While companies devoted vast resources to the use of technology since the rise of the internet, the final mile continues to be a tech-lacking aspect of supply chain management. However, the rise of software-as-a-service (SaaS) and cloud-based transportation management systems (TMS) are creating new opportunities for using technology and uncovering waste. To maintain competitive advantage in shipping, C-Suite executives need to know the top final mile trends to expect and how they build on logistics visibility.
How to Realize The Substantial Benefits of Final Mile Logistics
1. Final Mile Trends Include a Focus on Efficiency to Proactively Manage Final Mile Volume
Final mile is also changing to reflect a need for better service much more specific than the final mile. In fact, more companies are focusing on the final 50 or fewer feet of the last mile delivery trip and how to augment efficiency. These changing perceptions come in tandem with a growing sense of increased demand on the final mile among today’s fleets. According to FleetOwner, “a joint study issued earlier this year by the University of Washington and Seattle Dept. of Transportation found e-commerce and urban growth has led to a dramatic increase in the number of vehicles circling the urban core. Without steps to correct inefficiencies, the number of truck trips in the downtown area of Seattle could double by 2023.” Such improvements will save fuel, reduce the talent strain on the industry, and help to increase customer service.
2. Popup Fulfillment Centers Continue to Replace Traditional Distribution Centers
Traditional fulfillment centers have relied on a typical, business-to-business supply chain, but e-commerce changed the narrative. With the flurry of activity in e-commerce and traditional retail, more companies sought to increase distribution beyond traditional fulfillment. While this trend has been in place for a few years, the recent supply chain coronavirus crisis catalyzed more companies to create pop-up fulfillment centers to meet demand. However, the forced implementation of popup facilities created an opportunity as companies realized increased efficiencies and benefits that went beyond the short-term needs. The benefits are evident and could help companies respond during peaks throughout the years. As reported by Multichannel Merchant, “popup fulfillment centers can be a win-win for brands and consumers. Shoppers are not concerned with what happens behind the curtain; they just want timely delivery, especially now with ecommerce dominating retail. Case in point: a recent report from PWC shows 62% of consumers expect orders to be delivered within two days of purchase.”
3. The Uberization of Last Mile Is Here
There was a time when the idea of a Uberization of trucking and logistics, including final mile delivery service, seemed out of reach. Then, Instacart and DoorDash started working with grocers to offer final mile delivery service on items fulfilled in brick-and-mortar stores. Obviously, fulfillment in this model may be unrealistic for items that are not frequently purchased or immediately available in a brick-and-mortar store. These Uber-like services further offer an opportunity to eradicate the costs of final mile delivery by passing those charges onto customers in the form of delivery fees charged by the third-party delivery service provider. Some stores may even employ full time drivers that use personal vehicles to deliver necessities to local areas—an immense opportunity to reduce last mile congestion in urban areas. According to Industry Week, “in any case, stores can stand to cut a significant amount of costs by having employees deliver from stores, as the “last-mile” costs for delivery are a significant part of fulfillment costs. Employee delivery is potentially even better than having a third-party such as UPS or even Uber drivers do it (also being tested) as they would have to drive to the store, whereas the employee is already there. Furthermore, in the case of Walmart, two-thirds of the U.S. population live within five miles of a Walmart.”
4. Logistics Final Mile Trends Will Invest More Into Artificial Intelligence
The application of artificial intelligence is another of the top final mile trends to affect logistics that will dominate 2020. Artificial intelligence is much more than simple personal assistants, and it can be used to streamline processes, including:
- Reduced delay between replenishment and order fulfillment.
- Smart routing of orders that considers real-time inventory availability and demand for local areas.
- Increased use of big data analytics’ insights to better measure and manage performance of the final mile fleet.
5. The IoT Enables Better Traceability and Real-Time Communications to Digitize the Final Mile
The final mile has always suffered from challenges in visibility and communications within the final mile. Leveraging the technologies of the Internet of Things (IoT) gives companies the opportunity to track final mile movements by GPS and Bluetooth to seamlessly track arrival and departure of trucks from docks, movements in smaller cities and rural areas, and a communications path for drivers. Instead of simply hoping to contact drivers to see status, companies could use the IoT to query the status and location of a shipment at any time. As a result, customers can receive real-time status updates and reduce inbound calls to the facilities as well.
The Final Mile Trends Will Continue to Build on Efficiency
Throughout the logistics industry, companies want to build more efficiency from the first mile through the final mile. And, the top final mile trends will help companies reduce waste, save touchpoints, lower risk, and improve customer service levels. Of course, a final mile capable TMS, such as the Cerasis Rater, can go a long way in leveraging the full set of the final mile trends to achieve those goals.