The end-to-end supply chain encompasses many logistics functions, but the rise of e-commerce, especially over the past year due to the pandemic, has put an intense spotlight on last mile delivery. What makes last mile delivery so challenging? How has the pandemic transformed this process? What will separate the leaders from the laggards in winning this battle for customer satisfaction? Those are the key questions I discussed with Shawn Winter, VP of Mobility Solutions at Descartes Systems Group, during a recent episode of Talking Logistics.
What Makes Last Mile Delivery So Challenging?
Many aspects of the supply chain are complex, but what makes last mile delivery particularly challenging? That’s where I began our discussion. Shawn noted that last mile delivery has always been challenging because it is one of the most complicated and expensive parts of the supply chain. “With e-commerce, some of our customers are now averaging about 1.5 pieces per stop versus truckload, for example, where you’re delivering pallets of products in one or two stops, so the economies of scale are so much different. They also face very high volumes with very little time to plan and they have the challenge of creating the most efficient routes to maximize utilization of trucks and personnel.”
The Effects of the Pandemic
Shawn comments that the COVID-19 pandemic has affected all aspects of the supply chain for companies and their customers, but especially so for last mile delivery. He says, “Starting in April our customers were seeing volumes equivalent to what they normally experience during the Christmas holiday season and it carried right through the summer. Then it just exploded from October through January. One of our customers dubbed this the ‘super-peak’ season. This volume creates a lot of challenges just from an equipment and people standpoint, as well as in hiring and training.”
Another aspect has been that some major carriers have limited the number of parcels they’ll accept from large shippers, leaving customers to scramble for coverage.
Shawn thinks we’ll see another ‘super peak’ this year, possibly tailing off in 2022 as vaccines become widespread and people want to get back to shopping at brick and mortar. “I think what is good for the industry, however, is that people have been conditioned now to see the opportunities of ordering from home and the convenience that offers,” he says.
“To handle this, we are seeing coopetition where courier companies are banding together to manage the volumes with the flexibility to adapt to customer needs. Of course, you need the right technology to manage this effectively, especially since customers expect to see exactly where their deliveries are.”
How Technology Can Help
Shawn states that the flow of data has become as important as the delivery of goods, both from the perspective of customer visibility expectations and for payment purposes. “With some routes involving hundreds of stops, you can’t handle it with paper and clipboards.
“The data is important not just for the couriers, but also for their customers, such as retailers, to keep their customers informed, as well as to reconcile billing and payments. We’re also implementing artificial intelligence capabilities to help customers do predictive analysis so they can better plan to meet demand.
“Another important aspect of technology is ease-of-use. If it’s not easy to use, and interesting to use, people won’t use it. Scans won’t be done, data won’t be captured, and that impacts all areas of the supply chain.
“Lastly, the technology has to be fully integrated so all players in the supply chain — from couriers and their partners to shippers and their customers — have access to the data they need to fully realize the benefits. There is a wide range of planning, routing, mobility and data capture technologies that goes into this. Having this integrated technology is critical for all companies, but it is particularly important for smaller carriers to manage and grow their business.”
How to Compete in this New Normal
With all of the challenges of increasing volumes, more demanding customer expectations, and integrating partners and technologies, how can companies large and small compete in the new normal of accelerating e-commerce? What will separate the leaders from the laggards in this quest? Shawn had some interesting insights into what companies must do moving forward, so I encourage you to watch the full episode for his recommendations. Then keep the conversation going by posting your own perspective on this topic!
