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.

What is On-Demand delivery?

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

What is Scheduled Delivery?

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.

  • Planning
  • Delivery Task Creation
  • Routing
  • Execution
  • Metrics

Planning

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

  • Number of delivery personnel (or vehicles) needed for the delivery
  • Location of these personnel across the serviceable locations to optimize for faster delivery and adherence to SLAs (Service Level Agreements – here, agreed time before which delivery needs to be completed)
  • Keep the necessary inventory levels ready across these locations to ensure inventory holding cost is not high and minimum time is spent is at the pickup location.

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 OnDemand.

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

  • How many people/vehicles do I need to deliver
  • Which orders to batch and how it should be done?
  • In what sequence should the orders be delivered?

Delivery Task Creation

In the case of delivery task creation, businesses do it in different ways.

  • The tasks are created at the time of order creation or
  • The tasks are created when the delivery is initiated

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.

Routing

The way you design routing is entirely different for both on-demand and scheduled deliveries.

The objective of routing is

  • The global optimization of cost by allocating the right orders to the right agents in the right sequence
  • Overall adhering to the requirements of the customer like time of delivery (30-60 mins for on-demand, the right slot for scheduled tasks)

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 colocated) to a given agent and arrange them in a way that creates the shortest distance.

Execution

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.

Metrics

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 pickedup 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.

Author

I, along with Vivek and Subbu, build Zorp. Building Zorp so businesses can focus on building their core technology and not worry about basic operational workflows.

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