Disrupting Last Mile Delivery

Why is the last mile the hardest mile?

The Smiths asked this very question on “Is It Really So Strange” and it’s caused countless sleepless nights for many in the supply chain. As consumers turn to e-Commerce to purchase goods the traditional supply chain revolution has begun. Increased expectations from speed to the overall customer delivery experience are key fundamentals that consumers now feel empowered to ask for. Supply chain companies need to keep up with the pace.

Crucially, technologically advances such have breathed life into the industry and new entrants with creative solutions are now coming to shake up last mile delivery. Where there is change, there is opportunity and it’s fair to say the supply chain landscape will change forever.

Typically the cost of Last Mile Delivery (LMD) currently accounts for 20-30% of the whole cost of delivery but the market is ripe for disruption. Costs and delivery times are now reducing because new trends are emerging.

Gig Economy

Urban Logistics and last minute delivery sectors are growing hugely just witness the rise of companies like Deliveroo. In the gig economy, instead of a regular wage, workers get paid for the “gigs” they do, such as a food delivery.

Technology has allowed these companies to leverage their advantage and offer jobs to anyone with a car or bike. They are able to analyse data and figure out how to do the job for less. They can fill capacity in vehicles that weren’t previously open to them. Think Airbnb, but for vehicles.

Post Office/Royal Mail

Royal Mail have benefited despite a decline in mail delivery. The increase in eCommerce has come at the right time as the cost of adding a parcel to a home delivery is minimal. Suddenly the Post Office can offer the delivery at a cheaper price than most carriers. It’s a great example of a company changing its business model and adapting to modern changes in the market.

Faster Fulfilment

The utopia for everyone, consumer and producer is on-demand or same day delivery. Tesco are now offering shopping delivery within 6 hours 24/7 across 300 stores. Whilst there is a premium to pay from £3 – £9 the service is in response to an 18% increase in demand from customers. It will also allow Tesco to ward off the threat by the imminent arrival of Amazon Fresh in the UK.

Urban Warehousing

Warehouses in strategic geographical locations help reduce the number of LMD and increase the chances of on-demand or same day delivery. This model has progressed further in the US with Amazon Prime having a number inner city hubs. With this offering they are now able to deliver the most popular products within 2 hours.

Up Sell Up Sell Up Sell

Retailers can look at their own data and predict cross-sell opportunities in the LMD process. For example a company like Abel & Cole can easily add extra product lines to its subscriber delivery. If this is outsourced to a 3rd party courier then a reciprocal arrangement where both parties benefit from selling extra goods can be agreed to boost sales.

Technology and the Future

Drone delivery, automated vehicle delivery and robots will dominate the delivery of the future. Once the automated vehicle is fully rolled out the usual limiters like employee shifts, availability and cost will be things of the past. Iceland are the first country to launch drone delivery in Reykjavik for takeaways. What takes 25 minutes in a car a drone can do in 4 minutes. At the moment the drone can carry 3kg over a range of 6 miles but this is just the start. Inevitably technology enhancements will increase both load and range.

Conclusion

Whether or not the future is autonomous these trends show that when innovation and creativity meet technology, the supply chain looks it might finally crack the LMD issues once and for all. The last mile may still prove to be the hardest mile but it isn’t half as hard as it used to be messrs Morrissey & Marr.

 

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