Inside Logistics

Supply Chain Smarts: The last mile is getting smarter

New technologies are making last-mile perfection easier


April 27, 2018
by

Emily Atkins has been editor of MM&D Magazine since 2002.

Getting the last mile right – on time, intact and accurate – is the ultimate indicator of e-commerce success. Responsible for up to 50 percent of parcel delivery cost, it is an area that remains a huge challenge – and opportunity – for many supply chains.

There are so many ways the perfect delivery can go sideways. The customer is not at home; the package is damaged; the customer is at home, but the delivery doesn’t arrive in the specified window; porch pirates steal the package.

And when it isn’t right, for whatever reason, items have to be returned, re-creating the challenge in reverse. With customers demanding free deliveries in ever-tighter windows (same-day in many large urban areas), and traffic congestion moving the bar ever higher, it’s no wonder organizations are looking to creative new ways to get goods into customers’ hands in a timely fashion.

Delivery innovations

New delivery technologies are a favorite option under consideration. Drone deliveries, mobile package depots and even drop-offs in private vehicles have all been suggested and even tried out with varying degrees of success. While each of these innovations – collectively termed X2C – solves part of the last-mile puzzle, none of them takes the service to a truly new level that eliminates all the challenges of getting customers’ purchases where they need to be, when they need to be there.

It’s true that smart devices make the last mile a little shorter, enabling 24/7 secure parcel pick-up at depots without the need for human attendants. Many organizations are entering this space, offering even grocery pick-up in specially designed temperature-controlled kiosks at public transportation stations, convenience stores and apartment buildings. Returns are also being managed in this manner with designated drop-off locations.

Smarter options

The use of smart technology doesn’t stop at the pick-up and drop-off point, however. Advances in artificial intelligence are opening up possibilities for even more last-mile options.

For e-commerce sellers, the use of AI algorithms makes it possible to select the most efficient and cost-effective delivery method for each individual order based on multiple factors. That might mean employing a traditional delivery provider like FedEx or UPS for one order and then an UBER-style courier for the next.

For companies providing delivery services this means increased competition and pressure to integrate their own data analytics and AI processes into delivery and route planning. With proper execution, optimizing operations through the use of these tools can net significant savings.

Collaboration

Big data availability also promotes cooperation among players in the same space. Armed with the information you need about your own operations, and working with a compatible partner who is similarly informed about theirs, it is possible to leverage big-ticket expenses like space, transportation and even staff through the old-fashioned concept of sharing.

Sharing facility costs or trucking space with non-competitive companies can net big savings by turning relatively small players into a larger buying group. With today’s capacity limits driving prices up, there could be a substantial advantage.

As Calum Lewis, supply chain operations director UK & I, Lego said at a conference recently, ‘collaboration’ sounds soft, but actually requires hard work. “It requires negotiation and bringing challenges to the table in order to find the right solutions. That is not always nice.”

Mix, match, leverage

As long as e-commerce and omni-channel continue to grow and maintain popularity the last mile will remain a challenge. The factors that make it a complex logistics problem are just intensifying.

The good news is that this intensity is driving innovations, from new physical means of delivery right through AI-driven solutions and coming full circle to old-fashioned collaboration facilitated by access to big data.

While the options for solving the last-mile challenge are numerous, growing and hard to keep tabs on, this also means that the executives responsible for e-tail operations can pick and choose, leveraging the ones that best suit their business.

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Supply chain smarts is a new regular column. It’s intended as a forum for industry professionals to share an area of expertise. If you’d like to contribute, contact emily@newcom.ca.