Integrating B2C Parcel Delivery with B2B

City Distribution

A design science approach

MSc Technology and Operations Management

University of Groningen, Faculty of Economics and Business

Arie Bijl

a.bijl.6@student.rug.nl

Student number: S2362724

Supervisor: Prof. dr. K.J. Roodbergen, University of Groningen

Second assessor: Dr. ir. S. Fazi, University of Groningen

January 29th, 2018

Acknowledgements:

This thesis is the final work of my MSc degree Technology and Operations Management at

the University of Groningen. Several people have played an important role in completing this

final project. First, I would like to thank Prof. dr. Kees Jan Roodbergen for his guidance,

expertise and all the knowledge he has provided me throughout this master thesis project and

also before the official start. Second, I owe a great deal of gratitude to Birgit Hendriks of

Binnenstadservice Nijmegen for her willingness to be involved, for all the valuable

discussions during this project and for providing help in finding the right participants.

Moreover, I want to thank dr. ir. Stefano Fazi for his useful comments on my research

proposal in an early phase of the project. Of course, I also owe gratitude to all the

interviewees for their time, effort and their enthusiasm for my research. On a final note, I

want to thank my family and in particular Emmelie for their mental support throughout both

of my master degrees, which has really helped me in achieving my goals.

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Abstract

The growth of e-commerce has led to an increasing number of deliveries to cities. Currently,

last-mile delivery is inefficient with a low drop density, which has negative environmental

and societal consequences for cities. This paper introduces Integrated City Distribution, an

innovative concept that integrates B2C parcel delivery with B2B city distribution in the same

delivery route from Urban Consolidation Centres, in order to attain a higher drop density.

Three existing parcel distribution concepts are designed within Integrated City Distribution

through a design-science approach and validated through interviews with stakeholders from

practice. The findings indicate that parcel lockers, pickup points and micro-hubs each have

distinctive strengths and weaknesses within Integrated City Distribution. A refined solution is

designed, involving an integration of parcel delivery and collection from micro-hubs.

Although Integrated City Distribution could increase the drop density, it may also lead to

higher costs, higher delivery lead times and conflicts with the current interests of key

stakeholders in last-mile distribution.

Keywords: Last-mile delivery, B2C parcel delivery, B2B city distribution, urban

consolidation centres, parcel lockers, pickup points, micro-hubs

Word count: 11.979 excl. references and appendices

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TABLE OF CONTENTS

1. INTRODUCTION ................................................................................................................. 5

2. BACKGROUND ................................................................................................................... 7

2.1 Last-mile distribution ........................................................................................................... 7

2.2 City Distribution .................................................................................................................. 8

2.3 Parcel delivery ..................................................................................................................... 8

2.4 A comparison of city distribution and parcel delivery ......................................................... 9

2.5 Urban parcel distribution concepts .................................................................................... 10

2.6 Overview of stakeholders .................................................................................................. 11

3. METHODOLOGY .............................................................................................................. 15

3.1 Choice for the Design Science method .............................................................................. 15

3.2 The Regulative Design Science Cycle ............................................................................... 15

Problem investigation ....................................................................................................... 15

Solution Design................................................................................................................. 16

Design Validation ............................................................................................................. 16

Design Refinement ............................................................................................................ 17

3.3 Data Collection .................................................................................................................. 17

3.4 Data Analysis ..................................................................................................................... 18

4. PROBLEM INVESTIGATION AND SOLUTION DESIGN ............................................ 19

4.1 Detailed problem investigation .......................................................................................... 19

4.2 Solution design................................................................................................................... 20

Solution Component 1: Parcel lockers ............................................................................. 20

Solution Component 2: Pickup points .............................................................................. 21

Solution Component 3: Micro-hubs ................................................................................. 22

5. DESIGN VALIDATION ..................................................................................................... 23

5.1 Findings regarding Integrated City Distribution ................................................................ 23

5.2 Findings regarding Parcel Lockers .................................................................................... 24

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5.3 Findings regarding Pickup Points ...................................................................................... 26

5.4 Findings regarding Micro-hubs.......................................................................................... 27

5.5 Overview of the findings ................................................................................................... 28

6. DISCUSSION ...................................................................................................................... 30

6.1 Integrated City Distribution ............................................................................................... 30

6.2 Solution components .......................................................................................................... 31

6.3 Design refinement .............................................................................................................. 32

7. CONCLUSION ................................................................................................................... 34

7.1 Limitations and future research ......................................................................................... 34

8. REFERENCES .................................................................................................................... 36

Appendix A: Interview Protocol .............................................................................................. 41

Appendix B: Coding tree ......................................................................................................... 43

Appendix C: Interview details ................................................................................................. 49

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1. INTRODUCTION

Today, the internet is commonly used as a means to purchase goods (Cherrett et al., 2017).

This trend is illustrated in the dramatic growth of global e-commerce sales, which is expected

to exceed $10 trillion worldwide by 2018, where business-to-consumers (B2C) sales

represent around $2.4 trillion (Weber, 2017; Ducret, 2014). Due to the rise in online

shopping, more and more vehicle trips are required to deliver goods to receivers in cities

(Allen et al., 2017). As a consequence, delivery vehicles may visit the same streets more than

three times per day (Financieel Dagblad, 2016). The final delivery phase, which is referred to

as the ‘last mile’, is a direct cause of traffic congestion, noise and pollution in cities

(Savelsbergh and Van Woensel, 2016). Currently, last-mile delivery to stores and consumers

in cities are carried out in separate delivery rounds from national, regional or local

distribution centres (Topsector Logistiek, 2017). This is done by multiple logistics service

providers with often only partially filled vehicles, resulting in a low drop density, which

refers to the number of deliveries per delivery round (Gevaers et al., 2011, p.11). An idea

from practice is to integrate last-mile delivery to stores and consumers, using hubs in urban

areas to consolidate deliveries to stores and deliveries to parcel distribution points in city

centres (Hendriks, 2017). Thereby, a higher drop density could be attained, which could

result in substantial savings in kilometres, emissions and costs (Quak, 2012).

In B2B distribution to stores in cities, a well-known initiative that increases the drop density

of last-mile delivery is the City Distribution concept (Allen et al., 2017). This refers to the

consolidation of B2B shipments from multiple freight carriers at Urban Consolidation

Centres (UCCs), which are hubs closely located to the city, from which the bundled final

delivery is made (Triantafyllou et al., 2014). This entails that shipments from multiple

carriers are delivered to stores in the city through the same last-mile delivery round. The city

distribution network mostly supplies to small retail stores, which are ordering more

frequently and in smaller volumes nowadays (Ducret, 2014). The main benefit of the city

distribution concept is that fewer vehicle trips are required for delivery to stores, which

reduces emissions and congestion in the city centre (Cherrett et al., 2017).

In contrast, in B2C distribution, carriers typically operate their delivery rounds from their

own distribution centres outside the city, without the consolidation of shipments from

multiple carriers in the last mile. This leads to considerable duplication of parcel delivery

rounds in cities (Allen et al, 2017). In this paper, parcel delivery refers to the delivery of

products sold by online stores to private consumers in cities (Allen et al., 2016). Due to this

duplication of effort, the aforementioned negative environmental and societal impacts on

cities are amplified. Besides, the final phase of parcel delivery is inefficient and expensive

(Gevaers et al., 2009). This is caused by, for example, the wide dispersion of recipients and

the possibility of a failed delivery if a consumer is not at home (Xiao et al., 2017). Local

authorities are well aware of the challenges associated with parcel delivery and are looking

for alternative ways to organize last-mile distribution (Navarro et al., 2016).

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In order to deliver parcels more sustainably and efficiently in cities, a solution suggested in

practice is to integrate parcel delivery with the city distribution network (Hendriks, 2017).

This idea implies that goods designated for stores and consumers are consolidated in UCCs

and delivered to the city using the same delivery rounds. In these delivery rounds, stores

would be supplied directly from the UCC, whereas parcels for consumers would be delivered

to parcel distribution points in the city centre. For example, parcels could be delivered to a

Micro-hub, which is a small distribution point set-up much closer to the city centre compared

to the UCC. From these Micro-hubs, the final delivery to consumers’ homes can be carried

out with a bicycle or handcart (Janjevic and Ndiaye, 2014). Other options to deliver parcels to

the city from the UCC include Parcel lockers, which are groups of box units located at public

places, where parcels can be collected by consumers at any time of the day (Iwan et al., 2016;

Morganti et al., 2014). Throughout this paper, the bundled last-mile delivery of B2B and B2C

shipments by the same vehicle, from UCCs to the city, is referred to as Integrated City

Distribution.

In this paper, we design a solution within the Integrated City Distribution concept in order to

increase the drop density of last-mile distribution. The designed solution consists of multiple

components, where each component represents a parcel distribution concept in the city that is

supplied from the Integrated City Distribution network. We focus explicitly on the last-mile

delivery from the UCC to the city. Thus, the delivery of parcels to UCCs and the return flows

of parcels from the city are left aside for our present purpose.

We do this through a design science study. As part of the design science approach, this paper

answers the following sub-questions:

Which urban parcel distribution concepts are available in literature?

Who are the main stakeholders involved in the solution design according to literature?

What are their goals?

Which requirements should the solution meet?

What is the validity of the designed solution according to stakeholders in practice?

