The Parcel Delivery Company is the UK arm of an international pickup and delivery company. The UK network comprises of c.50 Depots and c.3,500 routes, the majority of which are serviced by self-employed couriers.
The payment model for the couriers is based on a fixed rate per stop. These rates were agreed locally between couriers and Depot managers ad had evolved over time, based on local factors, relationships and experience.
The above had led to inconsistency and inequality in Driver payments which was unsustainable against the backdrop of escalating demand, rapid growth and high churn in the workforce.
“The Payment by Postcode project has enabled us to centralise control of the Driver payment process and has delivered a 6% operational saving”
The solution was to introduce a Postcode-based system that allows the site the flexibility to give any drop to any driver with the knowledge that the correct payment will be made for the activity involved in making the delivery. The Payment by Postcode solution delivered via a consultancy exercise to generate payment rates at Postcode Unit level (c.1.8m records), based on:
- Typical stop duration.
- Travel time between stops.
- Time and distance from Depot location.
- Localised rates for hourly payment and mileage.
- Stop density and historic drop co-incidence.
The rates are fully re-calculated on a quarterly basis and calibrated monthly to reflect changes to Postcode geography and fall-to-ground of the stops. Rates can also be calibrated to influence overall spend across the network.
The rates are integrated into the existing Driver payment system, resulting in very little operational impact. Rates are also visible through Geoplan’s SKiN mapping software helping the payment team respond to queries.
Rates were calibrated to deliver a 6% saving on Driver payment across the network.
The rates are specific to geography, not Driver and are controlled at Network level – there is no local negotiation.
Postcode-based system ensures payments are fair, visible and transparent to both management and Drivers.
Rates are visible via Geoplan’s SKiN software to help payment team and Depot managers respond to queries.