Making the last mile work for you
Experts weigh in on how the last mile has stepped up a gear and how you can handle the load
It’s a time of turmoil and innovation in the last mile. With the massive rise in demand for e-commerce, there has never been a more important time to reappraise your last mile strategy.
In order to help you understand the trends and tactics, Reuters Events: Supply Chain sat down with experts from SEKO Logistics, GEODIS, Shipt (a Target company) and Scandit as part of a webinar to discuss the last mile and all the headaches and opportunities it encompasses.
Christian Floerkemeier, VP Product and CTO for Scandit, highlighted three key trends he is seeing: “The first one is something that really has never had the same attention [before], which was the safety and health of the people operating in the last mile and the people they interact with. That was really a game changer with COVID. We started talking about contactless delivery and really keeping the drivers, as well as the customer, safe. That's something that fundamentally changed.”
Chace Burnette, Principal Engineer for Shipt (A Target Company) also feels that the number one trend “Across all the different delivery services is contactless delivery. That's been one of the biggest, most effective things, just having the door drop-off orders…. We see about 90% of our orders now are contactless delivery.”
“The second thing” Floerkemeier brings up “is really the hiring of workers. There's always peak season, but we've seen for some of our customers what I would call an extreme peak season, where some companies … hired close to 100,000 employees within weeks.” Floerkemeier emphasises that this is “a whole different scale of hiring, and then all the training and all these forces around it – that really changed in that sense.”
That scale is driven by the overwhelming growth in demand. “In Europe, in North America, ecommerce has gone from like 15% of retail to 30% or more kind of overnight,” says Brian Bourke, Chief Growth Officer at SEKO Logistics. “We don't see those trends really reversing. You see what happened in places like China and Southeast Asia after SARS. E-commerce penetration just continues because buying behaviours adapt and, and then retailers and brands have to adapt to that new normal.”
The third thing Floerkemeier points out is how these additional pressures have meant costs have risen exponentially rather than linearly as delivery volumes have increased, adding “significant additional operational costs to actually deliver that volume,” making it a challenge to “somehow keeping the operational costs under control.”
For Bourke, it’s not been a case of sudden changes to the environment from out of the blue but more of an acceleration of critical trends from pre-crisis. “I can't think of anything that's been brand new that started in the past couple of months,” he says.
“We call it back to the future. You know, some things like aviation go back five years right, but some, some trends kind of jump forward five or 10 years, and I think one of them is parcel lockers. You started to see them really be introduced in a lot of places, a lot of environments, even in supermarkets and malls and locations where people already are going. I think you'll see that accelerate and that's empowered by technology.”
The challenges resulting from this extraordinary period are myriad, from the social distancing aspects to coping with the volumes.
First off, the quantities themselves are challenging for many at this time, alongside the supporting capabilities required to achieve functionality. For Shipt, they crowdsource shoppers who then pick and deliver the goods to their service members. While this has been a great position to be in at this point of pinched services but high interest in home delivery, onboarding shoppers has been a huge volume of work. “We actually doubled our shopper user base. By doing that, there's a huge cost in bringing on so many people. We are looking to basically make that process as slim as efficient as possible. There's always room for gains in those processes,” says Burnette.
Leanness is especially important as the quantities have meant “A lot of brands are now getting these surcharges from the integrators and that has been another cost challenge,” especially, says Bourke, when “we still have to practice social distancing,” and returns volume has shot up alongside outbound shipments.
The consequences of safety issues don’t end at the loading dock, however. “When you do a contactless delivery, for a heavyweight item, which is north of $2,000 of value, it creates challenges because there's no chain of custody,” says Bourke. “Luckily, with the technology that's out there, you can still take a photo at the address and the photo, and the device tracks GPS coordinates of when the delivery happened. So, the technology does enable us to be able to provide a contactless experience very, very quickly and we were able to deploy that almost immediately.”
Technology is going to be a critical enabler, especially as the crisis has revealed where there are gaps. The pandemic “Revealed a little bit about how agile our were our operations as well as the customers operations and how were we able to pivot and really leverage technology,” says Gina Anderson, VP Solutions & Growth at GEODIS.
“When it comes to technology,” says Bourke “all those initiatives that companies had in their queue, that they were going to get to someday on how to digitize their supply chain, or make it more agile, or more accessible for onboarding carriers, all of a sudden, those projects have become highest priority, because now the clutter is kind of gone away. It’s pretty clear what the need is.”
Those technologies might be of the highest priority right now, but it doesn’t negate the need for testing and preparation before rolling out initiatives. “From a technology perspective, having the foundation and doing scale testing, doing load testing during [this period] to make sure that the systems can handle these things,” has been a hugely important aspect for Shipt points out Burnette. “Normally, when we're testing these things, we're testing them at 10 or 15 times usual load to see what's the extreme that we're never going to hit but that we could actually survive. Then suddenly, this happens, and we are seeing a 10x to 15x load,” but “because of that extra testing, [our systems] have proven that they're going to hold up and they're going to stand up. We're able to weather these storms and get to the other side of it.”
Technology and services need not only be resilient but also flexible, a key theme that came across from all of the participants of the webinar.
Form the technology perspective this coalesces around two primary aspects: The ability to adapt both front- and back-end components quickly, and the capability to roll supporting technologies out to a wide range of devices securely.
“You need to be able to have Application Programming Interface (API) integrations,” implores Bourke. “That type of data integration is moving at the speed of e-commerce and I think those retailers and brands that have those API capabilities, are able to quickly pivot and we're able to pivot much quicker during this time and onboard new carriers…. Previously, that would have been really challenging but in during this time, it was much easier.”
For Shipt, they rewrote their app over the course of the prior year. “We moved to React Native as a as new foundation. It was just a joy to move to that technology and be able to implement the app inside of that platform,” explains Burnette. That basis gave them the flexibility to change the app to better meet the current times, such as putting “More of that training in real time in the app, which has been a huge thing for us, as opposed to the way things used to work a long time ago, where we would have to direct you to this website where you read through … and learn how to shop, how to pick produce, how to contact and message the member, all that kind of stuff. Now, because of the increased demand and the urgency around it, we're trying to get more of that into the app and into the experience to make sure that it's seen in real time.… It's right there ready readily available to you while you're doing your shopping experiences.”
Floerkemeier also notes that spreading facilitating technology through apps has come to the fore in the current crisis. When a driver or shopper “Brings their own phone and uses that phone and the app to do the job, it is something of course that you can scale very, very quickly and very efficiently…. You don't need to go and train someone on doing this. You don't need to manage a pool of devices.”
Another means to improve the experience finds Bourke is “Creating a portal experience, which gives you the ability to offer options and more control to the consumer, especially if you're shipping internationally… When you offer a portal experience, you can match options to what the consumer wants.”
Bourke believes that choice is also important in terms of the logistics train used for shipping. There is a “Need to have a diversified, agnostic carrier mix. Single-sourcing your carriers right now in e-commerce I don't think works anymore. By having more carriers in your mix, you can leverage and deploy more options and give more control, both for the consumer for the return, but also how it's delivered.”
“You've got to have some diversification,” agrees Anderson. This stretches beyond just the carrier to the facilities. “We have to also look at the micro-fulfilment centre, the urban warehouse, we have to look at being able to make this a profitable last mile delivery, and then work with our clients within their infrastructure to help design that, along with what we can provide.”
Anderson believes it will be key to move “Closer to the customer, and then injecting … more consolidated approaches and really leveraging other partnerships.”
Overall, Bourke implores companies to use this moment constructively. “I think the pandemic and how you can grow out of this is a great opportunity to re-evaluate your strategy.”