The remainder of this paper is organized as follows. Chapter 2 provides the background of

the literature and an overview of the main stakeholders involved, as well as their goals. In

Chapter 3, the methodology of this study is explained. Chapter 4 presents the problem

investigation and the designed solution. Chapter 5 presents the design validation. In Chapter

6, the main findings are discussed and the refined solution is presented. Finally, Chapter 7

presents the main conclusions of this study.

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2. BACKGROUND

This chapter consists of a literature review of several important concepts related to last-mile

distribution. As discussed in Chapter 1, the central objective of this paper is developing a

solution that increases the drop density of last-mile distribution. Section 2.1 further addresses

the drop density measure, as well as the differences with other measures that can be used to

assess the efficiency within last-mile distribution. Section 2.2 provides a further explanation

of city distribution, since the designed solution considers the integration of parcel delivery

with city distribution. Since these flows would be integrated at UCCs, this concept is also

further explained here. Section 2.3 further elaborates on parcel delivery, whereas Section 2.4

provides a comparison of city distribution and parcel delivery in order to discuss the most

important differences between both types of delivery. Section 2.5 provides an overview of

existing parcel distribution concepts that are currently used to deliver parcels to cities. Since

these concepts could be components of the designed solution within Integrated City

Distribution, the most important differences and similarities between these alternatives are

discussed. Finally, Section 2.6 describes the stakeholders involved in the solution, as well as

their main goals.

2.1 Last-mile distribution This section distinguishes between the most important goals related to last-mile distribution.

As already addressed in Chapter 1, the growth of e-commerce has resulted in an increasing

number deliveries to cities (Savelsbergh and Van Woensel, 2016; Ducret, 2014). This

development has an impact on several performance measures in the last mile, such as the

mileage (i.e. distance travelled in miles or kilometres), load factors (i.e. the utilization of

vehicles), and drop densities (Edwards et al., 2010; Quak, 2012). Many initiatives that are

being implemented by carriers or shippers aim to increase the efficiency in the last mile by

reducing the mileage, by improving load factors or by increasing drop densities (Allen et al.,

2017). These initiatives often also reduce the pressure placed on the road network in cities

(Allen et al., 2017) and therefore, these measures do not only influence economical aspects,

but also environmental and societal aspects (Arviddson et al., 2013; Edwards et al., 2010).

According to Janjevic et al. (2013), last-mile distribution measures should contain a

consolidation aspect in order to decrease the number of required journeys to perform

deliveries. When considering the mileage per delivery, little information is given about the

number of vehicles that carry out delivery rounds (Janjevic et al., 2013). Since the central

concept of the present study involves consolidating goods into fewer vehicles at UCCs,

information regarding the vehicle utilization is needed. This is can be determined through

vehicle load factors, which is often used as a measure in urban distribution (Arviddson et al.,

2013). By attaining higher vehicle load factors, the number of required delivery rounds to

cities are often reduced (Janjevic et al., 2013). However, Edwards et al. (2010) argue that the

number of drops per round (i.e. the drop density) is more representative for vehicle utilization

than the load factor, as the latter is often measured with respect to weight rather than the

number of goods. That is, the weight of consignments as a percentage of maximum

permissible weight (Edwards et al., 2010, p.107). Furthermore, the load factor can vary

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significantly over the course of the last-mile delivery round (Arviddson et al, 2013), whereas

the drop density usually remains constant (Edwards et al., 2010). Therefore, our study

focuses on the drop density of last-mile distribution.

One way to increase the drop density is by consolidating goods from multiple carriers to a

given geographic area, such as a postal code, which can result in decreased costs and

emissions per drop (Savelsbergh and Van Woensel, 2016; Quak, 2012). This is essentially

what is done in a city distribution network, which is addressed in the next section.

2.2 City Distribution The city distribution concept has been highly popularized in literature due to its potential

environmental benefits (Allen et al., 2012). As already mentioned in Chapter 1, city

distribution entails the consolidation of B2B goods from multiple freight carriers at UCCs,

which are typically located in close proximity to the city centre (Triantafyllou et al., 2014).

Hence, UCCs are not dedicated to a specific carrier (Van Rooijen and Quak, 2010; Topsector

Logistiek, 2017). Currently, the city distribution network is mostly used to supply small retail

stores, restaurants and offices (Cherrett et al., 2017) and attains a higher drop density in the

last mile by consolidating high frequency, low volume deliveries (Van Rooijen and Quak,

2010). In contrast, large retail chains with stores in multiple cities are more commonly

supplied through full-truckload delivery from centrally located distribution centres

(Topsector Logistiek, 2017). This type of delivery is already highly efficient and therefore

not seen as suitable for urban consolidation initiatives (Van Rooijen and Quak, 2010).

One common objection to UCCs is the assertion that they lead to higher delivery costs as a

result of double handling (Allen et al., 2017). The extra handling of materials typically also

leads to longer delivery lead times, which refers to the time between consumers placing

orders and deliveries being made (Allen et al., 2017, p.1). On the other hand, the

consolidation of goods at UCCs could result in cost reductions in other aspects through, for

example, less time being spent on deliveries in congested areas and higher drop densities in

the last mile (Allen et al., 2012). However, the most important benefit from city distribution

is its positive effects on cities and their inhabitants (Van Rooijen and Quak, 2010). This is

due to the fact that fewer vehicles with higher drop densities are used for store deliveries,

which can reduce congestion and noise in cities (Cherrett et al., 2017). At the same time,

freight carriers can benefit from the initiative by having only one drop location instead of

many deliveries across city centres (Triantafyllou et al., 2014).

2.3 Parcel delivery Similar to city distribution, parcel carriers are also aiming to increase their drop density in the

last mile, which is considered as a key efficiency measure by parcel carriers (Edwards et al.,

2010). However, in parcel delivery, the last-mile distribution networks of carriers are often

unaligned. This means that last-mile delivery rounds are carried out separately from hubs

outside the city that are operated by specific carriers (Clausen et al., 2016). Moreover, as

consumers are demanding ever-faster delivery services, retailers and carriers have introduced

new services in order to gain customer share, such as same-day delivery of parcels (Allen et

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al., 2017; Cherrett et al., 2017). Thereby, the unaligned delivery rounds are carried out more

frequently, further decreasing the drop density (Allen et al., 2017).

In a recent study by Cherrett et al. (2017), the effects of consolidating parcels from multiple

carriers in a UCC is considered based on a delivery audit and an online shopping survey.

Although not actually implemented in practice, their findings suggest that consolidated parcel

delivery to 14 student halls of residence across Southampton could lead to a decrease from

13.000 courier trips to less than 300 consolidated trips annually. This suggests that

consolidation of parcels from multiple carriers in UCCs could significantly increase the drop

density. However, Cherrett et al. (2017) do not consider the integration with store deliveries.

Since our study does consider this integration, Section 2.4 discusses the most important

differences between city distribution and parcel delivery.

2.4 A comparison of city distribution and parcel delivery Literature suggests that there are key differences between last-mile distribution to stores and

consumers. In general, parcel delivery is considered as much more complex and inefficient

than city distribution (Allen et al., 2012; Bask et al., 2012). In this section, we make a

comparison between both types of delivery to cities.

A first main difference between city distribution and parcel delivery, is that the latter is

typically focused around areas with relatively high inter-drop distances (i.e. distances

between delivery locations), whereas the city distribution network mostly supplies to stores in

city centres with low inter-drop distances (Bask et al., 2012). Second, the possibility of a

failed delivery is much larger in parcel delivery (Gevaers et al., 2009) A failed delivery

occurs if the consumer is not at home when the final delivery is made, which is undesirable

for consumers, but also leads to inefficient operations for parcel carriers. This happens much

more often is parcel delivery, since consumers are oftentimes away from home during

delivery hours, whereas store opening hours are known in advance by the carrier (Gevaers et

al., 2009; Song et al., 2009). According to Morganti et al. (2014), another key difference is

that delivery to businesses often involves larger delivery volumes to one location, whereas

delivery to consumers is much more fragmented, where the delivery often entails a single

parcel. A final main difference relates to the very narrow delivery windows of parcel delivery

to homes. Since many time slots may be used, the number of parcel delivery rounds to cities

increase, decreasing the drop density (Agatz et al., 2008). According to Gevaers et al. (2011),

the time sensitivity of parcel delivery leaves less scope for the consolidation of goods, like in

city distribution.

However, Ducret (2014) argues that the differences between consumer and business

distribution are decreasing, as both recipients have become equally demanding regarding

delivery speed, service and convenience. Besides, stores are also increasingly ordering small

volumes nowadays (Ducret, 2014). As motivated in Chapter 1, our study considers an

integration of parcel delivery with city distribution, which we refer to as Integrated City

Distribution. In order to be able to carry out both types of delivery from the same last-mile

delivery route, existing urban parcel distribution concepts within parcel delivery are

considered, which are discussed in the next section.

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2.5 Urban parcel distribution concepts

In literature, many alternative parcel distribution concepts have been proposed in order to

overcome problems associated with parcel delivery to cities, such as failed deliveries and

high inter-drop distances (Morganti et al., 2014; Allen et al., 2017; Iwan et al., 2016). These

distribution concepts aim to increase the delivery efficiency in the last mile. This is often

achieved by increasing the number of successful first-time deliveries, by reducing the

distances between deliveries across cities or by consolidating goods closer to the reception

point (Morganti et al., 2014; Ducret, 2014; Janjevic and Ndiaye, 2014). In this section, a

distinction is made between attended and unattended parcel distribution concepts.

