The pandemic has massively accelerated the adoption of e-commerce by consumers and businesses, compressing 10 years of growth into three months, and catalyzing a permanent shift in buying behavior. In North America, skyrocketing last-mile delivery volumes, rising costs, and the drive to return to the service levels consumers expect are forcing carriers and retailers alike to assess how technology can make last-mile operations more agile and effective.
The last mile is among the most complex and expensive parts of the supply chain. It involves incredibly high volumes, yet must perform with precious little time for planning each day. Many last-mile providers average 1.2 to 1.5 pieces per stop, versus one or two stops by truckload carriers delivering entire pallets of product. That makes for extremely different economies of scale. Other complexities lie in routing vehicles efficiently, having real-time visibility into order and delivery status, communicating to customers, and managing on-the-road exceptions effectively.
While COVID-19 has tested all aspects of supply-chain management, it has exacerbated last-mile challenges. Many retailers and carriers described a “super peak” in 2020, where shipment levels traditionally seen between October and January began in early April and continued throughout the summer and the holidays, ultimately eclipsing annual volume expectations. Order spikes clearly have a business upside, but these early peaks heighten the importance of being able to successfully flex while managing shipping volumes and capacity demands.
“Coopetition” is one strategy that helps to address the capacity challenge. In the courier industry, for example, it means partnering with competitors, or smaller companies that may have delivery capacity but not the large retailer contracts. One company has a fleet of more than 35 partner companies in Canada alone, to move excess loads that couldn’t otherwise be managed with thousands of its own vehicles and full-time employees. Leading tools and technologies can unify this intricate environment of different networks, systems and processes to simplify workflows for shipment and data sharing, and provide status information in real time to customers.
Route-optimization technology can help with the volume challenge. It creates greater delivery density by increasing the total number of stops per route. Last year, a large customer used route optimization to handle a 10% increase in delivery volumes, while reducing its total number of routes by 1% across a network of 28,000 stores. Similarly, at the onset of the pandemic, a national brand delivered three times its normal shipment volumes without increasing the size of its fleet. Some companies move 50,000 parcels per day through their networks on routes with hundreds of stops, making route optimization critical.
Dynamic delivery appointment booking is another capability used to improve delivery productivity while reducing costs. It allows companies to take in new orders during the day, and automatically dispatch them for delivery or service the same day. It’s also used to provide customers with delivery options (for greater service choice) that increase route density. In addition, leading retailers use the technology to drive top-line growth, so that customers can be presented at point of sale with premium delivery windows or value-added services.
As last-mile providers strive to meet shipper demands and new market conditions, technology offers the ability to flex with increasing delivery volumes, reduce the time and expense required to plan and execute routes, and manage in-transit exceptions. Making the last mile more effective, scalable and responsive is the only way that providers will survive, especially as brands focus on a return to the delivery service quality that customers had grown to expect prior to the pandemic.
Shawn Winter is vice president of mobility solutions at Descartes Systems Group.
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