Hi all- I ran across this case online. It’s supposed to be a MBB final round caliber case. But I didn’t quite get it. Can someone who gets it please explain?
The question of the case is what is the business case of making all Fedex trucks in the US and Canda only turn right when delivering parcels.
The idea is when a truck turns to the left, it must stop and check for traffic therefore would incur idle time; by only turning to the right, the idle time can be eliminated and be spent being productive, which is to deliver more packages. The benefit is revenue generated per number of deliveries that could be made during the time that the truck would’ve been otherwise idle. (comes out to additional 5 packages/truck; you will see how the estimation came about towards the end of the case)
What I didn’t understand is if you have a delivery located to the left of the intersection, in order to make that delivery by only turning to the right, you have to make multiple right turns and drive additional distance to make it; you would have spent additional time spinning around and additional fuel accordingly to make it. How is it more time/cost efficient?
Couldn't you approach it from an intersection so the delivery destination is on the right?
The driver would be coming from the previous delivery, so the direction in which he came from depends on where the previous destination was. The arrangement of the streets in a local area, and on which side of the street the next destination is would also make an impact, it can be 3, 4, 5, or 7 right turns before reaching the next destination. Versus 1 left turn, or 1 left turn plus a u-turn. Thoughts please?
You're really overcomplicating it.
I feel it sounds more complicated than it should be too, but I suppose in order for an idea to get implemented in real life, the details need to be worked out... Or is it a general rule of thumb to steer clear of the nitty-gritty (not to say details aren't important, but when crossing the line of being able to think it through in your head without start drawing graphs) for the sake of case interview?
delete
While this is an interesting question about a strategy employed by UPS (http://www.bloomberg.com/news/2012-09-20/ups-makes-no-left-turns-in-que…), I can't see this turning up as a final round case. It's too narrow in scope and doesn't allow much room for creative structuring. If I had to approach it like a case, it would look something like this.
(Note: I didn't watch much of the video)
It sounds like the goal is to increase profits. Is that correct? -Yes..
My hypothesis is that this change will require a large upfront investment in terms of R&D and training, but that will be offset by variable cost savings in the long-run. There may also be some modest revenue or marketing benefits. To determine whether this is a smart move, I'd like to find the break-even period then examine some of the potential challenges.
Profits = Revenue - Cost
Impact on Revenue = Price x Volume (both probably minor, but worth mentioning)
-Price. Predict faster delivery allows higher rates -Volume. Predict faster delivery provides competitive advantage which increases share/volume
Impact on Costs
-Fixed costs ---Increased capacity per truck means smaller truck fleet (can't change immediately, but worth mentioning) ---Cost for R&D to develop routing software ---Cost to re-train drivers
-Variable costs/truck x size of fleet = TVC ---Labor. Predict savings due to faster routes ---Fuel. Not sure whether increase due to longer distance or decrease due to less idling ---Maintenance. Predict lower costs due to wear and tear
Do we have any data on [pick an item. this is where the data-fishing starts.]... Back and forth, some data, some math... Razzle dazzle
My recommendation is that we implement this change because the break-even in net-present terms is only 4 years. Beyond that, we stand to make $xxx/yr
Some of the challenges we'll face include: -Capability to develop new system -Adoption by skeptical drivers
To address these, our next steps should be: -Put together an implementation team (read: extend the engagement) to determine where the gaps in our capabilities are and how to fill them. -Roll out a pilot program in a small (but at-scale) city using manually optimized routes. This will allow us to test our cost assumptions and further refine potential implementation challenges.
This is a different approach/structure. Everything fits under the Profit=Revenue-Cost framework, with risks and next steps in the end. I think it's more intuitive. Thanks for typing all that out!
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