As the race to shorten delivery times continues to escalate, micro-fulfillment strategies have grown in popularity. Ranging from highly automated small warehouses to retail storefronts, micro-fulfillment centers enable delivery times in hours or even minutes, rather than days.
Last-mile delivery is, of course, an integral stage in the micro-fulfillment process. However, amid a nationwide driver shortage and unprecedented e-commerce demand, this final link in the chain is too often a bottleneck for on-time service.
Following are three areas of focus for last-mile delivery in the micro-fulfillment ecosystem to facilitate more consistent success, particularly when contracting with independent or gig-economy workers.
In traditional warehouse fulfillment environments, pickers have specific, defined responsibilities. They are intimately familiar with their warehouse’s layout. Speed and accuracy are stressed and rewarded.
Can we expect an independent gig worker, untrained in picking and looking for products in an unfamiliar environment, to perform at the level of professional pickers? Grocery micro-fulfillment, in particular, has tasked drivers with these responsibilities, and it warrants consideration.
How should they be compensated for these additional responsibilities? Are they provided with technology (such as voice, pick-to-light and automation) to assist in their duties? What are the insurance ramifications if they are taking on these roles?
While solutions will likely vary by micro-fulfillment center, these are questions that must be addressed in this new model.
Micro-fulfillment success relies on nimble last-mile delivery to nearby customers, and that need is increasingly tasked to independent contractors.
Despite all the talk of a driver shortage, there is a fleet of gig economy workers uniquely positioned for micro-fulfillment delivery and ready to be harnessed. While this web of drivers exists, it’s severely fragmented within the silos of individual companies and delivery apps.
Initiatives such as California’s Proposition 22 have resulted in delivery drivers being classified as independent contractors, juggling gigs through multiple app-based platforms simultaneously.
The solution is to unite this network of gig workers. The last-mile economy needs to acclimate to drivers’ independent status and draw on the independent contractor ecosystem. This is an essential approach to creating the nationwide network of accessible 1099 labor.
Rethinking Best Practices
One of the biggest concerns for companies considering a micro-fulfillment model is the availability of drivers — more specifically, quality drivers. This lack of quality is a common complaint in the industry, and it highlights the need for responsible drivers who are expected to fulfill orders correctly, work quickly and consistently report for assignments.
However, with heavy competition and ease of switching jobs in the gig economy, driver longevity is often fleeting. If a micro-fulfillment operation is stalling at last-mile delivery and struggling to attract drivers, it might be time to look in the mirror and take stock of how you’re motivating those drivers. Are you providing them with an assignment quickly? Is the job priced to encourage them to accept?
Implementing options such as daily quick pay (versus traditional weekly or bi-weekly compensation) or by assignment provides instant motivation, as well as the means to fuel a vehicle to take on additional jobs.
Partnering with a healthcare company to provide affordable coverage and support is an excellent way to attract and retain drivers. For the vehicle, discounts on car insurance, roadside assistance, vehicle certification programs and vehicle maintenance are highly effective motivators.
While best practices for micro fulfillment are being written in real time, the key to last-mile success lies in attracting and retaining drivers, particularly those in the gig economy. In addition to the aforementioned topics, here some additional recommendations for consideration.
- Better batching. Partner with a software team to better optimize assignments to drivers. A user-friendly system that utilizes artificial intelligence, with the ability to batch jobs together, allows for drivers to take on multiple assignments along a route, empowering them to earn more while providing businesses with quicker access to deliveries.
- Offer perks. Creative financial, educational and personal incentives, such as above-minimum wage pay; tax software, and vouchers for restaurants, gyms, movies and more, encourage drivers to become “solopreneurs.”
- Screening done smarter. One-size-fits-all motor vehicle reports or background checks often result in turning away drivers for not meeting the highest levels of scrutiny. Consider progressive, customized reports that are proportional to drivers’ preferred gigs. This approach can streamline driver enrollment and prevent companies from turning away viable candidates.
Aaron Hageman is owner and chief executive officer of Delivery Drivers Inc.