How Retailers Gain Control of the Last Mile of Delivery

Editor’s Note: David Gerrard is a C-suite Advisor leveraging over twenty years of experience leading profitable business growth, consolidations, turnaround, and M&A activities. Today he represents Coolfire as Strategic Advisor, Transportation Sector.

Faced with changing customer expectations, retailers must transform the last mile of delivery with better supply chain workstream collaboration.

Delivery drones and autonomous vehicles — these are just two of the innovations making a splash in the market for last mile delivery. But while these technologies are exciting, they aren't the only solutions that retailers need for the last mile delivery problems they are facing today. In an era of tight profit margins and digital disruption, many retailers and restaurants are struggling with an inefficient model for brick-and-mortar delivery.

Most retailers would agree that the current last mile delivery process is both too expensive and complex. As consumer expectations shift due to the near immediate nature of e-commerce options, real and innovative solutions are necessary to help brick-and-mortar companies keep up. The retailers who invest in the right solutions — think automated ticketing tools for agility and visibility, not drones — will be best poised to stay competitive.

Integrating emerging technologies like IoT sensors and RFID tags are just a couple of the ways operational teams can leverage new opportunities to increase transparency and efficiency. To take full advantage, it's time for retailers to join with their supply chain partners and lead the way to a better last mile of delivery with workstream collaboration.

Brick-and-Mortar Meets the Digital Customer
Retailers across the spectrum are dealing with the fallout of the e-commerce revolution. It doesn't matter if you're a big box store or a small mom-and-pop shop — the changing retail landscape has put pressure on all involved parties to meet consumer expectations. In large part, that's due to expectations that arose from online shopping:

Always in stock: Of course, products certainly can be out of stock online — but this is different from going all the way to the store only to be faced with an empty shelf. Out of stock products online have simple digital waitlist capabilities, or at the very worst, a comparable product is usually just a few clicks away. But to satisfy brick-and-mortar customers, keeping stock on the shelves requires a streamlined, low-error supply chain system.

Next-day delivery: In an effort to win over customers, online retailers like Amazon have continually upped the ante — resulting in next-day and even same-day home delivery, often at no additional cost to consumers. Consumers have now been conditioned to expect that near-instant satisfaction in all of their retail experiences. If they do need to wait for a product to show up, they want visibility into tracking and delivery. In response, more retailers have begun to offer next-day delivery direct from stores. This “ASAP” mindset demands a solution that allows retailers to offer speed, communication, and transparency.

Social media and reviews: Customers have grown accustomed to a more interactive shopping experience, composed of product reviews and social media influence. Retailers should be attuned to these conversations, but they should also be ready to respond — which means stocking the shelves with popular products as a trend is emerging, not days or weeks after the fact. Again, agility is key if retailers hope to keep customers happy and stay ahead of the competition.

How Last Mile Delivery Holds Retailers Back
Issues related to the last mile of delivery pose a major threat to retailers who aim to meet these high customer expectations. For one, the last mile is expensive — it can easily represent around half of the total shipping cost. This isn't surprising, given that the last-mile process is logistically difficult and inefficient, with drivers often facing congested urban centers and managing multiple or irregular inventory drop-offs.

The traditional last mile model operates on slim margins, and a lot can go wrong. For one, current last mile operations lack the agility to respond effectively to changing circumstances, whether that's an unexpected change in weather or a sudden surge in customer demand. Traditionally, backend disruptions all too easily disrupt the customer-facing end, resulting in lost profit.

Retailers also often lack visibility into their en route inventory — will they receive the right products, in the right amounts? When will their shipments arrive? What conditions are their products currently in as they go through transit? Without real-time visibility, there is little that retailers can do but wait and see if the actual order matches up to what they expected.

When retailers do try to coordinate a change or check on shipments, miscommunications are rampant. This is due to the fact that most supply chain stakeholders still rely on email or phone calls to communicate, which results in late or inexact information. All too often, these frustrations translate back to the waiting customer and result in missed sales opportunities. Retailers must do better. And today's digital era may demand more of retailers — but it also provides them with numerous opportunities.

The Retailer Renaissance
Brick-and-mortar retailers have a lot to offer customers, even customers whose demands are shaped by their online experience. But staying competitive requires a digital transformation for supply chain partners as a whole. Retailers are well-positioned to kickstart and control an industry transformation. The fact is, retailers have more leverage than they think when it comes to pushing innovation in the last mile delivery space. For instance, Walmart recently started requiring produce suppliers to use blockchain tech for enhanced visibility.

In practice, changes like these demonstrate that retailers have an opportunity to take on a leading role — not just to command the process but to guide end-to-end alignment that benefits all stakeholders (and translates back to the consumer). But to truly guide this alignment and solve challenges in the last mile of delivery, the supply chain needs workstream collaboration.

Gartner defines workstream collaboration as an emerging segment of the technology industry that was designed to improve team coordination, performance, and communications. To drive better coordination among supply chain partners and deliver better customer outcomes, teams need collaboration technology. A workstream collaboration tool can deliver a conversational workspace for real-time group collaboration.

Retailers need persistent communication with their partners so that all parties can adjust to changing circumstances. Fast communication equals agility — it's easier to reroute a delivery truck or add a last-minute stop if everyone is already on the same page. Improving this process can include adopting cross-partner instant messaging channels and even targeted alert capabilities.

An automated tasking and ticketing system can also help provide retailers with real-time visibility into operations. After all, the difference between an unhappy customer and a happy one is often a simple status update. By gaining insight into the progress of inventory with RFID tags, IoT low-power sensors, and GPS location technology, retailers can meet customer expectations for a transparent delivery and restocking process.

Only with the right technology can retailers take control of the last mile and turn it from a stressful ad-hoc challenge to a streamlined, automated workflow. Workstream collaboration tools combine communication capabilities with real-time visibility, providing supply chain partners with a new way to respond to customer demands. With workstream collaboration, retailers aren't stuck in the middle — they're taking the lead.

SC
MR