In 2017 you’d think that both residential and commercial delivery would be cost-effective and efficient, right?
Wrong. It’s no secret that last-mile delivery, or the “last mile problem,” is the most inefficient and expensive part of supply chain management. With the growth of e-commerce driving on-demand or same-day deliveries, it’s now becoming harder to manage the last mile.
Why is the last-mile delivery process vulnerable to disruption?
Commercial delivery for supply chains and carriers is a piece of cake compared to residential last-mile delivery fulfillment. This challenging development is propelled by a variety of stakeholders in the supply chain. Some factors include Amazon Prime, as well as an increase in e-commerce and crowdsourcing trends causing supply chains to reexamine cost effective ways to streamline their fulfillment processes.
Five trends affecting last-mile delivery
- Faster convenience. E-commerce is one (big) factor driving the rapid increase in on-demand and same-day delivery, and it’s impacting consumer preference. Vendors want to provide the best customer experience possible and recognize that improving delivery times will help achieve that goal. Look at Amazon – it sets the bar with two-day shipping, and soon the company will adjust to a swift two-hour shipping fulfillment period – Prime Now.
- Crowd-based access. Think companies like Uber – which built a business model around sharing assets versus owning them. This concept could be applied to almost anything, so it wouldn’t be shocking if logistics providers started sharing their assets to develop more cost-effective use of space, delivery methods, and staffing models.
- Visibility into (objective) data. It’s no secret that tracking information provides traceability for carriers, but it’s hard to come by for local and regional carriers who cover the last-mile. Businesses across all industries are exploiting big data to save on costs and improve efficiency – last-mile delivery groups will probably adopt big data into their logistics strategy to keep up with consumer demands. VeriShip’s Intelligence Platform™ (VIP) uses big data technology that provides actionable data insights to inform cost-conscious parcel decision making.
- Evolution. Amazingly, the USPS finds itself with a competitive advantage. The timing of the increase in e-commerce package delivery is ideal because mail delivery continues to decline. Luckily for USPS, the cost to add parcel to home delivery is minimal since the postal service already practices residential delivery. This could evolve into a trend where carriers use more hybrid delivery options like SurePost and SmartPost.
- Driver becomes merchant. This one is pretty wild. Apparently, retailers are shipping items you haven’t ordered but believe you might want using your shopping data. The carrier has the opportunity to sell it on site. It’s taking products ordered in the past or “recommended items” the consumer might like off the website and bringing it to their doorstep. This concept has all kinds of implications:
- How much are retailers risking by shipping an item the customer didn’t purchase?
- Who pays for returns?
- How much are those returns going to cost?
- How is the payment processed and by whom (the carrier or the retailer)?
- Do they charge a transaction fee to the retailer if the carrier handles the payment?
- Who technically “owns” the additional item at this point, the retailer or the customer?
As you can see, there’s a lot in play affecting the last-mile delivery process. Consumer expectations are only going to become more demanding, so stakeholders are working to make the last mile foolproof to ensure a seamless customer experience.
Last mile inefficiencies are more prevalent as timelines for residential and commercial deliveries are expected to be shorter, and the importance of last-mile delivery continues to rise. The multiple players in this game are on the same page – evolve the last mile. Make it efficient, so the customer experience is a seamless one.
What other last-mile logistics challenges have you heard of or experienced? What innovative solutions would you like to see applied to resolving the last-mile problem?