PLEASE READ THE COMPLETE CASE STUDY AND HELP ME WITH QUESNTION AT THE END. I HAVE SUBMISSION TOMORROW Fresh Buy (FB) is one of the leading players in e-grocery market in Mumbai, India. FB's main specialty is in supplying fresh fruits and vegetables, which is sourced from farmers, and distributed through its collection center. This case illustrates a typical trade-off between increasedlogisticscostanddelayeddeliveriesfacedbyFB.Thiscasebringsuptheissueswith the vehicle routing problem with time windows (VRSPTW). An illustration presents the Clark and Wright Savings algorithm for route development. It also provides an enriched platform to compare and evaluate different demand scenarios in a growingmarket. Case

Keywords: e-grocery, India, logistics cost, delays, vehicle routing.

On a bright Friday afternoon Prateek Juneja, an MBA intern at Fresh Buy (FB), reflected on the events of the last few weeks in the company. Since 2013, FB had been operating in Mumbai, the capital of Maharashtra state. Prateek was hired from a premier b-school in India to identify appropriate solutions for FB. He was a little stressed as his internship was ending on Tuesday and his proposal for improving logistics practices at FB had not been well received. Prateek had prepared a logistics design recommending the deployment of additional vehicles on existing routes to cope with the increasing demand for FB products. His mentor, Mr. Nikhil Kapoor, Head of the Logistics Department, had expressed his dissatisfaction with Prateek's proposal during the previous meeting and asked Prateek to revise it with a focus on cost reduction - specifically he asked Prateek to improve delivery performance but only utilizing existing assets.

1. Online GroceriesMarket

The increasing penetration of the Internet and the widespread availability of smartphones has been a major impetus to the growth of online shopping. A strong economy and full employment has left people time- constrained, a major factor contributing to a growing preference for shopping from the comfort of their own space,anytime,anywhere,ononlinestoresthatareopen247365.Thus,moreandmoreconsumersare turning to online stores to make purchases including for groceries. The rise in online shopping can also be attributed to the rise in the purchasing power of the Indian population. As online shopping (including "grocery shopping")gainspopularitymorepeopledotheirshoppingatthesevirtualstores.Thisenablesthemtoavoid driving to physical stores, navigating often heavy traffic and paying expensive parking fees to bring in their monthly groceries or make more urgent purchases. They can do so from the comfort of their own space, anytime, anywhere. Food 1 has emerged as a prominent category in online retail business in India. Though the gross margin for this market is between 12-15% 2, the size of traditional grocery retailers is larger than that of modern groceryretailers.

Personal disposable income in India has demonstrated growth even higher than that of other emerging markets like Brazil, China, and Malaysia. Initially, online shopping took root in major metropolitan cities. Over time, the concept spread to other towns and cities as well. Studies show that the top ten markets for online retail business in India include metro cities such as Mumbai, Delhi and the NCR region, Bengaluru, Hyderabad, Chennai and Kolkata (Refer Figure 1). In terms of states, Maharashtra ranks fifth in retail stores distribution in the country. Mumbai is the state capital of Maharashtra and is also known as business capital ofIndia.

1. Journey of Fresh Buy(FB)

Fresh Buy (FB) was one of the major players in the e-grocery market, serving customers in Mumbai and its suburban areas. Established in May 2013, the company soon registered growth and began to compete with the established players such as Bigbasket 3and Groffers 4.

FB soon built its reputation of supplying fresh fruits and vegetables to its customers, which it sourced directly from farmers, and stored in its collection centers in Othur,Sinnar and Nashik. At these collection centers, the fruits and vegetables underwent sorting and inspection, after which they were transported to the Distribution Center (DC) at Navi Mumbai. Orders placed by both B2B & B2C customers were aggregated at the DC and delivered to the respective customers in Mumbai. FB provided deliveries to 79 pin codes 5across Mumbai and its suburban areas from DC, of which 59 pin codes had relatively higher demand. Some of its prominent B2B customers included REDCARPET,Superfresh, Bigbasket, Thyrocare, and Groffers (Exhibit 1a).

