Research: how can we use revenu management in last-mile delivery?

New opportunities arise to design profitable last-mile delivery strategies. In particular, companies can influence customer behavior by choosing the lead-times or time-slots that are offered (capacity controls) and as well as their associated fees (pricing controls). These decisions ultimately seek to balance the capacity utilization and increase the profitability of the delivery operation.

Revenue management

A new paper by MIT Center for Transportation and Logistics explores future avenues of research for revenue management in last-mile delivery. Revenue management (RM) for last-mile delivery (LMD) receives increasing attention in both literature and industry. The available literature on last-mile delivery revenue management (LMD-RM) strategies focuses on only one subsection of deliveries: the attended home delivery (AHD) of groceries.

New options

Recent industry trends unveil potential research extensions and new problems in this field. For instance, e-grocers such as Amazon now offer unattended grocery deliveries. Moreover, in contrast with grocery delivery options that are defined on a time-slot basis, delivery options and prices for dry-goods are usually defined on a lead-time basis (e.g. same-day or or 2-day).
As e-retailers continue to off er shorter lead-times, the associated pricing, capacity and inventory management decisions could benefit from a revenue management framework. Similarly, several e-retailers now offer order pick-ups at designated locations. These options that significantly impact delivery capacity, cost and customer choices.
Furthermore, the expansion of crowd-sourced delivery services provides e-retailers an alternative to increase delivery capacity on-demand.

Existing models should be extended for these new problems and discuss promising streams of future research.

Source: Megacity Logistics: Revenue Management in Last-Mile Delivery – State-of-the-Art and Future Research Directions, by André Snoeck, Daniel Merchan and Matthias Winkenbach

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