There are two critical aspects of the logistics process – the first mile and final miles. How efficiently and seamlessly retailers manage these two essential aspects of the supply chain is key to their survival, according to research from Zetes.
Household names are falling victim to the success of more agile ecommerce players and their logistics partners, but not all is lost for established retailers. If they want to meet the demands of the ‘want it now’, digital-savvy consumers, they must rely on an efficient and well-connected logistics infrastructure to provide a seamless customer experience, every time; even in peak periods when up to a third of deliveries arrived late or incomplete.
To deliver a first-class experience, two critical aspects of the logistics process must be flawless:
- The first mile – a process triggered by a customer order, for picking, packing, validation and transport; and
- The final mile – getting the item into the customer’s hand, whether that is via click and collect from a store, at home or the office, a drop off point or smart locker.
How well retailers and their logistics providers can manage these two aspects of supply chain logistics is fundamental to their survival. They include keeping customers informed throughout and ensuring customers have a good delivery experience, provided 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 retailers’ options and recommends they should focus their energy to gain the edge and deliver a competitive customer experience.
Logistics efficiency in an urban world
Some 74% of Europe’s population live in urban areas, and a 69% increase in parcel deliveries is expected across Europe by 2021. This means that transport and logistics models need to focus on solutions designed for dense, developed cities such as Berlin, London and Paris where landing a drone would be a challenge, but autonomous commercial vehicles and electric vehicles have great potential.
McKinsey reckons Urban Consolidation Centres are gaining ground, providing a repository where deliveries from multiple suppliers are amassed, sorted and despatched to a specific area or street, meaning 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.
Retailers could explore the possibilities of night deliveries to reduce congestion during the day – allowing suppliers to use bigger trucks and lowering the number of deliveries. In some places this could mean asking local authorities to review overnight restrictions, and of course secure off locations, like smart lockers, are needed.
This model should increase the number of right first-time deliveries. Combining night deliveries with Urban Consolidation Centres, electric vehicles, load pooling, parcel lockers and autonomous ground vehicle lockers, are better for the environment, cutting emissions by up to 30 and the costs per parcel by 25% to 55%.
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 give consumers with delivery options. One way would be by tapping into the network of employees, customers and drivers to complete one-off deliveries.
Still, this is a volatile market: competition and funding constraints are the two main causes for the failure of crowd-sourced delivery start-ups, according to the IPC Global Postal Industry Report. To succeed, organisations need solutions that provide full visibility, allowing retailers to track and manage the performance of disparate groups to maintain quality and protect their brands.
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, according to Accenture.
Fulfilment and delivery are no longer an arm’s length operational function but fundamental and at the core of the business. Customer experience around delivery directly affects customers’ perception of brands, their purchasing decisions, loyalty and ultimately a company’s competitive advantage.
The new environment means greater complexity with more stakeholders involved in value creation (or destruction). Hence retailers need to consider how to embrace innovations enabled by new technologies and inventive service providers, in an affordable, efficient and sustainable way.
They need trusted, real-time information for visibility across the critical pathways to monitor performance to ensure:
- it is achieving the right level of engagement;
- delivery promises are met; and
- delivery methods are appropriate.
The entire experience represents the brand, from product to price, and the promised and actual delivery. Retailers must consider every aspect of the delivery experience and ensure excellent governance to delight the customer every time.