Attended Collection Points

Pickup points

Pickup points in cities have been introduced as a solution for home-delivery failures

(Weltevreden, 2008). In this delivery method, parcels are delivered to designated pickup

points (e.g. local shops, convenience stores) by parcel carriers. Consumers are informed

through a message when a parcel is ready for collection (Morganti et al., 2014). Hence, the

consumer is required to make the final leg of the journey. Besides reducing delivery failures,

pickup points also result in improved drop densities by increasing the number of deliveries

made per drop (Iwan et al., 2016). This alternative is most suitable for high density city

centres or residential areas which are easily accessible (Visser et al., 2014).

Click & Collect services

Large online retailers that also have a physical store in cities have started using click &

collect services (Allen et al., 2017). In this concept, ordered items of online retailers are

delivered to the physical store in cities and collected by consumers (Visser et al., 2014).

Similar to pickup points, this concept also reduces delivery failures and allows larger

volumes of parcels to be delivered to one location, improving the drop density (Allen et al.,

2017). However, click & collect services can provide better service to consumers, as the point

of collection is the store itself. Also, it can increase the cost-efficiency due to larger number

of shipments to one location (Visser et al., 2014).

Unattended Collection Points

Parcel lockers

Parcel lockers are groups of box units which are typically located in public places, such as

railway stations, work places or shopping centres (Iwan et al., 2016). Consumers are notified

when their parcels have been delivered to a locker, and receive a PIN code to collect the

parcel themselves (Weltevreden, 2008). Although this concept was also introduced as a

solution to home-delivery failures, a key difference with the aforementioned concepts is that

parcel lockers are unattended collection points. Therefore, parcel lockers also offer the

advantage of highly flexible collection times that are not based on store opening hours (Iwan

et al., 2016). On the other hand, it is more complex to use lockers for deliveries requiring a

signature and not all parcel types are compatible with parcel locker sizes (Weltevreden,

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2008). Besides, this concept is also perceived as less personal by consumers (Morganti et al.,

2014).

Shared reception boxes

Shared reception boxes are in many ways similar to parcel lockers. The main difference is

that shared reception boxes are typically sited in high density residential areas around blocks

of apartments or flats (Wang et al., 2014). In contrast to parcel lockers, shared reception

boxes are only accessible to a specific group of people that live in the remote area (Moroz

and Polkowski, 2016). For consumers, shared reception boxes are, compared to the previous

alternatives, most convenient in terms of the travel time and flexibility to collect parcels, as

they are located close to the consumer’s home. From the carrier’s perspective, investment

costs in shared reception boxes may be high, but studies suggest that they can reduce overall

delivery costs by more than 50% (Punakivi and Tanskanen, 2002).

Micro-hubs Up till now, the distribution concepts that have been discussed entail the final delivery point

of parcels, where consumers have to travel a certain distance for collection. In contrast,

micro-hubs have been introduced to consolidate goods closer to the final delivery point in

cities, from where delivery rounds with shorter inter-drop distances are carried out (Janjevic

and Ndiaye, 2014). A micro-hub facility can take many forms, such as a container, an empty

store premise or a mobile form, such as a trailer or truck (Ducret, 2014). In these facilities,

deliveries can be transferred from a truck to flexible and non-polluting vehicles, such as

bicycles, which are used for the delivery to the final consumer addresses (Janjevic and

Ndiaye, 2014). Micro-hubs offer the advantage of green and efficient distribution in the city

centre through delivery by bicycles and by downscaling the consolidation effort (Janjevic et

al., 2013). However, due to the extra consolidation, handling and costs of the facility, this

concept can only endure in the long-term if the costs and benefits are shared among

participating parties through a sound business model (Allen et al., 2017)

2.6 Overview of stakeholders The challenge for last-mile distribution is not solely in designing and implementing

innovative solutions that increase the efficiency, but also in making the solution fair and

acceptable for all stakeholders involved (Harrington et al., 2016). Each involved stakeholder

has different goals which need to be taken into account (Ballantyne et al., 2013). In this

section, the stakeholders involved in the Integrated City Distribution solution are described, it

is motivated why they are involved as stakeholders and finally, their main goals are provided

in Table 2.1. The main stakeholders are: UCCs, receivers, parcel carriers, shippers and the

local government.

Urban Consolidation Centres (UCCs)

UCCs are a main stakeholder in the design of a solution, since UCCs are the facilities where

goods from multiple freight carriers are consolidated within the city distribution concept.

Thus, UCCs would also be the facilities where parcels from multiple parcel carriers are

consolidated with deliveries to stores within the Integrated City Distribution concept. The

current role of UCCs has already been discussed in Section 2.2.

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Receivers

This stakeholder group refers to end consumers and businesses. Consumer receivers refer to

private individuals in or close to the city, whereas business receivers are (retail) stores that

receive goods through the City Distribution network. As consumers are demanding ever

faster, reliable and convenient delivery services, they are a key stakeholder to consider (Allen

et al., 2017).

Parcel carriers

Parcel carriers are companies that deliver light-weight parcels (31.5kg at most), within

specific timeframes, to consumers (Ducret, 2014). Currently, they are responsible for last-

mile deliveries from their own regional or local distribution centres. In the Netherlands, the

number of active B2C parcel carriers is relatively limited. The market is dominated by a few

large players, which are: PostNL, DHL, GLS, DPD and UPS (Topsector Logistiek, 2017).

Shippers

This category encompasses the actors who send their parcels and arrange distribution

(Ballantyne et al., 2013). Shippers are an important stakeholder to consider, since they are

clients of parcel carriers that carry out the delivery of parcels. Since our research is in the

context of e-commerce, this stakeholder category only encompasses retailers selling their

goods via the internet.

Local government

This category encompasses the local authorities that set regulations on the local road network

and the accessibility of the city centre. Local authorities create both opportunities and barriers

for last-mile distribution (Ballantyne et al., 2013). They do so in order to maintain an

attractive urban area. Local authorities may also have a role in facilitating for available space

and subsidies for UCCs (Allen et al., 2012). This stakeholder group also includes the

residents in cities.

Stakeholder goals

Figure 2.1 provides an overview of stakeholder goals which were found in literature. These

goals fit into larger dimensions representing the interests of stakeholders, which are:

Environment/society, efficiency, flexibility and service level. These dimensions are based on

Harrington et al. (2016), who identified key constructs to capture the interests of stakeholder

groups for last-mile solutions. They distinguish between consumer, industrial and

institutional stakeholder goals/perspectives, which relate to service, efficiency and socio-

environmental considerations respectively. Flexibility is added to this list, since it is an

important sub-category within the goals of consumers and industrial stakeholders (Harrington

et al., 2016). The dimensions are also in line with Gevaers et al. (2009), who discuss the most

important characteristics of last-mile solutions. These include environmental, service-related

and flexibility characteristics, whereas efficiency is seen as the overall goal.

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Figure 2.1 – An overview of stakeholder goals related to last-mile distribution

3. METHODOLOGY

In this section, it is described how this research is conducted. Section 3.1 motivates the

choice for the design science methodology. Section 3.2 explains and motivates the steps of

the regulative design science cycle that are executed in this study. In Section 3.3, the process

of data collection through interviews is described, including the aim of the interviews and the

details of the participants. Finally, Section 3.4 discusses how the data is analysed.

3.1 Choice for the Design Science method The methodology of this research is design science, since the aim of this research is primarily

related to problem solving, rather than the accumulation of theoretical knowledge

(Holmström et al., 2009). Two important components of design science research are the focus

on a practical problem that is experienced by stakeholders, and the focus on an intervention

or solution (Van Aken, 2007). Unlike other methods that are used in Operations management

research, the ultimate goal of design science is to change the current state of the world by

solving this practical problem (Holmström et al., 2009). In order to reach this goal, first a

deep understanding of the problem situation and its context should be developed. Afterwards,

a solution to this problem is designed (Van Aken et al., 2016). Both of these design science

components are in line with the goal of this research. In this research, first an understanding

of the problems related to last-mile distribution is developed. Next, the goal is to design a

solution for this problem by inventing something new, by integrating existing theories or by

adapting existing solutions of other contexts to the context of Integrated City Distribution

(Holmström et al., 2009). In this study, we adapt an existing solution in the B2B context,

since Integrated City Distribution involves the integration of parcel delivery with city

distribution. In addition, existing urban parcel distribution concepts are considered within this

new context.

3.2 The Regulative Design Science Cycle This design science research is executed by following the regulative design science cycle,

since this is a suitable approach to solve practical problems (Wieringa, 2009). This section

explains how the steps of the regulative design science cycle are executed in this study.

Problem investigation

The first step of this cycle is to do a problem investigation. In order to perform the problem

investigation, Section 2.6 identified the main stakeholders and their goals from literature.

Hence, in Chapter 2, the following sub-question is answered:

Who are the main stakeholders involved in the solution design according to literature?

What are their goals?

After these were identified, an interview with an expert of city distribution from practice was

carried out at an early stage in order to examine this list and to determine whether any

important information was missing. In the actual problem investigation phase in Chapter 4,

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Integrated City Distribution is further explained, the design inputs are determined and the

requirements of the solution are derived from this list of stakeholder goals (Wieringa, 2009).

Thereby, the following sub-question is answered:

Which requirements should the solution meet?

