Recommending a Courier Switch with Incomplete Data
You manage dispatch for an online garden-supply retailer. Your current courier delivers 94% on time at £4.10 per parcel, with a 1.8% damage rate and an average delivery time of 2.9 days. An alternative courier offers 97% on-time delivery at £4.85 per parcel, a 0.9% damage rate, and 2.1 days average, but it covers only 80% of your postcodes and collects three days a week. Peak season starts in six weeks. Last peak, late deliveries generated 38% of customer-service tickets and £6,200 in refunds. You currently send 1,200 parcels a week and expect 2,000 a week in peak. Finance wants a one-page recommendation. You have no data on the alternative's peak capacity, and your operations director is risk-averse after last year's peak.
1. What recommendation do you make, and how do you handle the missing peak-capacity data?
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Recommend a time-limited split trial, not a full switch. Reasoning: the alternative wins on on-time (97% vs 94%), damage (0.9% vs 1.8%), and speed (2.1 vs 2.9 days), but it covers only 80% of postcodes and collects three days a week. A full switch would leave 20% of orders without a carrier and create a two-day dispatch gap in peak. Recommend routing the 80% covered postcodes to the alternative for a six-week trial starting four weeks before peak, keeping the current courier for the remaining 20% and as fallback. Set exit criteria: if the alternative misses 95% on-time for two consecutive weeks, or if peak capacity is not confirmed in writing by a named date, revert. The missing peak-capacity data is the decisive risk, so make confirmation a condition of scale-up, not a detail to resolve later.
2. Draft the 'Risks and mitigations' section in four bullet points.
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Risks and mitigations
- Coverage gap (20% of postcodes): keep the current courier for those routes; do not promise next-day service you cannot fulfil.
- Unknown peak capacity: require written volume confirmation (2,000/week) before the trial scales; cap trial at 60% of volume until confirmed.
- Three-day collection: schedule peak dispatch around collection days; hold a courier collection on the two non-collection days for high-value orders.
- Higher unit cost (£4.85 vs £4.10): track cost per successful delivery, not per parcel; review after six weeks against damage and ticket data. Reasoning: each risk maps to a decision in the recommendation; the mitigations are operational, not vague.
3. How do you justify the higher per-parcel cost to Finance?
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Use total cost, not headline parcel price. Reasoning: at 1,200 parcels a week, the £0.75 difference costs £900 a week, or about £5,400 over six weeks. Last peak, late deliveries drove 38% of tickets and £6,200 in refunds; a 3-percentage-point improvement in on-time and a 0.9-point improvement in damage should reduce both. If the alternative prevents even half of last peak's refunds (£3,100) and a third of the ticket load, the premium is largely offset. Do not claim exact savings you cannot evidence; present a break-even: 'We need to avoid £900 a week in refunds and service cost to justify the premium.' Propose a six-week review with actual ticket and refund data, and state that the trial is capped at 80% of volume, so the maximum premium exposure is £720 a week.