Optimisation of logistics and distribution of parcels in local courier services in South Africa

Abstract

Distribution logistics is a highly integrated supply chain network that generally focuses on the optimal movement of goods and services from consignor to consignee. Given the importance of logistics distribution, courier services suffer a severe problem of experiencing parcel damage which leads to customer complaints and packaging claims. The cardboard packaging for National Logistics Company (NLC) was found to be easily prone damage when in transit and the courier endured consequences such as claim costs that continued to rise every financial year. The aim of the study is to optimise the logistics and distribution of parcels in courier services in terms of cardboard package damages. The data of package damages was drawn from an Enterprise resource planning (ERP) system used at the NLC, together with measurements that were conducted on site. The study adopted a quantitative research approach, and the data was used to reveal the impact of damaged goods to NLC organisation. A fish-bone diagram was developed to represent the potential root-cause of parcels being damaged in the distribution network, and the results revealed that specifications such as packaging size, weight of parcel, internal content packaging utilization, flute corrugated size used for the package and manpower struggling with heavy parcels were potential root-cause of breakages. Furthermore, a value stream map was developed to analyse the operational steps and collect data of the cross-docking performance for a one-month period. Data collection revealed a lower than anticipated throughput capacity, throughput results varied from day-to-day operations which depict low reliability of distributing parcels. Correlation analysis was then used to examine the correlation between packaging weight, size, internal packaging utilization, and flute corrugated size used for a box. The correlation between these variables was ascertained to be moderate. To optimise package size based on weight, dimensions, item and flute size, a regression model was developed to derive the optimal package for items using the Simplex linear programming of the Solver function in Excel. The model revealed that for an item to have an optimal package size, an addition of 2cm must be added to the original size of an item. Furthermore, training solutions were developed to optimize package handling in the logistics and distribution of parcels. The approach for developing training solutions included loading and offloading strategies, methods of staging and sorting cardboard in a vertical flute direction which is also support by the packaging pictorial markings, and the type of equipment to be considered to reduce breakages. The outcome of the research revealed a significant improvement in the overall logistics process and the financial performance of the organisation. Future studies will look at logistics activities of manufacturing cardboard packaging and the development of standard optimal packages which will be derived from supplier product design.