Among the competitive advantages used by companies that have e-commerce is free shipping and delivery on the day. Consequently, for many of them, mainly the smaller ones, the most expensive and challenging part of the logistics occurs precisely in the last mile.
Let’s analyze the main drivers of last mile delivery:
- Customer Expectation. In an on-demand economy , customers demand faster and more efficient deliveries, while expecting low shipping prices or even free delivery .
- Logistic cost. Last mile deliveries can account for 40-50% of overall supply chain costs . Reason why smaller companies resist expanding their services through e-commerce .
- Logistics Intelligence. Obviously, the last mile involves getting to the customer where they are. The delivery is facing the challenges of city infrastructure, complexity of access and even the other extreme, when the client is in remote areas and rugged terrain.
- Innovation Technology. As technology and connectivity evolve, the way people find out, buy, use and dispose of products changes, seeking more and more real-time information on the status of orders and tracking of shipments.
- Evolution of e-commerce . According to Statista , retail sales through e-commerce will continue to expand, reaching $ 4.88 trillion by 2021, worldwide. Therefore, delivery will follow the same growth pattern.
Now let’s propose a series of alternatives to solve the problems involving each of these variables:
- Crowdsourcing. Because of its disruptive concept, let’s start with cowdsourcing . It could be translated as collective collaboration of tasks and consists of outsourcing activities that, traditionally, were carried out by employees or contractors, leaving them in charge of a large group of people or a community.
An example of crowdsourcing is Amazon’s PrimeNow, where a flexible workforce is used to deliver quickly and efficiently. Uber, Airbnb and GrubHub are other examples of crowdsourcing applications .
From these examples, some logistics start-ups begin to appear , such as, and, to name a few, where a team of independent drivers is used to make same-day deliveries, for customers within their area.
- Warehouses close to the customer. Contrary to what is usually done, warehouses must be located in urban centers and large cities, since the highest concentration of customers is found in these areas. The convenient location reduces transportation costs, inventory levels and offers agility in delivery.
An example of this localization strategy is Amazon, achieving its option to deliver the order in just two hours.
- Drones, Robots and Autonomous Vehicles.The AGV and dispense drones not only drivers, but make it possible to deliver 24 hours of the day and solve much of this logistics. What still does not make this possible are mainly the regulatory aspects, but they will not take long to resolve. It is estimated that in the next ten years, 80% of deliveries will be made by autonomous vehicles.
As an example, Amazon, UPS and Walmart appear again, topping the list of leaders that compete for deliveries by drones. However, some start-ups such as and also start , which use or offer the service of AGVs to make last-mile deliveries.
- Advance Logistics. The Artificial Intelligence and Big Data provide more reliable and accurate for predicting demand even before the idea or desire is generated on the consumer. The advance logistics is one of the keys of the last mile and is closer to being implemented that the use of autonomous vehicles.
Like the example of, which was discussed in the August 2018 post, anticipating the generation of the order allows better planning of delivery logistics and, determining the behavior patterns of customer purchases, enables the optimization of the space in warehouses, speeds up picking and reduces delivery time.
The truth is that the importance of optimizing last-mile delivery is essential to remain competitive in medium and long-term markets. The support of technology seems to be the only alternative to provide solutions to the challenges we face, such as cities with more complex infrastructures, more demanding customers for services and increasingly expensive supplies.
Thinking about traditional logistics is no longer good business, let’s think about logistics 4.0.