AN INNOVATION IN LAST-MILE DELIVERY: TA-Q-BIN’S “BUS STOP” OPERATION

Abstract

Ta-Q-Bin is a subsidiary of Yamato Transport and is one of Japan?s largest express delivery service companies targeted at the personal parcel delivery market segment. Due to unique challenges posed by the highly urbanized Japanese environment in which it operates, Ta-Q-Bin has devised an innovative mode of operation known as “Bus Stop” Operation for its last-mile delivery, which has since become a source of competitive advantage for Ta-Q-Bin. In this thesis, we first provide a detailed documentation of “Bus Stop” Operation, starting with the motivations for its development, its benefits as well as future plans for expanding its implementation. Next, we formulate “Bus Stop” Operation as a stochastic vehicle routing problem. Consistent with Yamato Transport?s strong emphasis on customer satisfaction, the proposed model balances operating cost with the penalty cost of service failure. In order to solve the model, solution heuristics are modified from existing ones, and it was found that these heuristics are able to generate solutions of good quality. Finally, we provide some managerial insights into the implementation of “Bus Stop” Operation. In particular, we consider two questions: the conditions under which “Bus Stop” Operation is superior to conventional operation, and the tradeoff between labor cost and service level. For the former, we derive an analytical expression to find the threshold household density beyond which “Bus Stop” Operation is likely to create significant advantages. For the latter, we put forward two recommendations for Ta-Q-Bin?s consideration based on results of computational experiments. It is hoped that this thesis will contribute to greater understanding of “Bus Stop” Operation and spur future research in this area