A model approach to last-mile distribution

This is an excerpt of the original article. It was written for the November 2017 edition of Supply Chain Management Review. The full article is available to current subscribers.

November 2017

There are strands of sustainability and corporate responsibility through much of this month’s issue. James T. Prokopanko, the former CEO and president of The Mosaic Company, details how corporate responsibility became his compass for leader ship when he took over the reins of the company back in 2007. Similarly, Joseph Ludorf, the executive director of supply chain for Cipla Medpro, details how revamping the planning process enables the South African pharmaceutical company to prof- itably supply drugs to underserved populations on the continent as part of its corporate mission. We round out the issue with five tips for intelli- gent risk taking in…

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In 2012, a capacity crisis in Brazil’s e-commerce distribution channels delivered a wake-up call to the country’s largest online retail platform, B2W Companhia Digital. The company decided that its last-mile distribution strategy had to become more systematic and analytically grounded.

This year, B2W began implementing a re-engineered network design, based on a model developed in collaboration with the MIT Center for Transportation & Logistics (MIT CTL). For the first time, the company is using a network optimization model to assess its operational footprint and provide actionable insights on how to make the network more cost efficient and improve service quality.

B2W’s journey reflects the changing nature of the Brazilian e-commerce market, and how companies must evolve in line with dynamic online commercial environments. Along the way, the enterprise has learned some important lessons about adopting a data-driven approach to last-mile network design and operation.

Course change

B2W delivers packages to tens of millions of e-consumers in urban, suburban and rural areas of Brazil. The company began operating in 2006 and since then has developed four different online platforms. It commands around 27% of the Brazilian e-commerce market.

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