Lockers: The Future of last mile delivery

Consider this scenario a couple of years ago even in the developed market. You order a product online to be delivered at your residence. What would happen at the time of delivery of your parcel if you are not at home?

1. Delivery guy will probably call you & ask for instructions?
2.  Drop the parcel with the neighbors or take the parcel back & reattempt the delivery probably at a later time or in all possibility on an alternate day.

This is a common scenario especially among the urban dwellers, who fear either the package may not be delivered or may be stolen if left unattended. This is a perfect nightmare for any online store as well. Imagine the cost associated with the failed delivery attempts in monetary terms as well as impact on the overall productivity. Add to this other factors such as cost associated with handling customer calls through customer service, dispatching a replacement item in case of lost item or even potential loss of sale due to customer switching to alternate retailer.

To address these challenges e-tailers have been working either on its own (Amazon) or closely with the logistics solutions providers such as Singapore post, Finland’s Itella, InPost Canada, Australia Post for building a network of smart lockers for delivery of parcels. It’s a win-win situation for customers as well as sellers. This solution is helping the etailers & logistics solutions providers not just to avoid the cases of failed delivery attempts, but also with improved productivity due to multiple deliveries at the same point resulting in reduced cost per delivery. Add to factors such as lesser chances of a lost parcels, deliveries during the non-peak hours resulting in avoiding the traffic congestion. Othe benefit being explored simultaneously is, for the reverse logistics. Lockers also work as pick up point for returned items.

How the lockers work?

Smart lockers are generally installed in public places such as Malls, convenience stores such as seven-eleven which are in the vicinity of the residential areas & often visited by the natives for the daily needs. It has compartments of varying sizes to accommodate wider variety of items & can typically handle items weighing upto 10 pounds.

Once the parcel has been delivered with the locker, automated tracking systems trigger the communication over email or cellular phone as preferred by the customer. Mail or SMS sends the details required of opening the lockers. Generally a passcode or QR code. Some of the locker models are also using the Bluetooth connectivity feature for added security.

Items are typically held in lockers for about 3 days for the customer to pick up the items. The backend system is designed for even reminding the customer for pickup of the items or alternate instructions in case item cannot be picked up within the set time or if customer wants the items to be returned to the seller.

While we all hear about the pilot projects of deliveries using drones to address problems relating to cost, traffic congestion, speed & agility, lockers have slipped in quietly into those convenience stores & doing the job assigned to them with ease & offering the convenience to the customers

Challenges

While the lockers are being successfully implemented in developed nations where people shop online mostly using internet banking & credit cards, it will be interesting to see how this works in developing Asian markets such as South East Asia & Indian subcontinent where preferred mode of payment is still cash on delivery. 

Is Nestlé the only culprit?

Nestlé S.A. is a Swiss multinational food and beverage company headquartered in Vevey, Switzerland. It is the largest food company in the world measured by revenues and ranked #72 on the Fortune Global 500 in 2014. (Source: Wiki)

One of the most popular product in Nestlé’s portfolio, Maggi Noodles came under scanner in India. An officer from state of U.P food safety & drug administration ordered tests on over a dozen samples of instant noodles. Nestle claims that the product does not contain Monosodium Glutamate (Popularly known as MSG: Used for enhancing the taste). Gorakhpur lab & Kolkata lab (Considered to be among the best in country for food testing) found the samples to be positive for MSG. In addition Kolkata lab also reported the samples to be containing dangerously high levels of lead content. Lab reported 17.2 ppm of lead in the sample. According to food safety regulation norms in India permissible lead content ranges between 0.2 ppm to 10 ppm depending on product categories. Instant Noodles falls under a category with a limit of lead restricted at 2.5 ppm.

Instant noodles are identified under food category code 6.4.3, which includes “pre-cooked pastas and noodles and like products” that are “pre-gelatinized, heated and dried prior to sale”. These categories of food are governed by Codex international standard 249, standards of food safety recognized by WHO. The masala used in these noodles is identified in code 12.2, which includes herbs, spices, masalas, seasonings, and condiments (eg. seasoning for instant noodles), where the use is “intended to enhance the aroma and taste of food”, according to FSSAI regulations.

