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Cliff Holste

Supply Chain Digest
Material Handling Editor

Logistics News - Sorting It Out

Cliff Holste is Supply Chain Digest's Material Handling Editor. With more than 30 years experience in designing and implementing material handling and order picking systems in distribution, Holste has worked with dozens of large and smaller companies to improve distribution performance.

March 21, 2018

Sorting It Out: Moving Data & Products Fast is Key to Attracting New Consumers


Progressive Logistics Companies know what their Customers Need Before they Do

 

In today's quick response environment individual consumers and business customers alike want to check the availability of inventory and the shipping status of their orders on-line. Progressive shippers/retailers are able to synchronize the activities of multiple warehouses, or multiple partners in the supply chain, to provide a seamless real-time view of inventory and order status beyond the four walls of the DC.


Many national retailers are utilizing the inventory in their neighbor stores to fill customer orders when necessary to satisfy next day or same day delivery schedules. Industry reports indicate that consumers are willing to pay more for faster delivery. As a result, it’s no coincidence that major companies such as Google, Amazon, and eBay have focused on developing expedited home delivery services. The impact this strategy is having on local delivery services is huge. Even utilizing Uber drivers to make the last-mile delivery when necessary.


Retailers are beginning to prepare their transportation networks for traffic fluctuations caused by the rapid growth in online sales. Traditional transportation methods such as UPS, FedEx and USPS may not be successful in all regions and retailers are beginning to search for alternatives to satisfy their needs. In order to accommodate faster shipping times, changing regulation and infrastructure limitations, retailers and their transportation partners have started to research delivery alternatives including click-to-deliver locations, local regional carriers, drones and much more. By focusing on last-mile delivery alternatives retailers are able to provide and guarantee exceptional service levels to their customers and adapt to the constantly changing omnichannel retail environment.

 

The following was provided to SCD by Jamie Gottlieb, Content Manager at Roadie www.roadie.com


Holste Says...

Putting customer needs and expectations at the heart of logistics operations, results in greater marketing effectiveness, increased sales, loyalty and greater customer satisfaction.

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Overcome Last-Mile Challenges

 

Before launching last-mile delivery, retailers will need to overcome these four challenges.


1. Build Demand in High and Low Volume Markets

Studies have shown that consumers will pay a premium for faster delivery. Researchers also expect same-day service revenue to hit $987 million by 2019. And the opportunity to address that change has never been better. But what people say and what they do can be different things. That’s why drop density is a significant factor in launching a last-mile delivery service.

 

The number of drops in a delivery route feed into the costs of a retailer’s last-mile delivery service. Without high density, costs rise exponentially. Customers in one zip code have a high demand for same-day delivery. But the customers in the neighboring zip code couldn’t care less. Do retailers eat the costs to cover an entire market or forego the market altogether?

 

Most say the former. And nothing hikes costs quicker than unused delivery trucks or unnecessary hiring. Retailers will need to find demand in both markets or rely on a solution that gives them the ability to flex up and down based on volume.


2. Transform Brick-And-Mortar Storefronts into Distribution Centers

With record-setting store closures, retailers are shifting focus toward their omnichannel strategy. It’s a seamless integration between store, website, and fulfillment. And most are looking at transforming their brick and mortar storefronts to do it.

 

Yet retailers aren’t thinking about the size of store footprint. They’re thinking about their ability to hold enough inventory. A customer could buy bedding online from Bed, Bath, and Beyond. Or Williams Sonoma advertises same-day delivery for a new mixer. But if those items aren’t in stock at a local store, the last-mile shipping costs to make sure it gets there same-day would be astronomically high — or just downright impossible.

 

To balance online demand with in-store supply, most retailers are currently renting 3PL trucks just to send a few boxes of inventory. And the cost and complexities of that solution make it unsustainable; retailers will need to find a new way to win in last-mile logistics.


3. Reduce Click-To-Deliver Times

It wasn’t long ago that a one-week delivery window was lightning fast. But now, that same window would be enough to stop you from buying something in the first place.

 

E-commerce retailers are constantly fighting an uphill battle of reducing click-to-deliver times — the amount of time from when you purchase an item online to when it arrives at your doorstep. Amazon keeps setting the bar higher with no signs of slowing down.

 

Outside of a delivery workforce, retailers are looking to technology and standardization to trim time on every delivery. From route optimization to omnichannel management, every piece of the supply chain needs to transform. That way, it can support an efficient last-mile delivery service.


4. Find A Scalable Last-Mile Delivery Workforce

The sharing economy has shifted the delivery landscape. Most retailers find that the emerging field of alternative delivery providers isn’t sustainably meeting business needs. Many label them as on-demand couriers — essentially “Uber-for-packages.” And they have strict size limitations, limited flexibility, and poor unit economics.

 

Retailers need to find a last-mile delivery workforce that flexes based on customer demand. It also needs to offer a national footprint. And it shouldn’t require businesses to spend millions in headcount or infrastructure.

 

That’s why many are solving last-mile logistics with Collaborative Delivery. The model that leverages existing resources — employees, customers, and people in the local community within close proximity to stores or warehouse — as a flexible and more cost-effective workforce option versus other delivery options.

 

Not only are they closing more sales and improving customer satisfaction, but they’re also increasing speed-to-market for last-mile shipping.


 

Another factor is that social media has changed the consumer’s expectation for collaboration. With the Collaborative Delivery model consumers reward retailers who get to know them intimately and deliver on every interaction. Delivering a smarter shopping experience means you can:

  • Create a single view of each customer - including preferences, propensities, transaction history and social media interactions - and use advanced analytics to derive actionable insights.

  • Target individual customers with timely, relevant and personalized offers delivered via their preferred channels.

  • Enable customers to research, buy, track, receive and return purchases wherever, whenever and however they please.

Going forward, web retailers are exploring interactive technologies that will anticipate the restocking needs of their customers (laundry, cleaning and bathroom supplies for example) and deliver supplies to them automatically before they run out. As it relates to certain types of medications, this is already happening.

 

Providing this level of service requires integrating order fulfillment operations with trading partner systems so logistics activities can be monitored in real-time. Visibility tools allow users across the supply chain to receive alerts and notifications when events occur or don't occur so that a service provider can take proactive steps rather than just react.

 

Given that a successful customer service strategy involves a blend of concept and technology, the key question is – what makes a winner?

  • Is it sending electronic data interchange (EDI) and advance shipping notices (ASN) over the Internet?

  • Maybe it’s a customer friendly order entry voice recognition system?

  • Is it a bar coding system that can increase inventory accuracy and reduce picking and shipping errors?

  • How about an automated manifesting system to speed packing and shipping?

  • If receiving and/or shipping accuracy is an issue – consider incorporating an automatic check weighing system to speed up the process.

  • Is it time to step up to a higher level WMS and/or maybe adding a WCS?

  • Or, for those companies who are playing catch-up, perhaps it’s just the ability to electronically take and place orders, and receive payments?

The truth is that each of the above involves tested and proven strategies that really work to speed up transactions throughout the supply chain and are deployed in the top performing logistics operations. But they need to be put in the context of your environment and your corporate need for speed.

 

Between of the web, smart phones and tablets, it is more critical than ever that shippers have a unified, executable and measurable business and technology strategy that allows customers to interact in the way that is most convenient and productive for them.

 

Final Thoughts

 

Putting customer needs and expectations at the heart of logistics operations, results in greater marketing effectiveness, increased sales, loyalty and greater customer satisfaction. Shippers/retailers who are not currently working on deploying interactive technologies that will expand and improve customer services and increase transaction speeds, are falling behind.


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