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Title of Submission
Can Freelancers With Big Data Resolve The Last Mile Logistics?
_____________________________________________________________________
Author(s)
(1) Pallavi Kulkarni, [email protected]
(2) Paul Schreiber, [email protected]
Primary Author Name
Pallavi Kulkarni
Permanent Address
5507 Pecan Hollow Dr.
Missouri City, TX 77459
Permanent E-mail
[email protected]
Permanent Telephone Number
281-248-7875
Educational Institution
The University of Houston
APICS Terra Grande - Houston District Chapter Affiliation
APICS – Houston Chapter
Can Freelancers With Big Data Resolve The Last Mile Logistics?
Pallavi Kulkarni
5507 Pecan Hollow Dr.
Missouri City, TX 77459
+1-281-248-7875
Pallavi Kulkarni (Bachelor of Engineering, Karnataka University, India) is currently customer
quality engineer with Texas Instruments.
Professional MBA at C. T. Bauer College of Business, University of Houston
Paul Schreiber
4700 Calhoun Rd.
Houston, TX77004
+1-832-708-6619
Paul Schreiber (Bachelor in Business Studies, University of Bamberg) is currently a student in
the professional MBA program at C. T. Bauer College of Business, University of Houston
Can Freelancers With Big Data Resolve The Last Mile Logistics?
Abstract
Gratifying today’s digitally native and fast paced consumer is a challenge. Even with flow of
millions of R&D dollars and technological advances like Internet of Things and big data, last mile
logistic still remains a challenge. Interlacing big data with freelancing could resolve this issue
while enhancing customer service.
CURRENT STATE OF LAST MILE DELIVERY
The previous decade has been a whirlwind in the technological era. The enormous changes in
technology have not only changed the way we live and go about our daily life, it has made a huge
impact on how we do business. Brick and mortar stores are a thing of past, with advent of ecommerce, supply chain is now faced with newer complexities every step of the way.
Complexities can include multimodal transportation, global logistics management, or risk
analysis, with every part of supply chain management being a technological melody. Today's
supply chains have matured, as compared to the previous simple formula between a producer
and a consumer. Today’s supply chain model attempts to reflect the complexities of e-commerce
and has become more complicated than ever. Cost effectiveness, time management, brand
management, and risk management are areas that today’s supply chain must become efficient.
While advent of e-commerce has made the consumer smarter, the same has created the demand
for a supply chain that is more agile, fast and flexible. This results in increased pressure to model
a supply chain that considers demand variation and has the ability to accurately forecast that
variation. While logistics management is more important than ever, the burden of customer
satisfaction falls mainly on the last leg of supply chain management, which is known as ‘the last
mile’. The last mile of supply chain management is the first touch point of a customer, and the
point where all of the efforts that went into perfecting the model comes to its fulfillment.
Many big companies such as Amazon and Walmart incorporate significant effort as well as capital
in order to make the outbound logistic cycle both effective and efficient. In the race to structure
this type of logistics chain, giants like Google and Amazon have used their capital to patent
technology, including the design of driverless trucks with keyed in delivery boxes. These
advancements are winning the game for these big giants to get their products from one
distribution center to another, but the burden of the last mile still weighs heavy on them. Bigger
companies might have resolved the technical barriers in their supply chain with the addition of
new talent, and the business may allocate a hefty cost towards logistic enhancement, but just
like the smaller businesses, they will continue to face the same issues when it comes to the last
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mile delivery. Even when all of the advancements in the supply chain world are considered, to
supply chain pundits the last mile logistics remains an enigma.
With Drone and drone-like technology, Amazon plans to win the last mile. However, the smaller
businesses that do not have the funds to allocate towards a similar investment get left behind in
the technology race. As technology improves so do the complexities of its implementation. The
technological overhaul not only costs money but if not designed properly it may become a costly
investment with significant overhead costs. Such shortcomings keep the smaller mom and pop
shops far behind the curve. Without the help of technology, small businesses will cease to exist
as they will be unable to penetrate the target market or expand in order to gain market share.
For a small business the last mile is the only logistical aspect in need of optimization, and
achieving this with many cost constraints is the most difficult issue many businesses face.
LOGISTICS OF THE LAST MILE
The last mile of the supply chain is the final leg of travel which brings the product from the
distribution center to the customer. This distance can vary, making the last mile seem like more
than a mile most of the time, but can be optimized by streamlining some of the delivery processes
involved. Streamlining the delivery process would require a deeper understanding of the
distribution center. The detail describing why distribution centers are so important are shown
as follows (Khanna 2015):

Number of distribution centers: The number of distribution centers for the last mile is
directly proportional to how efficient the last mile of logistics will be. The more
distribution centers there are the greater chance that the product will be close to the
consumer.

