Andre Pharand, global management consulting lead for postal and parcel industry with Accenture, reveals the findings of the firm’s new study on creating the sustainable last mile for e-commerce deliveries.
The study, which focuses on urban areas, examines ways to make the last mile “faster, greener and cheaper.” Pharand defines the last-mile “ecosystem” as one consisting of four major elements: retailer, delivery service, city, and consumer.
The key to sustainability lies in the creation of local fulfillment centers, defined simply as those placed closer to the urban consumer, as opposed to the giant distribution centers that are often located outside major cities. The study examined the possibility of driving 60% of all e-commerce delivery though local facilities. But for that to happen, Pharand says, the various elements that make up the last-mile ecosystem would need to work together, and possibly share assets. “It’s necessary for delivery companies to rethink last mile, and for retailers to rethink last-mile fulfillment,” he says.
One form that local centers are increasingly taking is that of the micro-fulfillment center, small operations close to e-commerce consumers, and often located within the walls of brick-and-mortar retail stores. That’s an option for big-box or hypermarket retailers, which have the floor space to spare, but smaller franchises, chains and individual stores would need to outsource their order fulfillment to a logistics service provider.
The Accenture research concentrates on the final stage of getting product to the consumer because it’s the least efficient of all of the steps involved in order fulfillment. Last-mile accounts for 50% of the total cost, and 80% of that expense is labor, Pharand says.
Local fulfillment is also cheaper than the traditional model because it eliminates several steps in order processing and can take advantage of higher route densities, he says.
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