How to make last-mile delivery more effective
▉ Insight 1
Fundamental buyer behavior has been altered as a result of the pandemic, creating shockwaves across the business landscape.
This is heightening the need to improve last-mile delivery (LMD).
Consumers have changed the way they shop, shifting sales to online retailers and brick-and-mortar stores that can support in-store pickup or touchless curbside delivery. The consumer shift to online shopping has accelerated changes in business portfolios, assortments and digital strategies. A significant component of these changes is a heightened sense of urgency to adopt technologies to improve last-mile delivery (LMD).
This enhanced focus is logical, given that LMD is the most inefficient process in the entire supply chain, representing more than 50% of a product’s total transportation cost in our experience. At the same time, the last mile is the most visible part of the supply chain to consumers, and thus plays an outsized role in the consumer’s shopping experience and brand loyalty.
▉ Insight 2
Companies must invest in their LMD capabilities to meet continuously evolving customer expectations.
Digital technologies can help companies seize opportunities to improve LMD.
An array of tools, along with cross-industry partnerships, have already empowered rich, interactive customer experiences that necessitate new delivery models and provide total transparency and full visibility of distribution.
Digitally enabled LMD capabilities can create powerful, immersive and entrenched customer experiences while also reducing costs along the journey. Companies that retain customers while efficiently managing costs are poised to surpass competitors and thrive.
▉ Insight 3
The stakes are high, as are expectations.
Consumers increasingly expect a frictionless delivery process, empowered by real-time traceability, visibility and constant communication. Here are the key emerging trends and investments that businesses should consider.
Which emerging trends and investments should you be considering?
▉ Insight 4
The benefits are tangible.
We have seen that retailers can effectively triple the inventory they ship while reducing costs by 10% to 30% by properly optimizing their resource planning and warehouse management systems.
From a strategic standpoint, this may require:
- Growth strategy and competitive analysis
- Service-level targets
- SKU segmentation
- Customer segmentation
- Cost-to-serve optimization
- Omnichannel supply chain and partnerships
In planning, this translates to:
- Advanced forecasting capabilities and a demand-driven network with integrated business planning and systems
- An omnichannel network design and multi-echelon inventory management
- Agility to scale supply up or down based on market volatility
In warehousing, advanced capabilities include:
- Automated decision making
- Advanced picking automation and robotics to boost speed and performance
- Micro-fulfillment centers near demand points to expedite delivery enabled by spoke-and-hub replenishment
- Optimized warehouse management systems
In transportation, an optimized supply chain makes use of advanced technology to provide the best experience for customers. These capabilities include:
- Frictionless order management
- A network of owned or partner carriers with immediate availability
- Optimized delivery routes
- Supplier drop-ships
- Crowdsourcing and specialized couriers
- IoT-enabled tracking