Distance to the distribution center: For efficient delivery speed it is very important that
the distribution center is near to the customer. Hence, placement of distribution center
is essential to make the last mile logistics not only cost effective but to ensure deliveries
arrive on time. Incorrect placement of a distribution center could result in a loss of sales
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and add cause an unnecessary delay to the last mile. Geographical proximity improves
both delivery speed and cost efficiency.

Time from the distribution center: As the distribution centers are mostly located in
industrial areas it is imperative that there is some stem time in deliveries. If the delivery
time takes more than 45 minutes on average that would be an indicator that there is a
need for another distribution center. Shorter delivery time is cost effective and increases
productivity in long run.

Traffic around distribution center: Delivering within any major city in the world can make
the last mile slow and unpredictable because of traffic. If the distribution centers are not
well placed this issue can aggravate arrival times and make the last mile logistics
inefficient and very expensive.
Figure 1 – Distribution Network
Many of the above mentioned issues can be overcome by proper placement of the distribution
centers. Of all issues discussed, the traffic issue poses the most significant hurdle in making the
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last mile efficient in many cities. Especially for smaller companies, like a mom-and-pop store, this
logistical issue can easily hit their bottom line causing financial insufficiencies that could
eventually shut down the business. To combat the traffic issue and make the last mile efficient,
many developing nations like India and China have started using freelancing courier services.
Since building a distribution center near customer base is not always an option to many
businesses, freelancing has made some of the last mile logistics issue a little bit less daunting.
DELIVERY AND FREELANCING
With every stage of improvement to e-commerce technology supply chain management has
increased in complexity. As supply chains become more complex so has last mile logistics. A
higher percentage of sales is being made through internet and this number is expected to
increase. This will result in parcel service logistics becoming more prevalent than ever before
and customer satisfaction will increasingly depend on last mile logistics.
Figure 2 – Increase in Package Volume
While this era of quick serviced consumerism needs a fast paced last mile delivery, the legal
grounds of this century makes achieving the same much harder. With pollution and global
warming being the center of attention, it’s getting harder and harder for many smaller businesses
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including mom-and-pop stores to serve their customers’ needs without hitting their bottom line.
When it comes to last mile delivery small businesses face many different kinds of issues as
described below:

The variety of product offerings results in an inflexibility of delivery options. For example,
a local restaurant will never have the same size of products to deliver, so the cost can
never be optimized using the current package delivery system. Hence, the delivery for
such a business becomes expensive due to the varied product offering. This results in the
local business being uncommitted to product delivery and losing that market share.

The high cost of owning a transportation fleet to make the delivery system efficient can
be daunting to many smaller businesses. Due to the capital shortcoming many small
businesses, like a local florist, cannot take orders that need delivery. Again, this lowers
the potential target market for that business and also limits the level of customer service
a business can offer.
As mentioned above, smaller businesses cannot spend money to own their own transportation
fleet or use expensive logistics services to make their last mile efficient. This restricts them from
penetrating the targeted market and essentially allows the big players to take that market share
away. How does a company make the last mile delivery, which in case of smaller businesses is
the most important mile, a viable option? It is not only the economics of the delivery system but
the efficiency and reliability that plays a big role when utilized by smaller businesses. Can use of
freelancers to deliver the products be one of the answers?
In the advent of freelancing, Uber, an app based taxi service, could be beneficial to small
businesses. Uber’s flexibility goes hand in hand with the technological advances of the Internet
of Things. Freelancing with Uber would provide many other related advantages as most of the
consumers today are tech savvy. Also, Uber ensures that 80% of the fees they collect are given
to the driver, making the transaction beneficial to both parties. Because Uber is an app, it makes
the entire process from hailing a cab, to calculating the fees, to making payments an easy and
efficient process.
Uber entered the freelancing delivery market with Uber Rush, launched in 2014. This app works
from the business front, just like hailing a taxi. For example, a small boutique in Houston using
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Figure 3 – Uber Rush Display
this app can enter the address to pick up an item and the address to deliver the item. The
business is given an estimate of delivery costs. If the business accepts the fare, a freelancer will
be notified. The freelancer has the choice to take that delivery or pass it on to some other
freelancer. If the freelancer accepts it, he picks the item up and delivers it. The complete process
is web based without any human interference, making the entire process error free and very
efficient.
Similar to Uber, Postmate is another online on-demand delivery business that utilizes the power
of freelancing to maximize its profits. Postmate provides a platform where many local restaurants
can utilize the benefits of freelancing. However, there is an initial payment and regular monthly
payments required to gain the advantages of the Postmate platform. While this could be a
solution for businesses already making a sufficient return on investment, for others this may
become a fixed cost that they may never recover from.
Using a freelancer could change the business strategy for the smaller businesses. Some of the
major advantages of freelancing can be:

