The last mile of any delivery has always been the most complicated part of the whole logistics supply chain.
Despite being the shortest part of any good’s journey, its inherent complexities make it the most expensive. In fact it can account for up to 53% of the total delivery cost. But profit margins are not the only concern when it comes to the last mile. Nowadays, delivery itself is one of the biggest influences in the consumer buying decision.
By being able to offer quicker, more convenient and sustainable delivery options, logistics companies will gain a significant competitive advantage as well as a foothold in the next generation of consumers.
Unfortunately, this is no mean feat. To meet the expectations expected by customers of today and tomorrow, we must rethink the whole urban delivery paradigm, through both transport
and warehousing. Discover the reflections and solutions proposed by Fm Logistic and the strategy consulting firm Roland Berger, by reading our White Paper.
Quick and free delivery: the best of both worlds
According to Global Web Index, free delivery is the primary purchase driver for 60% of internet users. On top of that, the accepted standards for delivery times have continued to shrink dramatically in recent years. Whereas before, 3-5 working days was the norm, the likes of Amazon have now made next-day delivery the benchmark. And the trend is set to continue, with same-day delivery already a reality and due to become increasingly in demand over the next few years. It already expected to be Worth $987 million in the US in 2019).
Not only do consumers want quick and free delivery, they also want maximum convenience. Long gone are the days where you would take a day off work for an important package. Customers want to have a choice of precisely when and where their goods will be delivered. They want to be able to change their choice and track their purchases throughout the journey. Similarly, they want to be able to return items with minimum hassle and at no extra cost.
All this may seem like a lot of work, but the rewards are well worth it. 93% of online buyers are encouraged to buy more products if free shipping options are available. And according to consultancy firm Capgemini, 82% of satisfied customers have shared positive delivery experiences with friends and family.
So, how can we achieve this?
Urban logistics: the two-pronged approach
With populations growing ever more urban, the supply chain needs to take on a new sustainable model. It must provides the flexibility and reactiveness sought after by today’s consumer.
Firstly, we must adopt greener and more automated forms of transport. They need to be adapted to the new regulatory and geographic landscape. As we talked about in our recent white paper, regulations are getting tighter and stricter. It means that fleets will have to be replenished with eco-friendly vehicles if they are to continue operating in city centres. Robotics and automation will also play a key part in the future.
According to Adriel Lubarsky, business development director at Udelv: “when you take the driver out of the car, the delivery cost goes down by about 50% to 60%”. Many startups are looking at innovative ways to accompany or even replace last mile couriers, from robots to drones. While drones have hogged most of the limelight, regulatory issues mean ground-based robots are most likely to pioneer the automated last-mile delivery industry.
But innovation in transport is not enough. We must also look at warehousing and fulfilment. On a general level, we need to shorten the last mile as much as possible. For example, by bringing distribution hubs closer to the city. On top of that, pooling distribution resources could allow companies to make significant savings both of time and money. Pooling opens up a whole new world of optimisation possibilities.
Inside the warehouse, automation is once again the word on everyone’s lips. The key to Amazon’s unrivalled success, automated fulfilment can increase order accuracy and reduce the time spent walking to pick orders by up to 40%. By leveraging big data and blockchain technology, orders will be picked, tracked and distributed with unprecedented efficiency.
The FM Logistic solution for Last Mile Logistics
One solution that exemplifies this two-pronged approach is FM Logistic’s CityLogin. Already in place in many european cities such as Madrid, Rome and Paris, it relies on small warehouses on the outskirts of the city and hybrid or electric vehicles to complete pooled delivery rounds. The sustainable urban solution helps companies improve their sales efficiency and reputation while decreasing their environmental footprint.
Contact us if you want to know more.