Case study - Precision Delivery Inc. (PDI) is a package pickup and delivery service for homes and small businesses. PDI specializes in packages 50 lb. or less and has a full-price rebate policy for any pickup or delivery made outside the customer designated 15-minute window. PDI advertising proudly states, "Pickup and delivery at your convenience, not ours." PDI has facilities at 2 locations, Downtown and Suburbia, each serving customers in within a 15 mile radius with pickup and deliveries made by truck or bicycle. Customers designate a 15 minute window for their packages to be picked up or delivered. PDI charges customers $5 per package plus $1 per pound (50 lb maximum). PDI Sales Operators receive pickup and delivery requests by phone from customers. Dispatchers issue instructions to Field Operators for pickups and deliveries. To ensure prompt service, Dispatchers plan for 30 minutes of Travel Time, one way, for each pickup or delivery and target arrival time for the start of the 15- minute window.
Under current procedures, travel time in excess of 45 minutes will result in a rebate and travel time less than 30 minutes results in idle time for the Field Operator. Field Operators return directly to the dispatch facility after each pickup or delivery. A subcontractor who offers bike and truck time on demand supplies Field Operations. PDI pays only for round-trip road time and idle time at the customer destination. PDI accountants have calculated the Field Operations variable cost for delivery, pickup, and idle time at $7.50/hour for bicycles and $15.00/hour for trucks. All other costs are fixed at $5,000 per week. Pickups and deliveries are made Monday through Friday, 8:00 a.m. to 4:00 p.m.
Recently, Sales Operators have reported a noticeable increase in customer concern for the timeliness of deliveries and pickup. In response, Sales Operators were instructed to remind customers of the PDI price rebate policy. Additionally, a short survey was sent out to a small group of established customers. Survey results disclosed an appreciation of rebates, but a preference for deliveries within the promised 15-minute window. PDI's CEO and sole shareholder, Pat Hunter is concerned about customer satisfaction and profitability. Although financial results have been consistent over the last year, Pat believes the current return on sales (ROS) of 11% must increase to more than 20% to avoid shutting down the business and more than 30% to grow the business. Pat wants to know how PDI can increase ROS while maintaining or increasing customer satisfaction. Last month, PDI had the following results:
- The CEO of the company wants to know if you can make his company profitable.
Prepare an A3 for the executive.
- As a guide, ensure that you consider the following elements in your A3:
- Define the problem statement and goal statement
- Calculate the baseline performance for Delivery Time.
- Identify any critical relationships that affect your x's (Ex: delivery time). Use graphs and data to highlight, and explain, your findings.
- On a separate ppt slide, the CEO also wants you to share with him any 'a-ha' moments you had while completing the consulting assignment.
Attachment:- Assignment.rar