The first and final mile, key considerations for flawless and sustainable delivery performance

Consumers Market, Environment, Land Trasnport, Logistics, Rail, Reports — By on October 9, 2018 at 2:45 PM

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There are two critical aspects of the logistics process, the first mile and then the final mile. It is the efficiency with which retailers manage these two essential aspects of supply chain logistics in a seamless way that is key to their survival.

The face of retail is changing almost beyond recognition. As huge household names are falling victim to the success of the more agile ecommerce players and their logistics partners, retailers are being challenged like never before. However, not all is lost. If retailers are to appease the demands of the ‘need it now’, digital savvy consumers, they must rely on an efficient and well-connected logistics infrastructure, that helps them to provide a seamless customer experience, every time; even in peak periods when up to a third of deliveries arrived late or incomplete. [5]

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In order to deliver a first-class experience, there are two critical aspects of the logistics process that must be flawless. The first mile – a process triggered by a customer order, for picking, packing, validation and transport. And then the final mile – getting the item into the customer’s hand, whether that is in store via click and collect, at home, office, drop off point or smart locker.

It is the efficiency with which retailers and their logistics providers can manage these two essential aspects of supply chain logistics in a seamless way that is key to their survival. This includes keeping customers informed throughout and ensuring the customer delivery experience is achieved in the most efficient and effective manner. In a highly competitive, increasingly price pressured retail market, no company can afford to make customer promises that are too fragile or expensive to sustain in the long term.

Zetes looks at the options available to retailers and where they should be focusing their energy in order to gain the edge that results in a competitive customer experience.

Logistics efficiency in an urban world

74% of Europe’s population currently live in urban areas, and a 69% increase in parcel deliveries is expected across Europe by 2021. [2] This means that transport and logistics models need to focus on solutions designed for dense, developed cities such as Berlin, London and Paris where new delivery initiatives like landing a drone would be a challenge, but autonomous commercial vehicles and electric vehicles will have more appeal.

Urban Consolidation Centres are gaining ground, providing a location where all deliveries from multiple suppliers are brought, sorted and then dispatched to one specific area or street, resulting in fewer shipments and optimised loads. Using Urban Consolidation Centres could save companies 25% per parcel delivery, reduce delivery related mileage by up to 45%, cut vehicle maintenance costs, reduce emissions of nitrogen oxide, CO2 and particulates and ease congestion. [3]

Night deliveries could also be explored to reduce congestion during the day – allowing suppliers to use bigger trucks and reducing the number of deliveries. In addition to requiring local authorities to review overnight restrictions, this prompts the need for some form of secure drop off location, such as Smart Lockers.  If adopted, this model should increase the right first-time delivery ratio, as well as reducing drive time on less congested roads. Combining night deliveries with Urban Consolidation Centres, electric vehicles, load pooling, parcel lockers and AGV lockers, could also play its part in the environment, reducing emissions by up to 30%, while also cutting costs per parcel by 25% to 55%. [3]

Transforming the Store Environment

Many retailers are already looking to fulfil online orders from a store rather than the warehouse, creating high street locations that double up as a showroom and fulfilment centre, as well as handling click and collect and returns. This has the added advantage of increased footfall and incremental purchases while collecting or returning to store, something the pure-play retailer cannot achieve.

With the shift to both Urban Consolidation Centres and fulfilment from the store, there is a growing interest in new entrants to the delivery market, using collaborative, crowd-sourced delivery platforms and applications to provide consumers with multiple delivery options. Tapping into an existing network of employees, customers and drivers to deliver one-off products to anywhere in the infrastructure, is appealing. But this is a volatile market, with competition and funding constraints the two main causes for the failure of crowd-sourced delivery start-ups [4]. To succeed, organisations must invest in solutions that provide full visibility, allowing retailers to track and manage the performance of disparate groups to continually reinforce quality and avoid brand damage.

Embracing technology

In order to leverage any of the new and innovative options available to retailers, they must ensure that their infrastructure is underpinned by an agile, scalable and connected execution technology solution. There are many opportunities to achieve rapid first-time fulfilment and utilisation of assets and resources, through end to end visibility, to control costs and proactively manage every step of the process. However, just 13% of retailers are investing in technology to bring further agility and efficiency to the organisation.[1]

Conclusion

Fulfilment & delivery is no longer an arm’s length operational function; it should be fundamentally at the core of the business, as it directly affects brand perception, customer purchase decisions, loyalty and ultimately competitive advantage. However, with greater complexity, more stakeholders involved in the value creation / destruction, retailers need to consider not only how to embrace the innovation that is rapidly being enabled by new technologies and innovative service providers but also how to do so in a way that is affordable, efficient and sustainable.

Without trusted real-time information providing visibility on the critical pathways performance; how can a retailer ensure it is achieving the right level of engagement? Or that delivery promises are met and that delivery methods are appropriate? The entire experience represents the brand, from product to price, delivery promise to delivery reality. Essentially, retailers need not only consider every aspect of the delivery experience but also ensure excellent governance of that experience to continually delight the customer.

A flawless brand experience requires an intelligent, connected and collaborative ecosystem.

Download Zetes’ Transport & Logistics Report.

[1] Accenture Strategy Research – Can intelligent fulfilment fix retail delivery woes and 3 steps to same delivery cost reduction

[2] Cushman Wakefield – Urban logistics

[3] McKinsey – Urban commercial transport and the future of mobility

[4] IPC – Global Postal Industry Report

[5] IMRG – Lowest on time delivery for online retail in December

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