Harvard Case - GrowSari (A): Design for the Last Mile Customer
"GrowSari (A): Design for the Last Mile Customer" Harvard business case study is written by Brian Trelstad, Cam Carag, Michi Ferreol. It deals with the challenges in the field of General Management. The case study is 13 page(s) long and it was first published on : Mar 22, 2022
At Fern Fort University, we recommend GrowSari adopt a multi-pronged approach to optimize its last-mile delivery strategy, focusing on technology integration, operational efficiency, and customer-centricity. This strategy will involve leveraging technology for route optimization, implementing a hybrid delivery model, and fostering a strong customer relationship through personalized services and loyalty programs.
2. Background
GrowSari is a Filipino startup operating in the B2B grocery delivery space, serving sari-sari stores (small neighborhood shops) across the Philippines. The company faces challenges in managing last-mile delivery, including high transportation costs, traffic congestion, and inconsistent delivery times. This case study focuses on GrowSari's need to develop a sustainable and efficient last-mile delivery strategy to meet the demands of its expanding customer base.
The main protagonists in this case are:
- Rey A. Abaya: Co-founder and CEO of GrowSari, responsible for the company's overall strategy and vision.
- Patrick C. Santos: Co-founder and COO of GrowSari, responsible for operations and logistics.
- GrowSari's Sari-Sari Store Customers: The core customer base of GrowSari, relying on efficient and reliable delivery for their business operations.
3. Analysis of the Case Study
To analyze GrowSari's situation, we can utilize the following frameworks:
a) Porter's Five Forces:
- Threat of New Entrants: High - The B2B grocery delivery market in the Philippines is attractive, with potential for new players.
- Bargaining Power of Buyers: Moderate - Sari-sari stores have limited bargaining power due to their small size, but they can choose between GrowSari and competitors.
- Bargaining Power of Suppliers: Low - GrowSari has a large network of suppliers, limiting their bargaining power.
- Threat of Substitutes: Moderate - Traditional wholesale markets and other delivery services offer potential substitutes.
- Competitive Rivalry: High - The B2B grocery delivery market is competitive, with several players vying for market share.
b) SWOT Analysis:
Strengths:
- Strong brand recognition and trust among sari-sari stores.
- Extensive network of suppliers and delivery partners.
- Focus on providing value-added services like credit facilities.
- Experienced management team with a deep understanding of the Filipino market.
Weaknesses:
- High transportation costs and operational inefficiencies in last-mile delivery.
- Limited use of technology for route optimization and delivery tracking.
- Lack of a robust customer relationship management system.
Opportunities:
- Growing demand for B2B grocery delivery services in the Philippines.
- Potential for technology adoption to improve efficiency and customer experience.
- Expansion into new geographic markets and product categories.
Threats:
- Increasing competition from established players and new entrants.
- Economic fluctuations and potential supply chain disruptions.
- Regulatory changes impacting the B2B delivery sector.
c) Value Chain Analysis:
GrowSari's value chain can be broken down into the following key activities:
- Inbound Logistics: Sourcing and procurement of goods from suppliers.
- Operations: Warehousing, inventory management, and order fulfillment.
- Outbound Logistics: Last-mile delivery to sari-sari stores.
- Marketing & Sales: Customer acquisition, relationship management, and promotional activities.
- Customer Service: Addressing customer queries and resolving issues.
The case highlights the need for improvement in the Outbound Logistics stage, specifically focusing on last-mile delivery efficiency.
4. Recommendations
To address GrowSari's challenges, we recommend the following:
a) Technology Integration:
- Route Optimization Software: Implement a route optimization software to minimize delivery distances, reduce fuel consumption, and optimize delivery times.
- GPS Tracking & Real-time Monitoring: Equip delivery vehicles with GPS tracking devices to monitor their location and progress in real-time, allowing for better route planning and efficient dispatching.
- Mobile App for Customers: Develop a mobile app for sari-sari store owners to place orders, track deliveries, and manage their accounts.
b) Hybrid Delivery Model:
- Own Fleet: GrowSari should maintain a core fleet of delivery vehicles for key routes and high-demand areas.