Just-in-time delivery makes it possible so that stores can have access to items as they
need them. This could be a great application for businesses with flexible demand so that
when the daily deliveries are at their peak, freelancing could minimize delivery costs.
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
In today’s world of internet frenzy, customers need instant gratification. Freelancing
could be the right tool to use to embrace such customer base, especially for wide spread
metropolitan cities like Houston, as this could mean better service level at a lesser cost.

With no fixed costs, like those involved in owning a fleet or using third party logistics,
freelancing gives cost independence to small businesses. In fact, this cost benefit could
be further used to lower product costs. The customer would benefit in the long run and
it would enable the small businesses to penetrate the target market.

Freelancing could help businesses overcome the geographical barrier and enable them
expand their business zones. This could lead to a higher return on investment which
would benefit the businesses.

Given the fact that freelancing uses the advantages of the Internet of Things, this enables
the real time tracking of deliveries. Customers could possess this information and utilize
it to empower them.
Thus, utilization of freelancing could make the challenges of last mile delivery for small
businesses less daunting. This service comes with its own set of challenges. For example, how
expensive is it to have an app that could provide this service to small business owners? Will this
utility have a learning curve and could that be damaging to the business? How can a small
business trust this service provider without any historical evidence?
To answer all the above mentioned questions we will explore big data and look into it deeper to
see if the power of big data analytics could save the day for small businesses.
IT IS ALL IN THE DATA, THE BIG DATA
Big data is nothing but cumulative electronic data collected in today’s information saturated
world, which can be in many forms including retail data, communication data, and social media.
This data is not only huge in size but contains valuable information that can be segmented and
used to make processes in many industries secure, efficient and cost effective. Big data also has
immense variability due to the different kinds of data it brings together, making it very useful
under various scenarios. Above all, big data is being collected at a speed that will lead to a data
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overload in near future. The amount of data collected is so daunting that most of the businesses
have not made much progress in combining the numerous data points into a real time solution.
Abandoning the older ways and using this latest piece of technology could boggle even the best
Figure 4 – Development of Big Data
One such business is the United Postal Services (UPS). UPS has used big data analytics to attain
a new level to its delivery efficiency and customer service. It has come up with proprietary
software, On-Road Integrated Optimization and Navigation (ORION), which uses big data
analytics. This software has made delivery routes more efficient, cost effective and
environmentally viable for UPS.
To develop ORION, UPS had to create its own big data by fitting each truck in its fleet with a
GPS tracking system which collected information for over a period of five years. On this
collected data, UPS then ran thousands of pages of algorithms which used the 250 million data
points collected. By doing this, UPS was able to get 200,000 alternative ways to run a single
route. When UPS deployed this software on its fleet of delivery trucks and beta tested ORION,
UPS saw a drastic reduction in fuel usage and carbon footprint, saving the company $50 million
per year on each driver’s mileage alone. The overall cost benefit from this big data change is
projected to save hundreds of millions of dollars in addition to the huge environmental impact
it will create.
ORION’s capability of providing real time road optimization is one of many strong attributes of
big data analytics. Applying this concept into freelancing, smaller businesses can easily utilize
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this information to make freelancing more powerful. Could big data analytics resolve some of
the shortcomings of freelancing? Well, we think it definitely can.
COMBINING FREELANCING AND BIG DATA ANALYTICS
While freelancers have found a way to make last mile more viable, there is still a lot of room for
improvement. Laying out the last mile to a freelancer could solve the cost and the efficiency issue,
but this would come with its own disadvantages. Primarily, the freelancer’s credibility could
become an issue causing the reliability of the service provider to come into question.
Additionally, the learning curve for different industries could be overwhelming for freelancers.
For example, a florist’s demand from a freelancer may not be the same as that of a local
carpenter. Similarly, a local restaurant would want to deliver to customers in a particular way,
which would differ from a baker’s delivery needs. When there are so many moving pieces, how
can one manage to be efficient and make money in the same process? One answer to making all
of these things come together is using big data to customize the freelancing process. Big data can
help make the freelancer more effective. Some of the ways are:

Route Management: As discussed above in ORION, big data can be implemented onto
freelancer’s software to manage the route efficiently. In metropolitan areas and
widespread cities like Houston, this could prove to be a game changer as it would save
money, time, and efforts for both the parties involved.

