Problem: Variability in demand
One of the main issue currently faced by Bluedart is the high variability in demand. During peak seasons the company experiences a deluge of orders and the delivery system invariably gets choked [1] Further due to the low switching costs, changes in customer preferences appear to be quite whimsical. Due to this inconsistency in demand there are periods of crest and trough experienced by the firm. The crest period generally leads to heavy traffic at the logistics service providers' end and delayed delivery. This in turn leads to customer dissatisfaction and a reduction in the repeat customer base. As against this, periods of low demand lead to low utilization of the transport infrastructure and human resource.
The main issues that lead to a high variability in demand are as follows:
i) Festivals/events that affect the …show more content…
The customers are very sensitive to price and quality of service being offered. Further as discussed in the previous report on industry analysis the entry barriers in this industry are quite low which leads to increased threat of demand variability.
iii) Demand forecasting issues:
Increased delay in the delivery of packages at the time of demand surges clearly shows that the demand prediction in the company is not being handled properly. The company is experiencing demand forecasting issues.
The above listed points are major issues for the company because of the following two reasons:
1) Services are perishable:
The infrastructure and human resources hired are a sunk cost for the company hence it is imperative to use them to the fullest. The workforce of the company once hired needs to be given a monthly salary regardless of the amount of work being done by them. A similar reasoning can be given for the transportation infrastructure owned by the
One of the main issue currently faced by Bluedart is the high variability in demand. During peak seasons the company experiences a deluge of orders and the delivery system invariably gets choked [1] Further due to the low switching costs, changes in customer preferences appear to be quite whimsical. Due to this inconsistency in demand there are periods of crest and trough experienced by the firm. The crest period generally leads to heavy traffic at the logistics service providers' end and delayed delivery. This in turn leads to customer dissatisfaction and a reduction in the repeat customer base. As against this, periods of low demand lead to low utilization of the transport infrastructure and human resource.
The main issues that lead to a high variability in demand are as follows:
i) Festivals/events that affect the …show more content…
The customers are very sensitive to price and quality of service being offered. Further as discussed in the previous report on industry analysis the entry barriers in this industry are quite low which leads to increased threat of demand variability.
iii) Demand forecasting issues:
Increased delay in the delivery of packages at the time of demand surges clearly shows that the demand prediction in the company is not being handled properly. The company is experiencing demand forecasting issues.
The above listed points are major issues for the company because of the following two reasons:
1) Services are perishable:
The infrastructure and human resources hired are a sunk cost for the company hence it is imperative to use them to the fullest. The workforce of the company once hired needs to be given a monthly salary regardless of the amount of work being done by them. A similar reasoning can be given for the transportation infrastructure owned by the