1. Current LogisticsNetwork

Mr.Kapoor was concerned about the logistics cost that FB had incurred for its operations during the last financial year. This cost included the transportation cost for all vehicles in the region. It is in this context, that he asked Juneja, an intern in the company, to recommend a solution to reduce the cost. As per the current logisticsnetwork,thecompanydeliveredfreshfruitsandvegetablestoitscustomersovertwotime-slots-one in the morning and the other in the evening. Both the morning and evening delivery options were available in the high demand areas, while for the others, the company only made deliveries in the evening. The B2B customers preferred their orders to be delivered during the mornings, to fulfil the demand of their customers throughout the day. Toensure smooth delivery to its B2C segment, FB divided the pin codes of its customers into four different routes - Central, Western, Thane and Navi Mumbai (See Exhibit1b).

1. TheChallenge

FB had witnessed an impressive growth in business over the previous few months, leading to a rise in its customer base, and consequently giving rise to the need for the company to revisit its logistics approach, to reach the new customers and provide them with timely deliveries. Mr.Kapoor was comfortable with the existinglogisticstodelivertoitsB2Bcustomerssincethehighvolumeofdemandoffsetthecostofdedicated full truck loads. It was the increase in B2C customers and serving them through the existing model that was thecauseofworryandsoheaskedJunejatoproposeasolutionthatfocusedonreducingthetransportcost, while at the same time, ensuring delivery in a nine-hourwindow.

Juneja first gathered data of the order details for all routes (Exhibit 2a; 2b) and zone-wise travel distance (Exhibit3)forthemonthofFebruary2016.Hestudiedtherouteplanandfoundthatithadbeencreatedona trial and error basis to meet the currentrequirements.

He further noted that FB rented four vehicles from a third-party logistics (3PL) service provider (Exhibit 4) andthecostforthemonth(Exhibit5)indicatedasignificantamountofovertime.Junejarecalledtheprevious day's meeting with Mr. Kapoor where his mentor had shared his worries about late deliveries, given that the company had built up a reputation for quality and timely delivery of its products. Mr. Kapoor had also pointed out to Juneja that during his last meeting with the 3PL service provider, he had expressed concerns about renewing the contract with the company as they would not be able to provide vehicles to FB with a larger capacity (e.g., the Mahindra (5025)) because these vehicles were already contracted out elsewhere. However,MrKapooralsotoldJunejathatthecurrent3PLserviceproviderhadservedFBduringdifficulttimes and was a loyal client, such that FB's CEO had instructed them to maintain the partnership in the long term. In addition to this, FB's market research division had submitted a report the previous Monday detailing the possibility of a 25% increase in sales across all pin codes during the following financial year. Mr.Kapoor was duly concerned as to whether the existing vehicles were being optimally used and asked Juneja to keep all these aforementioned facts in mind while designing hisproposal.

1. TheProposal

Torevisitthecurrentlogistics,Junejafirstidentifiedthelistofactivecustomersatrespectivepincodes(Exhibit 6).Hewasnotveryclearaboutthecurrentzone-wiserouteplanandwonderedifpoint-to-point,i.e.,pincode to pin code would give a better picture of the distances (Exhibit7).

HerecalledthatduringhisMBAprogram,hehadencounteredasimilarsituationwhichhadbeensolvedusing theClarkandWrite'salgorithm(Exhibit8).Hethoughtthatthealgorithmcouldbeappliedtofindasolutionto

the case in hand.

Whiledesigninganewroute,hehadtokeepinmindthattheloadofanyrouteshouldnotexceedthevehicle capacity and that delivery had to be made in a nine-hour window.He assumed on a regular day,vehicles would be able to run at an average speed of 40 kms per hour.But also he knew that this assumption would notbeapplicableduringpeaktrafficperiods.Heneededtoponderonthisassumptiontoincorporatepossible delays into thecalculations.

Finally, he had to consider the average delivery time per customer. He found that in cases of high density of order areas, for example, at pin code 400706, delivery time would be one minute on average while for others it could go up to 5 minutes.

Juneja knew additional sales meant extra pressure on logistics, however,it also meant growth in revenues. He was still pondering over the problem when he received a phone call from the logistics department confirminghismeetingwithMrKapooronthefollowingTuesdaytodiscusshisrecommendation.

QUESNTION

PLEASE EXPLAIN 2 BELOW PRINCIPLES AND HOW THESE CAN THE 2 PRINCIPLES BE APPLIED TO THE ABOVE CASE STUDY.

PRINCIPLE 1:Service response logistics (SRL) PRINCIPLE2: Procure to pay (e-procurement)