Reliability of the Driver: The use of many big data based systems can improve the
experience of freelancers. Use of big data based systems to obtain simple feedback and
reviews regarding the drivers makes it possible to choose a driver who arrives quickly or
delivers to the right address every time, and can enhance the customers first touch point
experience. This application will make the customer feel more confident about the small
business and will enable them in future to buy products from the same seller, increasing
traffic to the small business in the long term.

Cost effectiveness: By utilizing the many uses of big data, small businesses can give better
service at a lower cost. By not owning a fleet, giving an enhanced experience to the
customers, and expanding their target markets, the small business owners could make a
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significant difference to their bottom line. Using a well-developed technological
advancement would allow them to think outside the box and could make that investment
worthwhile in long run.

Real time location information: Customer service can reach the next height using this
capability of big data. Due to the heavy consumerization of technological tools as seen in
smartphones, IoT sensors and GPS devices, and with the emergence of high speed
internet, shippers can have a real time view of a given delivery route at any position.
Imagine waiting for a new dress you’ve ordered online at 6:45pm for a party that starts
at 8:00PM. Knowing exactly where your package is gives you, as a customer, freedom of
thought. A customer could potentially run other errands during that wait period and be
sure that when the package arrives they are home. Knowing the exact location of your
package can not only can you make you look gorgeous at the party, no matter what, but
it can get a beautiful bouquet of roses to the hostess during that same time, taking the
customer service potential to a new heights.

Availability of drivers: Peak hours can become a nightmare for any kind of delivery.
Especially in metropolitan areas, this issue could become very prominent. Big data can
resolve this issue by visualizing the number of drivers on road at any given time of the
day. This will allow the business to make decisions accordingly. For example, if a boutique
delivering a dress realizes that the nearby roads have no drivers for delivery at that given
hour, it can either decline an order that needs to be delivered in that hour, can give a
special promotional discount knowing delivery would take more time, or charge premium
for their service. This enables businesses have many alternatives to choose from.
All of the above mentioned advantages could make the last mile for small business less expensive
and more efficient at a very low risk. The utilization of digital nativity among consumers and
technological advancements in the field of IoT can enable use of freelancing with big data
analytics to be a huge success.
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POSSIBLE CHALLENGES
Even though freelancing and big data come with a huge set of advantages of their own,
implementation of both could have some unique issues. Freelancing comes with its own hurdle.
Not many freelancers are available that one can trust and rely on. This is an upcoming concept
which will become a normal type of service in a few years. Until such broad stroke
implementation is seen, using this service on a regular basis could pose a problem. Use of a
freelancing platform should become as easy as pressing a button if the small businesses choose
to embed it in their strategy. The technology will need to grow from its infancy. Also, for any
freelancer to show credibility and reliability, availability of the driver is a must. The availability of
drivers for Uber or any other such services depends on the popularity of this tool, and without
this basic requirement of reliability fulfilled, smaller businesses cannot determine if this is
the latest fad or if it is a here-to-stay type of technology. The same holds true with big data. This
is an emerging technology as well, which is still in the hands of the big players because of the cost
and learning curve involved. Once this technology matures so that it no longer needs the same
amount of capital or knowledge for customization, big data can be used easily to gain its many
advantages. When a small business trusts a freelancer to deliver its product, and may be an
expensive one too, there needs to be some level of trust between the parties, but more than
anything there is a requirement of legal binding. Legal binding ensures that there is no mistrust
among parties, and should a freelancer not be able to deliver, the freelancer is penalized. A
business must establish some way to make this delivery more stable so that even in case of
accidents the freelancer can complete the delivery. All complexities of this business model should
be examined and planned for so that this combination results in success in coming decades.
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CONCLUDING PERSPECTIVE
Freelancers like Uber have already collaborated with smaller businesses in metropolitan cities
like New York, Chicago, etc. Applications of IoT such as Uber Rush and Postmate, indicate there
is an infrastructure ready to be used to make the last mile an easy task for many existing small
businesses. Applying big data to the already existing platform can not only make this platform
efficient, cost effective, and secure, but it can really enhance the customers first touch point. This
could take the customer service to the next level and give an equal opportunity to smaller
businesses to play and win the tech savvy millennial.
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