Solution Design

In the solution design phase of the regulative design cycle, a solution is developed to solve a

practical problem (Wieringa, 2009). In our study, the input for the solution design was

obtained through face-to-face conversations with an expert of city distribution from practice

and through literature. In this step of the regulative design science cycle, urban parcel

distribution concepts are designed within the scope of Integrated City Distribution, in order to

be able to deliver parcels to cities through this network. Therefore, existing parcel

distribution concepts are identified from literature in Section 2.5, which answers the

following sub-question:

Which urban parcel distribution concepts are available in literature?

Since several urban parcel distribution concepts are designed within Integrated City

Distribution, the separate designs are referred to as solution components. These are

introduced in Chapter 4.

Design Validation

In the design validation phase, the designed solution is evaluated. There are many evaluation

methods that can be used in design science (Hevner et al., 2004). In choosing an appropriate

method for evaluation, Venable et al. (2012) distinguish between ex ante and ex post

evaluation, as well as artificial (in an unreal setting) and naturalistic evaluation (in a real

setting). In our study, the design is developed prior to the evaluation and therefore involves

an ex post evaluation. Furthermore, a naturalistic evaluation method is more suitable than

artificial evaluation (Venable et al., 2012). This is because the designed solution has to please

heterogeneous groups of stakeholders and the effectiveness of the solution should be

evaluated in a real-world context. For such an evaluation, case studies are viewed as an

appropriate method (Hevner et al., 2004; Venable et al., 2012), since a case study allows for

the evaluation of a design within a real-world context (Costa et al., 2016). Within this

approach, interviews can be used for the ex post validation of a design (Costa et al., 2016). In

this study, this is executed by interviewing multiple stakeholders from practice about the

effects and the feasibility of the design, which is further addressed in Section 3.3.

In the evaluation, the internal validity of the design is considered, which assesses whether the

solution could bring stakeholders closer to attaining their goals. Although it is often not

possible to satisfy all stakeholder goals, the better a solution satisfies the solution’s

requirements derived from stakeholder goals, the more useful the solution is (Wieringa,

2009). Since the design consists of multiple components, a trade-off between the alternative

17

solution components is made in order to analyze how each solution component satisfies

solution requirements (Wieringa, 2009).

The external validity of the design is not explicitly tested in this research. Thus, we cannot

state with certainty that the design would have the same effects if implemented in a slightly

different context (Wieringa, 2009). However, we hypothesize that the design can be used for

multiple types of goods, within different cities and by various companies, since different and

geographically dispersed company participants are included within most stakeholder groups.

The design validation relates to the following sub-question:

What is the validity of the designed solution according to stakeholders in practice?

Design Refinement

The last step of the regulative design cycle, which is the implementation of the solution, is

not executed in this study due to time constraints. Instead, in line with the iterative and

cyclical aspect of design science (Van Aken et al., 2016; Wieringa, 2009), the design is

refined based on the design validation phase. This is because the evaluation of a design can

result in the identification of weaknesses and areas for improvement (Hevner et al., 2004).

This refined design is not validated in our research due to time constraints.

3.3 Data Collection The company involved in this study is Binnenstadservice, which is a Dutch company that

operates the city distribution network and UCCs in multiple cities in the Netherlands. Before

the solution design, an interview with the company representative of Binnenstadservice was

conducted to examine the list of stakeholder goals. After the solution design, 18 stakeholders

from practice have been interviewed for the design validation. From each stakeholder group

(UCCs, carriers, shippers, local government and receivers), multiple participants are

interviewed. Almost all interviews were conducted in the Netherlands. Besides, an interview

via Skype was conducted with the manager of Stadsleveransen, which operates a UCC in

Gothenburg.

Most participants within the stakeholder groups are determined in collaboration with the

company representative of Binnenstadservice. Certain selection criteria for these stakeholders

have been taken into account. For consumers, it was crucial that the participant is familiar

with purchasing products online. For shippers, participants are included that could offer

delivery to consumers through the designed solution. For carriers, it was important to include

both a parcel carrier and a bicycle courier. A parcel carrier is included by reason of their high

involvement in last-mile distribution and because of the expectation that the solution requires

changes in the role of this stakeholder. A bicycle courier is also included, since one solution

component includes the delivery of parcels by bicycle. For local government stakeholders,

important selection criteria were their active involvement in setting regulations and

implementing policies for last-mile distribution. Besides, it was important for them to be

familiar with city distribution.

18

The data collection process is structured by the design of an interview protocol ahead of the

interviews (Voss et al., 2002), which is displayed in Appendix A. This protocol includes a

clear explanation of Integrated City Distribution and the separate solution components, along

with a list of open and semi-structured questions. During the interviews, the funnel model

was applied (Voss et al., 2002). This means that broad and open-ended questions were posed

first, and as the interview progressed, more specific questions were asked regarding the

solution components, as these involve urban parcel distribution concepts that were already

familiar to most participants. The details regarding the interviews are shown in Appendix C.

3.4 Data Analysis The first step of the data analysis was to transcribe the interview recordings verbatim,

resulting in raw data (Dresch et al., 2015). In total, the interview transcripts consist of 220

pages with a total of 112,322 words. Next, the coding process was executed. Therefore, the

database of interview transcripts was imported in Atlas.ti (version 7), which facilitates

qualitative data analysis.

The coding process was carried out through a three step coding procedure, which is in line

with the approach suggested by Miles et al. (1994). First, relevant quotes and sentences were

given a first-order code. These codes were grouped into second-order themes, which were

based on existing literature. First-order codes that did not fit into these deductive themes were

temporarily grouped into a different category. For highly relevant and frequently occurring

information, new categories were formed inductively. This was done through a cyclical

process, going back and forth between the different coding levels (Saldaña, 2015). Towards

the end of this procedure, all second-order categories were aggregated into third-order codes,

which represent the dimensions of stakeholder interests on a more abstract level. Altogether,

the coding process narrowed down a list of 261 first-order codes to 25 second-order codes

and 7 aggregate dimensions. The end-result is the coding tree, of which an excerpt is

displayed in Appendix B. This coding tree provides an overview of relevant data obtained

through the interviews, which relate to the views of stakeholders regarding the designed

solution components.

Throughout this study, multiple things have been done in order to improve the reliability.

First, a well-structured interview protocol served to ensure that all relevant topics were

covered in the interviews and that interview questions were clear to the participants (Voss et

al., 2002; Runeson and Höst, 2009). Secondly, multiple researchers were present at the

interviews, which can enhance the reliability of the collected data (McCutcheon and

Meredith, 1993). Finally, as elaborated previously, a structured approach to data analysis was

followed in order to improve this study’s reliability (Runeson and Höst, 2009). On the other

hand, no triangulation of data sources or methods is ensured, since the solution validation is

solely based on qualitative data through interviews. This poses a threat to the reliability of our

findings (Voss et al., 2002).

19

4. PROBLEM INVESTIGATION AND SOLUTION DESIGN

In Chapter 1 and 2, it is explained that the overall goal of this study is to improve the drop

density in last-mile distribution. Based on a suggestion from practice (Hendriks, 2017),

Chapter 1 introduced the Integrated City Distribution concept as a possible way to attain a

higher drop density in cities. Section 4.1 further elaborates on this new concept. Also, since

the integration of delivery to stores and delivery to widely dispersed consumer addresses

would not be feasible within the same delivery round, we consider the use of parcel

distribution concepts to realize Integrated City Distribution. Therefore, this section also

motivates which existing parcel distribution concepts, identified from literature in Section

2.5, are designed within Integrated City Distribution. In Section 4.2, the designed solution is

presented.

4.1 Detailed problem investigation Integrated City Distribution implies that, for parcel carriers, the final destination of parcels

becomes the UCC, rather than final delivery locations in cities. Since UCCs only facilitate

short-term storage of goods, the arriving parcels are consolidated as soon as possible with

B2B shipments and transferred to the vehicle used for final delivery to the city. Thus, the

delivery route to the city consists of groups of parcels (B2C) and shipments to stores (B2B).

Based on the size of the city, this could either be delivered in one route, or divided over

separate routes per geographical area. In this route, businesses receive large palletized

shipments directly at their stores, whereas parcels for consumers are delivered to urban parcel

distribution points. Here, we consider the existing alternatives introduced in Section 2.5:

pickup points, click & collect services, parcel lockers, shared reception boxes and micro-

hubs. Below, we motivate that not all of these concepts are included in the solution.

First, click & collect services are not further considered in the solution design, since this

alternative can typically only be used by online retailers that have a physical store location in

the cities (i.e. multi-channel retailers) (Allen et al., 2017). Since the majority of online

retailers nowadays do not operate from a physical store (Cherrett et al., 2017), only a very

small fraction of parcels delivered through Integrated City Distribution could be delivered to

these stores. Furthermore, click & collect services are very similar to pickup points (Visser et

al., 2014), and therefore it is chosen to only include pickup points in the solution.

Second, shared reception boxes are also not further considered in the solution design, since

these are only accessible for residents of a specific area (Moroz and Polkowski, 2016). These

residential areas are mostly located outside the city centre (Wang et al., 2014), and therefore

they are less suitable to be integrated with delivery to stores. In contrast, parcel lockers can be

located anywhere in the urban area (Iwan et al., 2016) and are therefore expected to be more

feasible within Integrated City Distribution. Another reason for excluding shared reception

boxes is the fact that their utilization is typically lower than parcel lockers, as they are only

accessible for residents of specific areas (Wang et al., 2014).

