Despite advances in logistics, last mile delivery is an enduring problem
Customer demands have transformed last mile delivery. Buyers once accepted that waiting was part (and parcel?) of ordering something online. However, the development of an on demand culture has bred impatience. Customer expectations have never been so high. As a result, many retailers and brands now offer customisation, personalisation, and a range of delivery options to boot. Amazon, the reigning champion of ecommerce, can even deliver some products within an hour. Nevertheless, the last mile delivery dilemma hasn’t gone away. Why?
The importance of the last mile
Last mile delivery is the last stage of the journey in getting a product to a customer, whether that be an individual or another business. It’s notoriously difficult for a number of reasons. Firstly, it can be very costly to send separate shipments to various locations, especially via ever changing routes. Another factor is the unpredictability of customers themselves – will they be there to receive the delivery? What happens to the delivery once it is left outside a property? Ironically, customisation and personalisation have done nothing to help the process by complicating inventory. The growth of ecommerce has accelerated demand, and therefore competition.
The difficulties associated with the last mile are not something that businesses can afford to ignore. A McKinsey study of over 4,700 global consumers found that 25 per cent of respondents were willing to pay more for same day, or next day, delivery. Shipping options are a pivotal decision maker for online customers, so businesses depend on providing the best possible experience. Out of this has flown some interesting ideas – drones, for one. As well as parcel carrying UAVs and same hour delivery, Amazon’s suggestions include Amazon Key, the controversial remote controlled security service, and putting 3D printers inside their vans to marry customisation with superfast shipping. However, it’s likely that these services will only be available to Amazon Prime members. Smart transportation companies like Citymapper, Uber, and Lyft are also working to fix last mile delivery, although their job is to get humans rather than inventory to an intended destination. Regardless of what the cargo is, these companies have made tangible improvements to transportation through the accumulation of – you guessed it – data.
Deliverance by data
While data itself is certainly important, it’s what organisations do with it that makes all the difference. Organisations can apply a range of data analysis techniques to track demand and formulate a strategy to meet it. Predictive analytics, for example, can be used to forecast what customers will want, and when they’re going to want it. Another complementary approach is to apply prescriptive analytics to suggest real time, relevant ways of responding to demand. Combine these two techniques and it’s possible, in theory, to build a supply chain based on in depth data forecasts. The ideal result is the creation of a system that gets item or person X to point Y in the most efficient way possible. . . gathering location data all the while. If any part of the journey changes, the algorithms can shift to accommodate it. Ironically, though, streamlined services are not always the best thing for businesses. In terms of generating revenue, inefficiencies have an important role to play. If there is no friction, then where is profit made? This isn’t a problem for companies with the resources to control the entire product to consumer process, but it’s a kick in the teeth for the organisations that exist purely to fix these friction points.
Data is solving deliveries, metric by metric. Unsurprisingly, it’s data rich companies that are coming up with the most promising solutions to the last mile delivery dilemma. This is worrying for smaller businesses who will be hard pressed to compete. It also reduces the need for enterprises that aim to solve friction points in supply chains. If only big organisations can provide solutions to last mile delivery then perhaps this will lead to the development of delivery as a service, intensifying competition between major retailers and logistics and freight firms. Either way, dealing with the last mile delivery dilemma is reliant on appropriate data strategies. The future of consumer data collection is uncertain, but if businesses can continue to demonstrate that it is used to build quality products and services, then customers will be more comfortable with exchanging information. As Amazon has continually shown, the better the data, the quicker the delivery.
Has your business come up against the last mile delivery dilemma? What other innovative techniques could be used to streamline supply chains? Will data solve deliveries? Comment with your thoughts.