- Third-Party Logistics (3PL) Partners: Partner with established 3PL providers for specific routes and locations, leveraging their expertise and existing infrastructure.
- Crowdsourcing: Explore the use of crowdsourcing for deliveries in specific areas, utilizing individuals with personal vehicles to serve as delivery agents.
c) Customer-Centric Approach:
- Personalized Services: Offer personalized services based on customer preferences and order history, such as customized product recommendations and delivery schedules.
- Loyalty Programs: Implement a loyalty program with rewards and incentives for repeat customers, encouraging customer retention and brand loyalty.
- Customer Feedback Mechanisms: Establish feedback channels to gather customer insights and address their concerns, fostering a culture of continuous improvement.
5. Basis of Recommendations
These recommendations are based on the following considerations:
- Core Competencies & Consistency with Mission: The recommendations align with GrowSari's mission of providing affordable and reliable grocery delivery services to sari-sari stores.
- External Customers & Internal Clients: The recommendations prioritize customer satisfaction by improving delivery efficiency and providing personalized services. They also aim to streamline operations for internal teams, reducing workload and improving efficiency.
- Competitors: The recommendations focus on leveraging technology and optimizing operations, enabling GrowSari to compete effectively with other players in the B2B grocery delivery market.
- Attractiveness: The recommendations are expected to increase efficiency, reduce costs, and improve customer satisfaction, leading to increased market share and profitability.
6. Conclusion
By adopting a multi-pronged approach that combines technology integration, operational efficiency, and customer-centricity, GrowSari can address its last-mile delivery challenges and achieve sustainable growth. This strategy will enable the company to maintain its competitive edge in the B2B grocery delivery market, while also fostering strong relationships with its valuable sari-sari store customers.
7. Discussion
Alternative approaches to last-mile delivery include:
- Fully outsourcing deliveries to 3PL providers: This could be cost-effective but may lead to less control over delivery quality and customer experience.
- Investing in a large fleet of owned vehicles: This could provide greater control but may be capital-intensive and require significant operational expertise.
Key assumptions underlying these recommendations include:
- The availability of reliable technology solutions for route optimization and delivery tracking.
- The willingness of sari-sari store owners to adopt mobile apps for ordering and tracking.
- The ability to find and manage a network of reliable 3PL partners and crowdsourced delivery agents.
8. Next Steps
To implement these recommendations, GrowSari should:
- Phase 1 (Short-Term):
- Conduct a pilot program to test the effectiveness of route optimization software and GPS tracking.
- Develop a mobile app for customers and launch a beta version.
- Partner with a 3PL provider for specific routes.
- Phase 2 (Medium-Term):
- Expand the use of technology across the entire delivery network.
- Implement a loyalty program for sari-sari store customers.
- Develop a comprehensive customer relationship management system.
- Phase 3 (Long-Term):
- Explore opportunities for further technology adoption, such as AI-powered route optimization and automated delivery systems.
- Expand into new geographic markets and product categories.
By following these steps, GrowSari can transform its last-mile delivery operations and establish itself as a leading player in the B2B grocery delivery market in the Philippines.
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Case Description
Reymund (ER) Rollan and Shivapratim (Shiv) Choudhury, founders of the digital technology platform GrowSari, were at a crossroads. The feedback from their initial product roll-out were not what they had expected, and they needed to decide how to proceed. The pair, alongside co-founders Andrzej Ogonowski and Siddhartha Kongara, had started GrowSari after they had each spent significant time working at the intersection of technology and Fast-Moving Consumer Goods (FMCG). They were trying to bring data and technology to inform how multinational consumer goods companies sold their products through small, informal retailers known as "sari-sari" stores in the Philippines. These stores, whose name means "variety" or "everything" in Filipino, were a typical convenience store or bodega, selling consumer products from sachets of shampoo to cans of baked beans and potato chips and soda.
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