20

The remaining three urban concepts, i.e. parcel lockers, pickup points and micro-hubs, are all

designed within Integrated City Distribution, and will therefore be referred to as solution

components. As already explained in Section 2.2, UCCs bundle shipments for multiple

carriers and are therefore not dedicated to a specific carrier. Hence, the designed parcel

distribution concepts are also considered to be accessible for all parcel deliveries made from

the UCC. Although these solution components could be used in concurrence and are not

mutually exclusive, the aim is to evaluate the effects of the separate concepts within

Integrated City Distribution.

Based on the list of stakeholder goals from Section 2.6, several requirements for the solution

are derived, which are shown in Table 4.1. Only the goals that fit within our scope have been

translated into solution requirements, which represents the last-mile delivery flow only.

Therefore, not all stakeholder goals identified in Section 2.6 are translated to a requirement.

Solution requirements Stakeholder goals (from Table 2.1)

1. Reduction in CO2 emission in cities 1, 5, 6

2. Reduction in the number of delivery vehicles in cities 2, 3, 4, 7, 12

3. Improvement of delivery success rate 8, 9, 10, 11

4. Improvement of parcel collection convenience for consumers 14, 22

5. Maintain high level of service and contact 19, 20, 21

6. Maintain low delivery lead time (at least next-day delivery) 17, 18, 23

7. The solution should be cost efficient 9, 12

Table 4.1: Requirements for the solution derived from stakeholder’s goals

4.2 Solution design

Solution Component 1: Parcel lockers

Parcel lockers are the first solution component within Integrated City Distribution. This

solution component involves the delivery from UCCs to unmanned parcel lockers in cities.

From literature, it is known that parcel lockers can be effective if located at any urban area

that attracts a lot of pedestrians, such as railway stations, work places and university

buildings (Iwan et al., 2016). In this solution component, we therefore consider parcel locker

both in- and outside the city centre, within the urban area. However, we do not explicitly

differentiate between different types of locations in cities (e.g. railway stations, work places).

Within the urban area, parcel lockers should be located in places that are highly accessible for

both consumers and delivery vehicles (Morganti et al., 2014; Moroz and Polkowski, 2016).

Figure 4.1 illustrates the parcel locker design.

21

Figure 4.1: Solution Component 1: Parcel lockers

Solution Component 2: Pickup points

The second solution component represents the delivery to pickup points through Integrated

City Distribution. Since it is known from literature that there are large differences between

pickup points and parcel lockers in terms of service (Visser et al., 2014; Weltevreden, 2008),

both concepts represent separate components within Integrated City Distribution. Like parcel

lockers, pickup points can also be effective both in- and outside the city centre, as long as

consumer density is sufficient (Visser et al., 2014). Therefore, this solution component also

considers the pickup points both in- and outside the city centre. Pickup points are often

located in supermarkets, convenience stores and in small local shops (Morganti et al., 2014).

Similar to the first solution component, we do not differentiate between these types of

locations for pickup points. Figure 4.2 illustrates the pickup point design.

Figure 4.2: Solution Component 2: Pickup points

Urban area

City centre

Store

Pickup point

Urban Consolidation

Centre

Delivery route

Urban area

City centre

Store

Parcel locker

Urban Consolidation

Centre

Delivery route

22

Solution Component 3: Micro-hubs

The third solution component represents the delivery of parcels to micro-hubs through

Integrated City Distribution. Here, parcels that are designated for consumers in a specific

geographic area (e.g. postal code) are delivered to a micro-hub that is located in close

proximity to consumers’ homes. From these micro-hubs, home-delivery rounds are carried

out using only zero-emission delivery modes (Janjevic and Ndiaye, 2014). In our micro-hub

design, we consider the use of bicycles for home delivery, as this delivery mode is enabled

through the lower inter-drop distances (Maes and Vanelslander, 2012). Due to the

involvement of bicycle logistics, the parcels need not be delivered to the actual city centre,

where access restrictions may be in place (Janejvic et al., 2013). In order to facilitate the

move towards zero-emission delivery in city centres (Harrington et al., 2016), the micro-hubs

are therefore located outside the city centre. Similar to the previous solution components, we

do not distinguish between different forms of micro-hubs, such as empty store premises,

containers or mobile trucks. Besides, we consider an unattended micro-hub that does not

involve the possibility for collection, as the combination with a service point could lead to

higher costs (Janjevic et al., 2013). Figure 4.3 illustrates the micro-hub design.

Figure 4.3: Solution Component 3: Micro-hubs

Delivery route

Store

Zero emission

delivery

Consumer address

Urban area

City centre

Micro-hub

Urban Consolidation

Centre

23

5. DESIGN VALIDATION

This chapter discusses the findings of this research based on the analysis of the interviews

with stakeholders. This chapter is organized by first discussing general findings regarding

Integrated City Distribution, which are similar for all three solution components. Next, the

findings of the three solution components are discussed separately. This is done by discussing

their strengths and weaknesses within four dimensions: Environment/society, efficiency,

flexibility and service level, since these dimensions were also used to distinguish between

goals of stakeholders in Section 2.6, in line with Harrington et al. (2016). Finally, in Section

5.5, an overview is provided on how each design scores on the solution requirements of

Section 4.1. Throughout this chapter, quotes of participants are used for clarification of the

findings. Whenever a quote is used, the company and participant number is shown in

parentheses, which relate to the overview of participants provided in Appendix C.

5.1 Findings regarding Integrated City Distribution Stakeholders expressed different views and opinions regarding the overall concept of

Integrated City Distribution, irrespective of whether parcels are delivered to parcel lockers,

pickup points or micro-hubs via this integrated network. First, stakeholders agreed that the

success of solutions in last-mile distribution highly depend on how well they are perceived by

consumers, as the parcel distribution sector is seen as highly customer-driven. At the same

time, stakeholders acknowledged that last-mile distribution initiatives that have a

collaborative character, like Integrated City Distribution, are very complex, due to the

involvement of a variety of stakeholders with conflicting interests. Regarding our solution,

UCCs and local authorities were quite positive and also felt high urgency for it. In their view,

the solution can increase the drop density and thereby contribute to solving the problems

experienced by last-mile distribution in cities. However, whereas UCCs perceived Integration

City Distribution as realizable, other stakeholders questioned its feasibility. Carriers and

shippers expressed strong concerns about the efficiency and the collaborative character of the

solution, which is seen as incompatible with the high competition in the parcel delivery

sector. Also, the consequences of the solution for the delivery lead time were perceived

negatively. Consumer participants also felt little urgency, as they are more concerned with

fast delivery services and convenience, rather than sustainability

With respect to the efficiency of the solution, UCCs and local authorities agreed that delivery

to parcel lockers, pickup points or micro-hubs through the Integrated City Distribution

network could lead to a higher drop density. This is due to the fact that all deliveries to an

area in the city would be delivered by the same truck, which removes several delivery rounds

from carriers with poor utilization. It was thereby argued that that the solution could make the

overall distribution to cities more efficient, providing benefits to the entire chain. In order to

reach this higher efficiency, UCCs (P4, P16) and a local government stakeholder (P5) stated

that it should be done for the entire volume of deliveries to a specific city, otherwise the

solution would only lead to an extra delivery round with a low drop density.

24

In contrast, carrier participants (PostNL, P11, P12) stated that the solution could only be

feasible for areas where carriers cannot attain high drop densities independently. PostNL

stated that they already consolidate their deliveries to most cities in local hubs, which is seen

as a more efficient way to distribute than Integrated City Distribution, as the latter involves

extra consolidation at UCCs. Two shippers (P10, P17) also questioned the efficiency of the

solution due to the extra consolidation, stating that parties would have to give up profit if this

would be implemented.

With respect to the collaborative character of the solution, several other issues were

addressed by carriers and shippers. Carriers want to maintain control over their own

distribution network and volume, whereas shippers want to maintain the ability to compete

with other shippers through innovative fulfilment and delivery services. These interests

would both be harmed if all deliveries to cities are consolidated in UCCs. The same

stakeholders also expressed concerns about how the revenue model would be discussed

between the participating parties: “The biggest challenge is to discuss this openly with

multiple parties” (PostNL, P11).

With respect to the delivery lead time, all stakeholders agreed that same- and next-day

delivery are highly unlikely within Integrated City Distribution, due to the extra delivery and

handling at the UCC. Although two consumers (P8, P18) stated that they do not desire same-

day delivery, they do perceive next-day delivery as a fact of life nowadays. The solution

would therefore conflict with their interests. Due to all aforementioned issues, shipper and

carrier interviewees did not see the solution as feasible in today’s market, as the following

quotes illustrate: “This has no chance of success” (Blokker, P10) and “Maybe this could

work in the future, but the solution is a bridge to far for the current market” (PostNL, P12).

Two shippers did, however, encourage the idea, since it involves a more sustainable delivery

alternative to their customers. However, all shipper participants feel that the ball is in court of

the parcel carriers, who need to be willing to open up their network for consolidation and

collaboration with other parties. In contrast to this, UCCs feel that large shippers themselves

are the engines that can bring about this solution, by pushing their logistics service providers

towards more sustainable last-mile solutions. As one participant said it: “Shippers are the

only ones that can make the difference by pushing carriers to choose alternative solutions,

such as this” (Binnenstadservice Maastricht, P4).

