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TRANSFORMATIONAL TECHNOLOGY: SPEEDING UP THE LAST MILE LOGISTICS

03/05/2019

Last mile logistics is not solely the literal last mile; it could be the last 10 miles or 1,000 miles, or in fact any distance. It does, however, cover the period between when the product arrives at the distribution center to when it reaches the end user. Thus, it represents the final step in the logistics chain.

It’s fast becoming one of the most crucial steps for logistics companies to succeed in, and for good reason. With e-commerce having experienced exponential growth over the last few years, more retail stores are shutting by the day, and there is an ever-increasing need for faster and more efficient deliveries. From food shops delivered within two-hour windows, and outfits ordered and worn within the day, consumers expectations are rising – and companies need to act quickly to meet this demand. The answer? Invest in innovation.

Packaging supplier Rajapack investigated how technology is transforming last mile logistics. With insights from Glen Walker (COO of online marketplace Trouva) and Bertand Nicoli (Director of Operations at Mindful Chef), here’s how innovations in last mile logistics are allowing companies to speed up the system and capitalise on its clear profitability.

Tracking and traceability

These days, the likes of live-tracking and GPS mean that the last mile in logistics can be monitored more effectively. It’s important for customer trust, because it allows them to know where their order is, and when it will arrive. People have come to expect this level of service: “Just because the logistics chain is complicated for the retailer doesn’t mean it has to be for the customer,” says Trouva’s Walker.

Tracking is vital for the company’s visibility too, and provides a chance to improve their last mile. Bertand Nicoli of Mindful Chef says: “We believe that the customer has a better delivery experience when we are able to be involved closely with the last mile. Because of this, we have full visibility when it comes to routing, courier loads, ETAs etc. and this allows us to pre-empt any problems and deal with customer queries much more efficiently.”

Delivery by drones

It’s said that 79% of deliveries will be done by drones in the future. They’ll be capable of carrying up to 15kg as well as take the most direct route to the item’s final destination. Their appeal to companies trying to get ahead of the curve are limitless: they cut costs of labour (often the highest cost in the delivery process), as well as offering constant availability, able to work 24 hours per day with speedier service.

Granted, there are some things yet to be sorted out, including drone regulations and how drone traffic control would work. Plus, Mindful Chef’s Bertand doesn’t think they will take over in cities “due to density” but suggests it “could be an effective way to carry out deliveries at low cost to more remote locations.”

Autonomous Ground Vehicles (AGVs)

Another autonomous courier of deliveries is AGVs. With seven companies already speeding to get theirs on the streets, it’s now a matter of when, not if. These will be mobile parcel lockers monitored from a control point, that follow a set route along the road. Customers will be notified of the time the vehicle will reach them and then be expected to collect their items from a specific locker. Companies like Amazon are pouring money into this technology, with the goal of controlling the entire shopping process from click-to-buy to delivery. Though this is an expensive investment, McKinsey predicts it can reduce retailers’ shipping costs by 40%.

Packaging innovations

Finally, technology has the potential to transform the way that packaging is put together in a way that can improve the final step of the process. One of the ways this is being done is through robotics such as arms that sort small items into boxes; an increasingly popular choice among both manufacturers and retailers.

Packaging innovations are something that Nicoli of Mindful Chef is passionate about, particularly for the food and beverages sector: “I think packaging innovations will be important in keeping food fresh and goods in the condition in which they are meant to be received. The e-commerce industry is so huge that innovation in packaging will be richly rewarded by consumers and so should have brainpower and capital diverted to it.”

The above is a taster of how technology is transforming the last mile of logistics, at a time when this final part of the process is becoming more and more profitable for retailers – and more and more important for consumers. And it’s not all drones and self-driving delivery vehicles. Companies that are early adopters of accessible technologies like live tracking, real-time data and efficient packaging processes can capitalise on the speed and efficiency this creates – and make a real difference to their business profitability in the process.

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Finance Derivative is a global financial and business analysis magazine, published by FM.Publishing. It is a yearly print and online magazine providing broad coverage and analysis of the financial industry, international business and the global economy.