Recently we completed some research that turned up some surprising trends which aren’t getting much attention but could fundamentally change the last-mile environment. Our top four findings are:
Trend 1: Inventory Proximity. Retailers are clearly investing in bringing inventory closer to the consumer: building closer distribution centers, shipping from store and investing to improve inventory insight to optimize shipment origination.
These investments make sense. They increase the speed of the delivery while decreasing the cost. But these investments also tear at one of the biggest barriers to entry, a nationwide network. If most of what is moved is local, then all that is needed is a robust last mile network and that is much easier to build and coordinate.
Trend 2: Reliable External Data. Finding the least-congested traffic route, when driving to work or anyplace else, used to be a guessing game. That changed with crowdsourced, GPS-based applications such as Waze that accurately predict drive times and optimize your route. These technologies can handle multiple addresses and will plot the quickest path to hit them all—seamlessly navigating around traffic snarls and along little-known paths.
Similar advances in telematics, weather and other reliable data types provide new sources for optimizing transport. This data and the associated technology enable drivers to rely on real-time insight, not historical data or their knowledge, as they optimize delivery.
Trend 3: Predictive Demand. A lot has been written about using Artificial Intelligence to understand and then predict consumer behavior. Investments in better understanding and predicting consumer-buying behavior empowers retailers to stage and more effectively inject content into shipping networks, reducing reliance on traditional fulfillment models while optimizing inventory management.
While not mature yet, these investments are progressing as artificial intelligence transforms the retail supply chain. These capabilities will reduce hub and spoke reliance and create micro-hubs that favor a local network.
Trend 4: Crowdsourced Labor. The smartphone has forever changed labor sourcing models. This trend has growing importance for shipping companies, especially in the last-mile, as retailers demand later delivery to accommodate later orders (when consumers are more likely to be home). This is when crowdsourced labor is most abundant.
Crowdsourced labor allows for more granular delivery nodes—vehicles filled with dozens instead of hundreds of packages. These new, smaller nodes can be optimized in very different ways creating an efficient network without the typical investment in vehicles and scanning devices to enable track and trace. And they can scale up and down rapidly, making more than 60 percent of delivery costs variable.
These trends have the potential to reshape the fundamentals of last-mile and the industry overall. Smart post and parcel companies are already taking advantage of some but, according to our latest digital research, The New Delivery Paradigm, there is much more opportunity. Delivery organizations need to be more aggressive and agile in their efforts. Last-mile dominance is at stake and it is a winner-take-all market.
Please leave your comments, thoughts, and suggestions at the bottom of this blog. In future articles, I look forward to exploring more insights from our research, but in the meantime, feel free to follow me on LinkedIn and Twitter.
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See this post on LinkedIn: Four Trends That Could Disrupt the Last Mile