesses will continue to struggle to cope with this trend and make it sustainable and profitable. Using the right technologies and processes is the first and necessary step towards that end.