Problem Statement
Fetchr is a technology-based delivery and Logistics Company that offers C2C and B2C services on the same-day and next day basis. The corporation has a large market share in the MENA, currently operating in UAE, Bahrain, KSA, and Egypt (Narayanan & Kuzucu, 2019). Although Fetchr has a strong market position in the MENA, it faces challenges of operational inefficiency and low profitability, which can be overcome through effective management of its labor requirements and optimization of fleet utilization.
Alternative Solutions to the Problems
To overcome the current challenges in the corporation, Fetchr’s administration should consider adopting a strategy of labor management. Based on the corporation’s profitability analysis, it is evident that the company has a high labor capacity, which in turn contributes to increased operational expenditure. Notably, Fetchr has an average of 288 and 20 B2C and C2C drivers, respectively (Narayanan & Kuzucu, 2019). Although a high workforce is essential to meet the rising demand for technology-enabled logistics services in MENA, Fetchr should reduce the capacity proportionately to its labor requirements, and invest in outsourcing drivers during peak seasons. Reducing the number of the full-time workforce would help the venture cut telephone, housing, and visa-related expenses because the management would avoid such costs while utilizing outsourced drivers. Minimizing operational costs would enable the company to reduce its expenditure and in turn, boost profits across the two segments. Hence, Fetchr may choose labor management as a potential solution to its operational efficiency and profitability issues.
Alternatively, Fetchr’s management should consider optimizing fleet utilization as a strategy to overcome its operations and profitability related-issues. Fetchr has a fixed charge for the next day and same day B2C and C2C services. In particular, the corporation charges 15.0 and 20.0 AED for B2C and 30.0 and 40.0 AED for C2C in next and same-day deliveries, respectively (Narayanan & Kuzucu, 2019). From the fixed charges, the company makes significant profits in the same-day B2C segment compared to the same day C2C. From this information, the company has the potential to increase its profitability by optimizing fleet utilization in the C2C and B2C next day service. In particular, Fetchr should adopt an economic strategy in logistics, whereby few trips are made back and forth the warehouse for next day deliveries. For instance, rather than transporting a single parcel to the centrally located warehouse in Dubai, the firm should consider using the same driver to pick several small packages within the area and deliver them to the warehouse at a specified time. By optimizing the fleet capacity, Fetchr would can reduce its spending on drivers and fuel, and hence, maximize its profits across the segments.
Recommendations
While the two alternatives have the potential to facilitate operational efficiency and profit maximization, Fetchr should adopt the second alternative for several reasons. Notably, time is limited to make necessary changes, considering the fundraising event to occur before summer. Therefore, the first alternative, which involves analyzing its labor requirements and reducing its workforce, may not be effective because more time may be required to evaluate and project its service demand and match the projections with an efficient workforce. However, the second alternative is less complicated and less time consuming, since the management would only require making necessary adjustments in their operations to accommodate optimal pickups and deliveries across the segments. For this reason, Fetchr should adopt the second alternative due to its efficiency and associated advantages.
References
Narayanan, V.G., & Kucuzu, E. (2019). Fetchr: A new way of last mile delivery. Harvard Business School Case 119-018.
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