Matt Gunn, Infor
“A journey of a thousand miles starts with one step…” or so the ancient Chinese proverb goes.
It feels appropriate for today’s retailer dealing with last-mile fulfilment. Consumers place an ever-growing amount of strain on brands and retailers. Shoppers demand free or cheap shipping, and want goods within hours, not days.
Simply providing better bells and whistles at the front end of the customer experience does not suffice. Much like the Chinese proverb states, the success of last-mile fulfilment starts well before a package arrives at the customer’s front door.
You can’t manage what you can’t measure
One of the biggest challenges with the last-mile is that it costs brands money – a lot of it.
Retail supply chains are built for volume. Businesses optimize the movement of goods by consolidating inventory, delay final assembly to allow for shipment of less expensive materials, containerize bulk items to maximize efficiency and leverage massive vessels to move goods around the world.
The supply chain isn’t optimized for single orders, much less thousands of them each day. The chain breaks, or gets very pricey, when businesses are trying to serve their stores and DCs as well as individual ecommerce customers. Without a good sense of where all the inventory is in the supply chain, it becomes that much harder to fulfill an order at the lowest possible cost.
Businesses focus on the last mile because it’s has the most direct impact on customer satisfaction. But before tackling that last mile, businesses must ensure that they understand all that is happening in the miles prior. What are the true costs associated with getting that inventory passed through the entire chain?
The supply chain is not a cost centre
Supply chains are complex networks that include suppliers, manufacturers, warehouses, stores, banks, and logistics providers, to name a few. When a business considers each of these nodes a cost centre, they become a necessary evil that shifts the mindset to one of reduced spending and margin protection.
Retailers and brands must recognize that the extended supply chain is the main enabler of differentiation. We all looked at Dell in awe in the 1990s as they revolutionized the personal computer market because of their finely tuned supply chain, or how Zara’s supply chain ensures the fast fashion giant has fresh new batches of style in the stores in a timely fashion.
The lesson is clear – before optimizing the last mile, are the other nodes of the supply chain acting as strategic players? Do the warehouses and stores act in unison to tackle last-mile deliveries?
With the explosion of ecommerce, and the empowering of the consumer via digital technologies, the entire supply chain must step up to become strategic in chasing last-mile fulfilment optimization.
It’s the network, stupid
All the partners and players within an extended network are vital to overall success, and by extension last-mile delivery. The network goes beyond just the supply chain; it encompasses all the players that enable delivery of the product to the customer.
For example, the main cost of last-mile delivery is usually labour. So how can businesses better optimize it? Can the brand use it as an opportunity to interact with the consumer? The shift in mindset is to leverage assets to ensure the last-mile fulfilment does not become a cost centre, but rather a source of maximum returns on the relationship with the end customer.
Savvy retailers are understanding that their supply chain and extended network are vital tools to get that last mile right. Rome wasn’t built in a day, so don’t expect your last-mile fulfilment to happen overnight.