In the next paragraphs, the findings of each designed parcel distribution concept within

Integrated City Distributions are discussed separately. An excerpt of the coding tree is

displayed in each paragraph. As explained in Section 3.4, the coding tree is the end-result of

the analysis of the interviews. The coding trees provided in Sections 5.2, 5.3 and 5.4 each

provide an overview of the main factors that have emerged from the interviews, which relate

to the strengths and weaknesses of each design according to stakeholders.

5.2 Findings regarding Parcel Lockers Figure 5.1 displays an excerpt of the coding tree relating to the parcel locker design.

25

Second-order codes Third-order codes

Figure 5.1 – Coding tree excerpt of Parcel lockers design

First, most stakeholders agreed that this solution would have a significant impact on reducing

vehicle movements in the city. Interviewees (P1, P15) stated that delivery rounds to the city

would become shorter through this solution component, since multiple parcels can be

delivered to the same location and fewer deliveries to consumer addresses would be carried

out. As a result, the delivery to parcel lockers could make the last-mile delivery round more

compact. In addition, UCCs (P4, P16) stated that the integration of store deliveries with

parcel delivery to lockers is very flexible, since lockers both in- and outside the city centre

would always be accessible, even early in the morning. Furthermore, regarding the positive

impact on delivery success, interviewees agreed that this would be an effective solution to the

common problem of delivery failures. The following quote supports this: “With parcel

lockers, there is a 100% chance of delivery, which is very interesting for us, but also for

carriers and our consumers” (Retailer: The Musthaves, P17). Based on coding tree, we can

also conclude that stakeholders value the parcel locker design due to the high collection

flexibility, since it involves the possibility of 24/7 collection by consumers. Thereby, the

direction and autonomy of consumers on when to have access to their parcels is increased.

However, not all interviewees supported the statements of UCCs that delivery to parcel

lockers through Integrated City Distribution is feasible. Several carriers and shippers (P9,

P10, P11) felt that parcel lockers would be more suitable outside the scope of Integrated City

Distribution, since parcel lockers, dedicated to specific carriers, are already used in cities and

can be supplied by these carriers directly. Also, a different view on the reduction of

congestion due to parcel lockers was expressed by stakeholders (P3, P12), as consumers may

travel to the locker locations to collect their parcels. Besides, concerns were expressed about

the service to consumers through this design. Although shippers see parcel lockers as a

valuable addition to the range of delivery options that they want to offer to consumers, the

consumer participants perceive this alternative as too impersonal. They see value in the extra

26

service and security of personal collection: “I would rather collect a parcel in a more

personal way” (Consumer, P8). Finally, our findings indicate that the parcel locker solution

would only be applicable for a small volume of deliveries, as several stakeholders

emphasized that consumers strongly prefer home delivery. This was supported by the

consumer participants (P8, P18).

5.3 Findings regarding Pickup Points

Figure 5.2 displays an excerpt of the coding tree that relates to the pickup point design

Second-order codes Third-order codes

Figure 5.2 – Coding tree excerpt of Pickup point design

In terms of environmental, societal and efficiency-related considerations, all participants view

the delivery to pickup points as highly similar to the use of parcel lockers within Integrated

City Distribution. In particular, their positive impacts on the amount of delivery rounds, the

drop density and delivery success are seen as similar, as is illustrated through the high

similarity of both coding trees. However, in terms of flexibility and service, some important

differences between the alternative designs were expressed.

First, as shown in the coding trees, pickup points do not have the same level of flexibility as

parcel lockers, since most pickup points are only open during the day. This is seen as a

problem by consumers and shippers, who prefer high accessibility of parcel collection points

for consumers. Besides, UCCs (P4, P15) mentioned that pickup points within Integrated City

Distribution also entail lower flexibility from a delivery perspective. Some of these stores

may be closed on Mondays or not open before the afternoon, which could make the

integration with store deliveries more complicated than with parcel lockers.

Second, compared to parcel lockers, the use of pickup points is seen as beneficial from a

service perspective. Due to the attended collection and the fact that it is familiar to many

consumers, it is perceived as a safe and personal alternative by stakeholders. This is clarified

27

through the following quotes of a shipper and consumer respectively: “At stores, there is

always someone available to help, which is particularly useful for older customers”

(Bol.com, P9) and: “Having someone in front of you handing over your parcel is a real

advantage” (Consumer, P18).

5.4 Findings regarding Micro-hubs In Figure 5.3, the coding tree excerpt relating to the micro-hub design is shown.

Second-order codes Third-order codes

Figure 5.3 – Coding tree excerpt of Micro-hub design

In addition to reducing vehicle activity and congestion in the city, local government

stakeholders stated that the implementation of micro-hubs has a large effect on reducing

emissions. This is due to the possibility to carry out deliveries with a bicycle, which

contributes to the zero-emission city logistics vision by municipalities: “Micro-hubs work

best in stimulating bicycle logistics” (Gemeente Groningen, P1). Other stakeholders agreed

about the possibility of zero-emission delivery through micro-hubs, but analyzed this solution

more in terms of efficiency-related aspects.

Many interviewees agree that micro-hubs are the best solution to enable efficient, fine-

meshed distribution of parcels from the UCC. This is because of the ability to distribute

parcels by bicycle in delivery rounds with short inter-drop distances. Besides, it was argued

that micro-hubs can overcome the increasing access restrictions for delivery vehicles within

city centres. Especially in cities where the access regulations are strict, a micro-hub can

greatly increase delivery flexibility, since bicycles can be used that do not have such

restrictions placed on them. From a service perspective, micro-hubs are also seen as the most

28

suitable design by all stakeholders. This is because this design involves delivery to the

consumer’s home with very limited changes for consumers, whereas the other designs entail

alternatives to home delivery. The following quote illustrates this: “The only difference for

consumers would be that the deliverer comes with a bicycle, instead of with a van”

(Provincie Drenthe, P5).

However, as shown in the coding tree, concerns were also addressed regarding the efficiency

of micro-hubs, due to the extra costs of adding a consolidation and handling point compared

to the parcel locker and pickup point solution components. Two shippers (P10, P17) therefore

questioned whether micro-hubs could exist without subsidy from local authorities.

Furthermore, another shipper (P9) stated that the micro-hub design, combined with bicycle

delivery, does not reduce delivery failures and is therefore less efficient than parcel lockers

and pickup points. In contrast to this, a bicycle courier (P6) mentioned that he is barely

bothered by the not-at-home problem, since bicycle deliveries can be flexibly scheduled

according to consumers’ wishes: “We can deliver flexibly from 8am until 8pm, which makes

it easy to make an appointment with the consumer” (Go-Fast Bicycle Courier, P6). This

suggests that the micro-hub solution component, involving the flexibility of bicycle logistics,

can also lead to an increased delivery success rate.

Finally, stakeholders expressed different views about the locations of micro-hubs. UCCs (P4,

P15, P16) stated that they should be located in the city centre, as close as possible to the

customers, as this enhances delivery efficiency. On the contrary, other stakeholders (P5, P6)

emphasized that they should be placed outside the city centre, where they are better

accessible for large vehicles and contribute to creating an emission-free city centre: “A

micro-hub in this area [city centre] would completely ignore the overall idea to create an

emission-free city centre” (Go-Fast Bicycle Courier, P6).

5.5 Overview of the findings

Based on the coding trees and the findings discussed in this chapter, the solution components

can be evaluated through the solution requirements from the detailed problem investigation of

Section 4.1. Although each parcel distribution concept within Integrated City Distribution has

advantages and can contribute to stakeholders attaining their goals, several weaknesses were

also discovered. Some of these strengths and weaknesses relate to the separate solution

components, whereas other are similar for each design within Integrated City Distribution.

Table 5.1 provides an overview of how each solution component scores on the solution

requirements, based on the coding tree and the findings.

29

Solution requirements Parcel

lockers

Pickup

points

Micro-

hubs

Reasoning

(based on coding tree and findings)

1. Reduction of CO2

emission in cities

Micro-hubs involve zero-emission home

delivery through bicycles, which is seen by

stakeholders as leading to a significant

reduction of CO2 in cities.

2. Reduction of the number

of delivery vehicles in

cities

Stakeholders agreed that Integrated City

Distribution reduces the number of vehicles,

since bundled delivery can improve the drop

density. Here, no difference between the

solution components was expressed.

3. Improvement of delivery

success rate

Parcel lockers and Pickup points do not involve

home delivery and thereby fewer delivery

failures occur. The findings suggest that micro-

hubs also increase the delivery success rate,

since last-mile bicycle deliveries can be more

flexibly scheduled with consumers.

4. Improvement of

collection convenience for

consumers

Stakeholders agreed that Parcel lockers

include the highest convenience for consumers

due to their 24/7 accessibility. Pickup points

were perceived as less flexible from a

collection point of view

5. Maintain high level of

customer service and

contact

Stakeholders agreed that Pickup points result

in high service to consumers and are a good

way to maintain customer contact. Parcel

lockers are perceived as impersonal. Micro-

hubs were considered as most manageable for

consumers, since it involves home delivery

6. Maintain low delivery

lead time (at least next-day

delivery)

Stakeholders agreed that Integrated City

Distribution reduces the delivery lead time due

to the extra consolidation of parcels at UCCs.

Next-day delivery was seen as highly unlikely

through Integrated City Distribution

7. The solution should be

cost-efficient

UCCs perceived the solution as cost-efficient

due to the higher drop density, but other

stakeholders (carriers and shippers) argued

that the extra delivery and handling at UCCs

results in lower cost-efficiency.

