Improving delivery system of tea outlets w.r.t Chaipoint

Abstract

Chai Point has delivery system in place to serve industrial customers. They receive fixed orders and some ad hoc orders daily. Currently they use auto rickshaw and a person to carry container. But this delivery system is not responsive and cost efficient. Also it restricts the company to only large orders of 15 litres or above. As the business grows, this system may not be sustainable. So we decided to study the existing system and requirements of the company to come up with a solution. We studied existing supply and storage system. Chai Point follows weekly supply practise to all its stores. Supply quantity is based on sum of fixed institutional orders to be catered every week and retail sales of previous week. As per previous week’s average daily sales pattern, 2 days of inventory is maintained in stores. In current scenario, Chai Point delivers tea to institutional clients. The minimum order quantity of 15 litres per day is required from clients in order to deliver tea. Chai Point has ISB (Institutional Sales Business) department which deals with prospective clients and gets fixed daily orders through short or long term contracts. Delivery is made in 5 litres or 10 litres dispensers which are covered with insulating jackets. Time of delivery is fixed. Delivery is done through rickshaw which charges Rs 100 per trip. Moreover 1 store employee also goes for delivery. We studied traditional tea stalls to see how efficiently the deliver and to take insights to improve delivery system of Chai Point. We found that they only serve customers in the vicinity and their model cannot fit to the Chai Point. We studied profitability of Chai Point business model and current delivery system. We found out that profitability has kept Chaipoint running in tea business, but ways to increase efficiency and thus profitability are primarily required. We devised alternative delivery system using motorcycle customized to Chai point requirements. The cost analysis gave us tremendous cost saving and the system was found right in feasibility analysis. The delivery system using own motorcycle is better in terms of response and cost efficiency and can add value to the business. The motorcycle delivery system customized to Chai point can act as promotional medium as well. With this delivery system, Chai point can serve small orders like 5 litres and increase customer base for delivery business.