Cost Drivers, Challenges & Solutions
With the prolific rise in eCommerce fulfilment, an influx in B2C deliveries has exacerbated the last mile challenge.
There are still huge frustrations linking couriers and customers to ensure parcels arrive on time, in the right place, at the lowest possible cost. As demand grows for same-day delivery and specified time slots, pressure for shorter lead times is redesigning the operation and infrastructure of entire networks.
Growing Customer Expectations
B2B tends to be easier with higher densities and fixed known delivery points, whereas B2C is characterised by lower densities and variable delivery points, especially in rural areas. B2C fulfilment operations are also characterised by product returns for many eCommerce retailers.
In order to keep pace with consumer expectations retailers must provide a seamless experience across all touch-points of a purchase journey. A delivery service that doesn’t supply value for money, and fails to meet promises made online or in store, can be detrimental to customer retention. Unsurprisingly, careful selection of a carrier solution and investment in technology is becoming an increasing consideration of the supply chain, 13 getting it right will provide a real source of competitive advantage.
The Last Mile Challenge
The last mile can be the most expensive and time-consuming component of the fulfilment process. Let’s look at some of the key cost drivers, the operational challenges, and some of the solution trends.
- GETTING THE DRIVER TO THE EXACT DELIVERY POINT: Trying to find an address is the biggest offender for lost time. An accurate location description helps but the UK postcode system is unable to provide the precise information. There are a variety of alternative systems that can pinpoint exact locations using short codes, such as W3W and Mapcode.
- “SORRY WE MISSED YOU”: What if the customer is not in to correct errors in address information, receive an awkward parcel, or confirm delivery? A failed or incorrect consignment means a re-delivery cost or even loss of the parcel – managing these are a key lever on cost control and customer service levels.
- ALTERNATIVE PICK UP POINTS: An added benefit for the operation is to develop the use of collection points where customers can securely receive their parcels - examples include Amazon lockers or pick up points in shops or garages. This may not suit all but would increase the density of deliveries and reduce cost.
- DELIVERING TO A SMART SAFE PLACE: Initiatives such as customers adopting specially designed parcel receipt doors, smart home locks, or even smart car boot access systems may only receive limited future adoption but will enable first time secure delivery.
- ON DEMAND DELIVERIES: More dynamic vehicle scheduling can have cost implications where sufficient density of delivery is not available. However, this could reduce failures and the requirement for second, or even third, delivery attempts.
- AUTOMATION: Robots, drones, and eventually even autonomous cars, may in some circumstances have a role to play. Current delivery robot trials by Starship Technologies in Milton Keynes allow customers to select an address and time - hopefully minimising delivery failure. As this type of technology develops and demonstrates its effectiveness, operators may eventually fulfil a high proportion of deliveries in this way, reducing the reliance on humans with the associated labour availability and cost implications.
- FASTER FULFILMENT SOLUTIONS: Include mobile warehouses, and smaller urban warehouses, allowing products to be held closer to customers and delivered within hours. These can be supported by a range of delivery models, including crowdsourcing solutions, and provide highly flexible final delivery response.
- TECHNOLOGY: is also one of the key ways to improve efficiency, allowing planning, tracking and communication with the customer through a wide variety of channels including social media. This allows greater visibility and liaison, which will always be invaluable.
With the critical importance, and competitive advantage, of the final mile delivery to your supply chain it is important to select the right courier partner and solution. The rapidly changing dynamics ranging from customer requirements, delivery order profiles, carrier solutions and technology make this an area requiring ongoing monitoring.