Table 5.1 – An overview of the findings related to the solution requirements

30

6. DISCUSSION

Extant literature in the field of last-mile distribution emphasizes the need for innovative

solutions that are capable of improving the efficiency of delivery, whilst reducing the

environmental and societal impacts on cities (Navarro et al., 2016; Allen et al., 2017;

Savelsbergh and Van Woensel, 2016). The main challenge in designing and implementing

effective last-mile solutions pertains to the variety of stakeholders involved, which all have

different objectives and requirements that need to be balanced (Ballantyne et al., 2013;

Harrington et al., 2016). Our research has designed a solution within Integrated City

Distribution, an innovative concept for last-mile distribution that has not yet been studied to

date. Our main focus has been on the integrated delivery from UCCs to stores and parcel

distribution concepts in cities, where the effectiveness of multiple parcel distribution concepts

is evaluated. However, the findings also indicate that stakeholders have different views and

perceptions regarding Integrated City Distribution, irrespective of the type of parcel

distribution concept that is used in cities. Therefore, we first discuss our findings in relation

to what is known in literature about collaborative initiatives in last-mile distribution. After,

we discuss the strengths and weaknesses of the designed solution components, in order to

suggest a refined design.

6.1 Integrated City Distribution Many initiatives in urban distribution fail in an early stage due to the lack of participation

from stakeholders (Lindawati et al., 2014; Allen et al., 2012). The main motivating factors for

stakeholders to participate are the expected benefits derivable from a solution’s efficiency

and sustainability (Handoko and Lau, 2016; Lindawati et al., 2014). In our research, most

stakeholders acknowledged that the designed solution can have significant environmental and

societal benefits. However, stakeholders had different views about the efficiency of

Integrated City Distribution. First of all, many stakeholders confirmed that the solution

increases the drop density and minimises inter-drop distances in cities. This is line with Quak

(2012) and Allen et al. (2017), who suggest that the bundling of shipments from multiple

online retailers and carriers in collaborative last-mile distribution networks could increase

efficiency and reduce the costs per drop. However, our findings also suggest that the delivery

to shared consolidation centres is perceived as leading to extra unnecessary handling and

costs. This is due to the fact that many large carriers already consolidate parcels at their own

hubs in order to attain a high utilization in their delivery rounds to cities (Allen et al., 2016;

Navarro et al., 2016). Hence, parcel carriers already focus on increasing the delivery

efficiency of their own volumes (Ducret, 2014; Xiao et al., 2017), which leaves less scope for

our solution.

The concerns of carriers and shippers regarding the costs of Integrated City Distribution are

in line with what is stated in City distribution literature, where some authors argue that UCC

schemes lack a business model to endure in the long-term, without subsidies (Verlinde et al.,

2012; Marcucci and Danielis, 2008). Stakeholders confirm that Integrated City Distribution

31

also requires a sound business model, where the costs and benefits are fairly shared between

participating stakeholders (Allen et al., 2017; Ducret, 2014). Discussing and implementing

this requires the readiness to collaborate, involvement and openness (Kauf, 2016). However,

this conflicts with the fierce competition that exists in the parcel distribution sector (Xiao et

al., 2017).

It is known in city distribution literature that only a small fraction of carriers (i.e. between 16-

18%) are willing to participate in UCC schemes (Regan and Golob, 2005). However,

Holguín-Veras and Sánchez-Díaz (2016) suggest that the reluctance of shippers to participate

is the main obstacle to UCC adoption, since carriers cannot use a UCC without the shippers’

consent. Several stakeholders from practice support this statement. Shippers are most afraid

to expose information and relinquish control over their deliveries (Lindawati et al., 2014;

Holguín-Veras and Sánchez-Díaz, 2016). In addition to this, our findings also suggest that

shippers are disinclined towards the solution as it harms their ability to compete with other

shippers through unique delivery services. For instance, online retailers are increasingly

trying to differentiate by offering later cut-off times and same-day delivery (Cherrett et al.,

2017). The same applies to carriers, who consider delivery speed as a key logistics capability

(Jon-kun Cho et al., 2008). Thus, solutions based on the consolidation of shipments for a

given geographical area conflict with these goals. For consumers, the solution conflicts with

their desires for next-day delivery (Cherrett et al., 2017), since the extra consolidation of

parcels at UCCs increases the delivery lead time.

When focusing solely on the distinctive strengths and weaknesses of the designed solution

components within Integrated City Distribution, several key findings have emerged, which

are discussed in the next section.

6.2 Solution components First, the views of stakeholders support previous studies, where it is stated that unattended

delivery concepts strongly reduce delivery failures (Iwan et al., 2016; Allen et al., 2017). In

addition, although not all stakeholders agreed, it was stressed by a bicycle courier that the

micro-hub design can also increase parcel delivery success. This is supported by Clausen et

al. (2016), who found that deliveries with cargo bikes fail less often, due to the better

possibility to schedule deliveries according to consumers’ wishes. Thus, we hypothesize that

the all designed solution components can increase the delivery success of parcels, but the

highest increase can be achieved by parcel lockers and pickup points.

Second, the findings suggest that flexibility can be enhanced by delivering to parcel lockers

within Integrated City Distribution. Previous studies, however, suggest that delivery

flexibility to parcel lockers is lower than delivery to pickup points, as the lockers are of fixed

sizes and cannot be used for all types of parcels (Weltevreden, 2008; Iwan et al., 2016).

Stakeholders argued that the high accessibility of parcel lockers enhances the flexibility of

integrated delivery, whereas pickup points may not always be accessible when store

deliveries are carried out. Thus, although it is known that pickup points entail limited

flexibility of consumer collection (Morganti et al., 2014), pickup points may also entail lower

delivery flexibility within Integrated City Distribution. Thereby, we hypothesize that high

32

flexibility of delivery within Integrated City Distribution can be achieved through parcel

lockers.

However, the findings also support previous studies that parcel lockers imply lower service to

consumers (Weltevreden, 2008; Iwan et al., 2016; Morganti et al., 2014), as pickup points are

perceived as more personal, safe and easy to use. It is also confirmed that shippers value

pickup points, since delivery to pickup points is typically more efficient than home delivery

(Visser et al., 2014) and can enhance customer satisfaction (Xiao et al., 2017). Hence, we

hypothesize that high customer service within Integrated City Distribution can be achieved

through pickup points.

Furthermore, the findings suggest that micro-hubs are the best distribution concept to reduce

emissions. This is due to the fact that lower inter-drop distances enable emission-free

transport means (Ducret, 2014). Stakeholders that are concerned with environmental aspects

were therefore most pleased with this alternative. According to literature, the aim of

downscaling the consolidation of goods is to increase delivery efficiency in congested urban

areas (Janjevic et al., 2013). For such concepts, the volume of delivery is seen as a

determinant of their feasibility (Janjevic and Ndiaye, 2014; Ducret, 2014), which was

supported by stakeholders. Besides, our finding seem to confirm that the extra delivery to

micro-hubs and the subsequent transfer of parcels to bicycles is only interesting if cities are

poorly accessible for parcel delivery vans or trucks (Janjevic and Ndiaye, 2014). Stakeholders

perceived the micro-hub solution component as more feasible and beneficial in cities with

strict access regulations. In those areas, bicycles can overcome the access restrictions and

thereby increase delivery flexibility (Maes and Vanelslander, 2012). This suggests that the

delivery conditions and regulations in cities could also be a motivating factor for stakeholders

to participate in urban collaborative distribution initiatives (Lindawati et al., 2014). We

hypothesize that, as access restrictions to cities increase, the micro-hub solution component

can increase delivery efficiency and enable fine-meshed distribution to consumers.

Finally, stakeholders supported the notion that distribution concepts that replace home

delivery can only be applied for a limited volume of parcels (Morganti et al., 2014; Allen et

al., 2017). This is because home delivery is seen as a key feature of B2C e-commerce and

highly preferred by many consumers (Moroz and Polkowski, 2016). Since micro-hubs are the

only design that entails home delivery, this was generally perceived as the most feasible

alternative when volumes are sufficient. We therefore hypothesize that Integrated City

Distribution requires a distribution concept that enables home delivery.

6.3 Design refinement In order to better contribute to stakeholder goals, the designed solution can be refined based

on the evaluation and discussion of the solution components. The refined solution entails an

integration of the distribution concepts within the form of a micro-hub. In the refined

solution, micro-hubs remain just outside the city centre, since regulations to curtail emissions

from city logistics activities are expected to rise (Savelsbergh and Van Woensel, 2016). From

the micro-hubs, bicycles are used for home delivery in order to ensure delivery flexibility

(Maes and Vanelslander, 2012). The refined solution also includes the possibility for

33

consumers to collect parcels, since this can further reduce delivery failures and increase

service (Iwan et al., 2016; Weltevreden, 2008).

In the decision for an attended or unattended collection point, the volume of parcels delivered

via micro-hubs is a key determinant. Therefore, this should be considered during

implementation. If the volume is large, micro-hubs should be combined with a pickup point

that is manned during the day, whereas parcel lockers located at the micro-hub are used for

flexible delivery and off-hours collection. In this way, the benefits of both types of collection

concepts can be combined. However, in case the volume of parcels is not sufficient for

integrating it with a (manned) pickup point, only parcel lockers should be used as a collection

point, in order to make the solution more cost-efficient. In Figure 5.4, the refined solution

with delivery to and from micro-hubs and self-pick-up by consumers is illustrated.

