Improving last-mile productivity at Paack - Teaching note
Last-mile delivery is by far the most operationally complex and costly part of logistics. Nevertheless, it has become a critical function of e-commerce in the last 20 years, particularly during the COVID-19 pandemic. A multitude of actors operate in the last-mile delivery space: first-party logistics companies, such as Amazon; third-party logistics companies, such as DHL; and fourth-party logistics (4PL) companies, many of them gig economy-based, which act as supply and demand aggregators in the pursuit of economies of scale. This case follows Paack, a technology-based 4PL start-up based in Barcelona and operating in several European countries, in its dual pursuit of growth and profitability. Against the backdrop of high interest rates and the ensuing liquidity crunch, as well as widespread turbulence in the tech industry in late 2022, profitability in the not-so-distant future has become imperative for Paack. In the eyes of Paack's management, profitability goes hand in hand with improving productivity. Can this be achieved through growth and scale, technology and analytics, people management, or good old operations?
Collection: IESE (España)
Ref: OITT-4-E
Format: PDF
Number of pages: 9
Publication Date: Sep 18, 2024
Language: English
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Description
Last-mile delivery is by far the most operationally complex and costly part of logistics. Nevertheless, it has become a critical function of e-commerce in the last 20 years, particularly during the COVID-19 pandemic. A multitude of actors operate in the last-mile delivery space: first-party logistics companies, such as Amazon; third-party logistics companies, such as DHL; and fourth-party logistics (4PL) companies, many of them gig economy-based, which act as supply and demand aggregators in the pursuit of economies of scale. This case follows Paack, a technology-based 4PL start-up based in Barcelona and operating in several European countries, in its dual pursuit of growth and profitability. Against the backdrop of high interest rates and the ensuing liquidity crunch, as well as widespread turbulence in the tech industry in late 2022, profitability in the not-so-distant future has become imperative for Paack. In the eyes of Paack's management, profitability goes hand in hand with improving productivity. Can this be achieved through growth and scale, technology and analytics, people management, or good old operations?
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Year: 2022
Geographic Setting: Spain
Industry Setting: Transports and Postal services
Learning Objective
The main objective of this case is to illustrate the crucial role of productivity in the unit economics and, consequently, the profitability of last-mile logistics companies. A natural conclusion of this discussion is that the path to productivity and profitability goes through a combination of factors and initiatives?some with a short-term and others with a longer-term horizon, some having to do with ?hard? tactics and others with ?softer? management skills?which explains why it has been challenging even for companies that managed to achieve scale, such as Amazon and Uber.
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