1. 1 On Time, On Demand Delivery Chris Kantarjiev Time, Place & Space 20 September 2006

2. 2 At the tone, the time will be 1999 28.8kbps 28.8kbps 640x480 or 800x600? 640x480 or 800x600? What’s a cookie? What’s a cookie? 500MHz? Wow! 500MHz? Wow!

3. 3 “Manifesto”

4. 4 Dec 1996: ISR Oct 1997: Oasis Virtual Supercenter Feb 1998: VP Eng hired May 1998: ChrisK hired Dec 1998: Christmas at the DC May 1999: First delivery Jun 1999: Public launch Nov 1999: IPO Feb 2000: 3000 orders/day Mar 2000: 2.0 cloned to ATL Jun 2000: Buy HomeGrocer Aug 2000: 2.0 cloned to CHI Jul 2001: Close the doors

5. 5 Region overview 60 mile diameter 60 mile diameter DC is 330,000 sq ft, costs $30MM DC is 330,000 sq ft, costs $30MM 50K SKUs 50K SKUs 4.5 miles of conveyors 4.5 miles of conveyors Frozen ice cream, fresh turkeys Frozen ice cream, fresh turkeys 14 delivery zones, 4+ vans/zone 14 delivery zones, 4+ vans/zone Target 8000 orders/day, $100/order Target 8000 orders/day, $100/order

6. 6 Lessons, part 1 Customers don't know where they live Maps don't know where they live, either Couriers are not drivers and don't know area Letting the customer dictate your schedule is a bad idea Knowing what to measure is hard

7. 7 The big picture Front Office Front Office Webstore Customer Relationship Management Transportation Subsystem Order Management System Order Management System Order Fulfillment System Order Fulfillment System

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10. 10 The Promise Must consider five things: Must consider five things: 1.Inventory 2.Van driver time slot 3.Van capacity 4.Truck capacity 5.DC capacity

11. 11 Delivery flow 1.Define zones 2.Geocoding 3.Subzone assignment 4.Schedule delivery 5.Order confirmation 6.Cutoff 7.Fill to order 8.Pick 9.Stack 10.Truck load 11.Download routes 12.Van load 13.Delivery (unpack, returns, receipt) 14.Special situations

12. 12 Scheduling is much harder than routing FTO was very slow, couldn't be started early truck routes were 'fixed' but changed every week personnel scheduling was done by hand van resources were fairly fixed 7 days out interesting anomalies from van and truck size never got our heads around driver breaks

13. 13 Yield management Make the map smarter Make the map smarter Special events Construction Realistic speeds Variable pricing Variable pricing Short window but not wide choice Short window but not wide choice Remove FTO Remove FTO

14. 14 What went wrong? too much technology love too much technology love needed 5/hour needed 5/hour couldn't do 4/hour too customer centric too customer centric didn't charge enough for delivery didn't charge enough for delivery opened with a too-large service areas opened with a too-large service areas DC too rube goldberg... DC too rube goldberg... chill chain/FTO 3250/day max, based on 8000 seayco server that handled tote diverters would crash we started with 4000 orders/day, but we poisoned the well. we started with 4000 orders/day, but we poisoned the well. shifted from carriage trade to basic supplies, shifted from carriage trade to basic supplies, but never had same day delivery many SKUs does not match many stores hard to get customers to plan ahead hard to get customers to plan ahead hard to shift demand in time hard to shift demand in time

15. 15 Lessons, part 2 Don’t design for perfection Don’t design for perfection More vans not necessarily better More vans not necessarily better Open slowly, can’t go back Open slowly, can’t go back Think big in the right places Think big in the right places Optimize the entire chain, if you can Optimize the entire chain, if you can Bigger windows Bigger windows Too much technology Too much technology Density matters! Density matters!

16. 16 Make the map smarter Most traffic data companies focus on outliers (accidents, etc.) 80% of observations within dark blue band

17. 17 Traffic data sources Government sensors Government sensors Cell phones Cell phones Tracked vehicles Tracked vehicles

18. 18 Traffic data providers LandSonarINRIX Traffic Cast Traffic.comWestwoodOne State DOTs Flow Traffic Coverage (12/05) 100% freeways 100% arterial ~15% freeways ~0% arterial ~15% freeways 0% arterial ~15% freeways 0% arterial N/A ~15% freeways 0% arterial Historical GPS data source GPS data from nationwide AVL providers Taxis, others N/AN/AN/AN/A Customers NAVTEQ, @Road, GEOCOM, ESRI, others ClearChannel Yahoo!, Google TV & radio, NAVTEQ TV & radio, NAVTEQN/A DOT sensor data source  TrafficService Flow Flow Incidents Incidents Flow Flow Incidents Incidents Flow Flow Incidents Incidents Flow Flow Incidents Incidents Traffic products Predictive Predictive Real-time Real-time