When it comes to fulfilling e-commerce orders, the shortest distance between two points is often the toughest to traverse.
The problem is figuring out how to navigate the so-called last mile: that final, crucial stage of getting product to an impatient and demanding consumer.
The supply chain woes of recent months, including gridlock at key transfer points and a shortage of both trucks and drivers stemming from the COVID-19 pandemic, only served to exacerbate an already problematic task. E-tailers and their logistics partners are expected to execute flawlessly on deliveries to homes, offices, stores and lockboxes in urban, suburban and rural settings alike. With the relentless growth of e-commerce volumes, that becomes increasingly difficult to do.
The rise of e-commerce and customer-facing applications for smartphones have radically altered the relationship between buyer and seller. Prior to that technology, brick-and-mortar retailers only knew about their customers to the extent the latter came into the store. Customer service was largely a matter of how well the shopper was treated by a sales clerk.
Now, thanks to the power and promises of Amazon.com, customers expect rapid delivery — sometimes within a matter of hours — coupled with real-time reports on the status of their orders. And that requires an unprecedented degree of cooperation between the merchant and its logistics partners.
The physical dimension of that challenge is all too evident today, with carriers struggling to overcome bottlenecks at ports and warehouses, along with shortages of the vehicles, containers and chassis required to keep product moving. Equally important, though, is the need to maintain the flow of information that accompanies those shipments. And that’s where technology comes to the fore, as a means of helping retailers to negotiate the last mile.
The foundation of today’s information revolution is the internet of things, granting access to a wealth of information about product details and shipment status through the use of smart tags and sensors. Retailers, for their part, can deploy sophisticated analytics to make sense of trillions of data points, with the aim of producing and balancing inventory in accordance with actual demand.
Still to come is the ability to ascertain inventory levels on a continuous basis, as well track individual SKUs from a manufacturer in Asia to point of purchase in the U.S. “The technology exists today, but it’s not yet used widely,” says Derek Wittenberg, managing director of Progress Partners, a specialist in mergers and acquisitions of technology companies. “We’re still years away from it being broadly adopted, to [analyzing] very granular data.”
Digitization — the technology buzzword of the moment — promises to have a particular impact on last-mile logistics, Wittenberg says. All related assets, including vehicles, containers and the products themselves, can be made visible in real time. And that makes it possible to build accurate schedules of the people required to get the job done.
The last-mile landscape of the future will incorporate not just retailers and their customers, but also the third parties that make it possible to get product to the customer’s door, Wittenberg says. The picture grows increasingly complex as Amazon acquires more of its own equipment and people to handle deliveries, sidestepping the traditional parcel-handling giants such as UPS and FedEx.
Wittenberg predicts continued strength in software investments for solving the last-mile challenge by all partners in the supply chain, and expediting the flow of physical goods and equipment. “Increasingly, infrastructure is only part of the story,” he says. “It’s about all these different software solutions that help manage delivery and make sure that dispatch is being done in an optimal way, and that things are being delivered on time.”
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