Controversies are not new to Nestlé. In 1974 Mike Muller wrote an article for War on want called “The baby killer”. Articles focused on impact of alternative introduced by Nestlé for breast feeding the newborn babies. Swiss court on the basis of the report, warned Nestlé that if the company did not want to face accusations of causing the infant deaths or illness, should change the way they do the business & not to use unethical sales practices. Following the report Nestlé products were boycott across Europe, UK & US. The campaign also garnered support from health authorities & medical professionals in developing nations. Momentum gathered by this even lead to 1981 formation of code of conduct to govern sale & promotion of products substituting breast milk.  

Mike Muller has been consistently active against companies which are purely money minded & does not care towards the health of people.

In one of the recent articles Muller posed an important question. Though this was not applicable to just Nestlé as a single company but to the entire industry. While in 1970’s challenge was high child mortality rates, malnutrition, quality of water, in today’s times issues have been replaced with obesity, diabetes & heart diseases. Back in 70’s industry was accused of harming the health of the babies. Now it has raised to a level of harming the entire nation. In either cases issues about the food industry’s responsibilities remain unchanged.

UN’s current millennium goals are due to expire in 2015. In such case, question of importance is should the sustainable goals focus on unsustainable & unhealthy lifestyle of riches or on the plight for the basic needs of the poor? Also, should UN actively engage with global food giants to control products & marketing to improve people’s health. For answers to these questions we will have to wait & see until we discover/ invent machines that can take us to future.

This article is not intended towards the questions raised at Nestlé but towards the general issues relating to the food industry.

FIFA scandal explained.

The Fédération Internationale de Football Association (commonly known as FIFA: International Federation of Association Football) is the international governing body of association football (soccer), futsal and beach soccer. (Source: Wikipedia)

Founded in 1904 & currently having a membership of 209 national associations is one of the largest sports bodies in the world. FIFA reported the revenues of over USD 1.3 billion with net profit of USD 72 million. FIFA is responsible for organizing & promoting the game, however it does not govern the rules.

Recent news of an ongoing scandal in such an old organization raised many eyebrows. It was brought into limelight by some investigative journalists of repute. Charges raised include rapaciousness, rigged elections, corruption & bribery. Charges have been pressed against nine of the highly ranked FIFA officials & five other corporate executives by U.S department of justice. It is estimated that FIFA officials have been engaging in malicious activities over past 24 years. Out of these 18 years have been under the leadership of Joseph Blatter. Under his leadership football has increased its popularity many a fold. FIFA also became more successful financially during this tenure. In recent developments, even after the scandal became public he has been re-elected to lead the organization for the 5^th consecutive term.

Is FIFA only party to the scandal?

As they say, you cannot clap with just one hand, a scandal will require involvement of atleast two parties. A giver & a receiver. Wait, there will be one more party to it, a middleman since the deal cannot be struck officially there will be an intermediary involved who will facilitate the transactions off the record. With the FIFA, all its associates are likely to be scrutinized for the involvement in corruption. This means two of the world’s largest sportswear & marketing firms Adidas & Nike, football federations of Russia & Qatar, for being awarded the venue for upcoming football world cup.

With time even more companies & federations will come into picture for & play a part in proving corruption & scandals in FIFA.  

What were these people exactly doing?

Justice department has mainly cited deals struck between FIFA, sports marketing firms & broadcast networks for exclusive televisions broadcasting rights for the FIFA events. Justice department has alleged that FIFA officials accepted bribes from marketing firms for exclusive television rights. The amount of money involved is anticipated to be around USD 150 million according to primary analysis.

What is the recipe for perfect corruption?

1.    Red Tape: excessive bureaucracy or adherence to official rules and formalities create the perception that bribes is the only means for getting a job done. Organizations like FIFA have been closed to share any information apart from the revenue & profits. Add to this the confidence in power of position which leads to arrogance in believing that they are untouchables.

2.    Organization culture: in case of FIFA, according to Yenkey, an assistant professor of organizations and strategy at The University of Chicago Booth School of Business corruption was acceptable & nobody felt any evil about it. He cited the example of Chuck Blazer, a former official with FIFA and Concacaf, a governing group that oversees soccer in the North American, Central American and Caribbean region, who pled guilty in 2013 to charges that he engaged in racketeering, wire fraud, money laundering and income tax evasion