Figure 5.4: Refined design within Integrated City Distribution

34

7. CONCLUSION

This study considered Integrated City Distribution as an innovative concept to increase the

drop density in last-mile distribution, and thereby increase the efficiency and sustainability of

delivery to cities. Within this concept, three different parcel distribution concepts were

designed, through a design-science approach, and evaluated through interviews with key

stakeholders within last-mile distribution. Stakeholders from practice confirm that delivery to

parcel lockers, pickup points and micro-hubs through the Integrated City Distribution

network has the potential to increase the drop density in the last mile. Thereby, the amount of

required vehicles and delivery rounds could reduce, relieving the environmental and societal

pressures of distribution to cities. Although each parcel distribution concept has key

advantages and disadvantages, our findings suggest that micro-hubs combined with bicycle

logistics is the most feasible distribution concept within Integrated City Distribution. Micro-

hubs comply with the vision of zero-emission delivery in city centres, can facilitate efficient

and flexible distribution to poorly accessible city areas and are most manageable for

consumers, who prefer home-delivery. However, our findings also suggest that parcel

distribution concepts that enable collection by consumers are highly valued from an

efficiency, flexibility and consumer service perspective. Therefore, the designed micro-hub

solution within Integrated City Distribution is refined by integrating it with parcel lockers

and, if sufficient volumes are delivered, with a pickup point that both enable parcel

collection. Hereby, an innovative urban distribution point is formed that could be the most

effective parcel distribution concept within Integrated City Distribution.

On a higher level, our study indicates that the implementation of Integrated City Distribution

through a combination of parcel lockers, pickup points and micro-hubs is not desirable for all

stakeholders from practice. The interviews with stakeholders have revealed several factors

that hinder the willingness of stakeholders to participate in Integrated City Distribution. Our

findings suggest that carriers and shippers are the most reluctant stakeholders for this

concept. Explanations for this can be found in the characteristics of the parcel delivery sector,

where the competition between online retailers and their carriers is high as parties are aiming

to differentiate through innovative and unique delivery services. Therefore, the willingness of

shippers and carriers to deliver their goods to UCCs and share the same vehicle in last-mile

delivery rounds is low. Stakeholders from practice are also concerned with the extra

consolidation at UCCs, as this could lead to higher costs from an individual stakeholders’

perspective and increase the total delivery lead time of products ordered by consumers. Until

such obstacles can be overcome or lightened, the implementation of Integrated City

Distribution would not be beneficial for all involved stakeholders.

7.1 Limitations and future research This study has several limitations. First, although the aim was to attain an equal

representation of participants across the stakeholder groups, this was not achieved. As a

result, shippers and UCCs stakeholder groups contain a larger variety of organisations than

carriers and local authorities. This could have had an impact on the evaluation of the solution,

since UCCs were found to be more optimistic about Integrated City Distribution than other

35

stakeholders. A second limitation pertains to the fact that the validation of the solution

components was solely executed through semi-structured interviews, which were based on

the perceptions, opinions and assumptions of stakeholders. Besides, the interview transcripts

were not sent to the respondents for verification. This limitation, along with the absence of

triangulation of data sources, are disadvantageous for the validity and reliability of this study

(Voss et al., 2002). Besides, due to the absence of objective data, the solution components

were not evaluated based on facts, and real data pertaining to the investment and operational

costs of the different designs have not been considered. Since the cost efficiency of the

designed solution components may be a crucial factor for the implementation, future

research within this setting should consider more in-depth the comparison between several

urban distribution concepts based on costs efficiency through quantitative data. Furthermore,

our findings suggests that designing a business model that fairly shares the costs and benefits

between participating parties within Integrated City Distribution could increase the

willingness of stakeholders to participate. An interesting future research effort within

Integrated City Distribution therefore relates to the construction of a viable business model.

36

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Appendix A: Interview Protocol

Introductie Bedankt voor uw deelname in ons onderzoek

Voorstellen

Toestemming voor opname (verwijderen als scriptie afgerond is)

Mogen we uw naam noemen of wilt u liever anoniem blijven?

Tijdsduur is ongeveer één uur

Heeft u nog overige vragen?

Doel interview:

Wij hebben concepten opgesteld op basis van de literatuur

Van gedachten wisselen met verschillende stakeholders, uitnodigen om te vertellen

wat uw ideëen over dit onderwerp zijn

De praatstoel/rol van de stakeholder

Structuur: geïntegreerde stadsdistributie, pakketkluizen, afhaalpunten, micro-hubs

Algemene vragen:

1. Kunt u iets vertellen over deze organisatie?

2. Kunt u iets vertellen over uw functie?

Geïntegreerde stadsdistributie Pitch:

Voortdurende groei van e-commerce (B2C), groei van aantal leveringen naar

consumenten in de stad. Momenteel bezorgen pakketvervoerders vanuit hun eigen

distributienetwerk naar consumenten thuis en aan afhaalpunten in delen van de stad.

Praktijkprobleem: hoog aantal bestelbusjes in de binnenstad, hoge emissie en

congestie

Voor B2B leveringen aan winkels in de binnenstad is er een concept genaamd

Stadsdistributie: geconsolideerde winkellevering (B2B) vanaf hub net buiten het

centrum

Dit is een groeiend concept, maar wordt nog niet voor B2C leveringen naar de stad

toegepast

Er vindt dus geen consolidatie plaats van verschillende vervoerders in de last mile

Ons concept: Geïntegreerde stadsdistributie = B2C gaat mee met netwerk van B2B

We kijken naar drie verschillende distributiepunten in de stad waar pakketten vanuit

dit netwerk naar geleverd kunnen worden: pakketautomaten, afhaalpunten en micro-

hubs.

Concept A: Pakketautomaten Uitleg concept:

Design figuur laten zien

Pakketkluizen: onbemande bezorgpunten

In binnenstad en of andere druk bezochte gebieden

Consumenten halen pakket zelf op

42

Concept B: Afhaalpunten Uitleg concept:

Design figuur laten zien

In binnenstad: Lokale winkels, (kleine) supermarkt, tabakszaak

Consumenten halen pakket zelf op

Concept C: Micro-hubs Uitleg concept:

Design figuur laten zien

Meer in de binnenstad vergeleken met hub

Transferpunt van goederen naar ander voertuig

Zero-emission last mile: levering door fietskoerier (of lopend met handkar)

Vragen voor alle concepten (A, B en C) 1. Wat vindt u hiervan?

a) Voordelen

b) Nadelen

2. In hoeverre voldoet dit concept aan uw belangen?

a) Welke doelen het meest?

b) Welke doelen niet?

3. In hoeverre is dit concept volgens u toepasbaar in de praktijk?

a) Factoren: waarom past dit concept in de binnenstad (relevance, suitability factoren)

b) Wat moet er gebeuren om het uit te kunnen voeren?

i. Uitdagingen bij implementatie (implementatie aspecten, barrières,

feasibility factoren)

ii. Wat ziet u als uw rol in dit concept (vanuit stakeholder perspectief)?

iii. Heeft u suggesties voor dit concept die de nadelen zouden kunnen

wegnemen?

4. In welke mate verwacht u dat dit concept het praktijkprobleem oplost?

a) Wilt u vanuit uw stakeholder perspectief dat dit concept er komt?

b) Wilt u vanuit het algemenere perspectief van iedereen dat dit concept er komt?

i. Perspectief overheid, webshop, vervoerder, ontvanger hub, consument

Afsluiting Relevante onderwerpen die nog niet aan bod zijn gekomen vanuit stakeholder

Vervolgstappen:

Samenvatting/transcript gewenst?

Eindresultaat scriptie gewenst?

Contact opnemen als er nog extra info te binnen schiet

Appendix B: Coding tree

44

45

46

47

48

49

Appendix C: Interview details

Participant Organisation Name(s) Date Stakeholder type

Duration (minutes)

1 Gemeente Groningen Sjouke van der Vlught

5-12-17 Local government

57:23

2 Gemeente Groningen Jeroen Berends 5-12-17 Local government

57:23

3 Energy Expo Mario Sabel 5-12-17 Local government

57:23

4 Binnenstadservice Maastricht

Max Prudon 7-12-17 UCC 54:09

5 Provincie Drenthe Rolf Meerbach 7-12-17 Local government

41:42

6 Go-Fast Bicycle Delivery Services

Peter Rugge 8-12-17 Carrier (bicycle courier)

48:56

7 Noorderpoort Roeland Hogt 14-12-17

UCC 53:11

8 - Hugo Herbers 14-12-17

Receiver (consumer)

36:44

9 Bol.com Hessel de Gelder 15-12-17

Shipper 46:52

10 Blokker Roel Megens 15-12-17

Shipper 49:20

11 PostNL Maryam Boonstra 18-12-17

Carrier 52:23

12 PostNL Marien Vaandrager 18-12-17

Carrier 52:23

13 Stadsleveransen Göteborg

Christoffer Widegren

18-12-17

UCC 43:27

14 IDESKA Arnoud Schoffelmeer

20-12-17

Receiver (business)

52:50

15 Binnenstadservice Nijmegen

Frank Adema 20-12-17

UCC 50:42

16 Binnenstadservice Nijmegen

Birgit Hendriks 20-12-17

UCC 42:45

17 The Musthaves Steven de Boer 22-12-17

Shipper 45:20

18 - Marijn te Flierhaar 22-12-17

Receiver (consumer)

31:37