ZedEx

Case Prompt

ZedEx has hired you and your team to investigate consistently rising costs across their last mile delivery courier service. For context, assume that ZedEx has a series of deliveries with various levels of priority.

Your team has been asked to identify the key drivers of cost creep and make strategic recommendations to the ZedEx as to how they might be able to save money. Specifically, ZedEx is evaluating a technology-based ride scheduling platform to help schedule and track deliveries, and would also like your opinion on whether or not investing in such a solution would be wise.

• Additional Information to provide the candidate (ALWAYS):
  • Assume that right now, there are a limited number of vendors (taxi companies, van companies, etc.) that ZedEx has contracts with, but this is very much something they would be open to expanding if they can force more companies to compete on price.
  • Trips are billed to the hospital using a rate card that each taxi/van company shares with the hospital. This is a blind bidding system whereby the taxi/van companies have no idea how their prices relate to the other bids submitted by competing companies.
• Transportation is coordinated by a central dispatching system at ZedEx hubs, and a scheduler calls taxi companies and van companies to schedule all patient rides at least 3 days in advance.
• Assume that trips which are coordinated on short notice are charged at a significant premium.
• If a candidate asks about trip duration/distance – assume that there is some variation, and this will be discussed later on in the case.
  

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General response summary

• A well-designed framework would focus on cost drivers – chiefly, number of items needed to be transported, total distance traveled, how many drivers are available to transport these items.
• A strong candidate will also realize that segmenting utilizers of this benefit will be vital to understanding the highest-cost populations.