E-commerce is revolutionizing how companies move inventory at such an incredible rate that even leading innovators are having a tough time meeting consumer expectations.
Case in point: just last year Amazon found themselves in the uncomfortable position of having to concede that they grossly over-promised on same day deliveries for consumers in Chicago’s South Side.
Simultaneously, same-day delivery is quickly becoming the new standard. 64% of consumers already aren’t willing to pay anything extra for two-day shipping, according to a new study by Deloitte.
To keep pace, a lot of companies are implementing advanced last-mile distribution and warehouse strategies designed to streamline logistics for an increasingly-complex delivery environment. A lot of potential exists in this space for innovative BCO/3PL companies, whose background in warehousing and moving goods presents them with a unique advantage. Here’s what to watch for forward-thinking inventory-movers looking to get in the game:
Many major retailers are choosing small local warehousing right in the heart of densely populated areas — even in the most expensive real estate markets in the country — instead of larger, more traditional warehouses in surrounding exurban areas. This new hyper-local focus puts LTL and last-mile logistics directly in the spotlight. Smaller hubs mean better delivery speeds, but they also present challenges when it comes to managing and moving stock between hubs, as well as getting inventory into the fulfillment flow efficiently.
Now, where many B2B logistics professionals have traditionally focused on moving large amounts of freight between ports and major retail hubs, many are looking to use their logistical expertise to aid in local delivery. Major trucking companies like Schneider National are acquiring smaller last-mile experts to expand their reach into this valuable niche market.
Changes to the supply chain and the increased focus on local warehousing will change the role of interstate carriers as well, where increased LTL between smaller local hubs will feed regional inventory movement, facilitating smoother business-to-consumer delivery.
Small Trucks, Big Problems
Last-mile distribution is notoriously difficult. Large retail stores are designed with bays that can handle an LTL rig, but most cul-de-sacs are not. That means that shippers are becoming reliant on a network of smaller delivery vehicles, which of course equals many more smaller loads.
Even under the best circumstances, packing a fleet of delivery vehicles to maximize efficiency is major challenge for delivery services. Smaller vehicles present a unique challenge when it comes to delivering large items, such as washing machines, which recent studies suggest are growing in e-commerce popularity. Some last-mile specialists are already retrofitting specialty vehicles designed to take on large parcels using a straight truck liftgate and increased safety and visibility equipment.
Seeing as how name-brand legacy carriers like UPS can’t keep up with demand, there’s untold potential waiting to be unlocked here.
Automatic for the People
Automation, in forms ranging from delivery drones to smart warehousing technology, will revolutionize the way people send and receive goods. We are already seeing warehouses being automated by leaps and bounds. Today’s improved Warehouse Execution Software (WES) is designed to better integrate with IoT devices to predict where and how demand will shift and allocate packages into the last-mile distribution chain effectively. This can mean fuller trucks and fewer trips (and, of course, a neater bottom line) during periods of increasing demand.
Better GPS technology and smarter warehouse management means unmatched visibility for consumers tracking their goods while in transit. Today, many retailers are going beyond IoT tracking checkpoints by adding GPS probes directly on packages, especially for time or temperature sensitive goods. New software exists for sensitive freight, such as refrigerated food, that’s designed to collect data about weather and traffic conditions along the delivery route. It uses this data to customize everything from packaging (how many ice packs per frozen good, for example) to loading and fulfillment for better delivery optimization, which is likely to revolutionize the way we shop for groceries in the years to come.
Be Ready for Uncertainty
Uncertainty puts a lot of pressure on your supply chain. The external pressures we face today are especially difficult for both domestic and overseas distributors and shippers — cyber attacks and uncertain international trade relationships, plus a increase in catastrophic weather events over the past decade.
Some logistics experts are choosing to diversify their supply chain stateside, locally, to cut excess volatility out of their flow. Others are looking to the gig economy to allow for more flexibility in last-mile distro, taking on additional labor as demand increases.
The future of distribution is here. As traditional retail looks for ways to compete with e-commerce giants, 3PL experts will likely see an increased focus on consumer-facing delivery services. Current models are having difficulty keeping up with demand, which presents a unique opportunity for companies who understand how to target needs they are uniquely suited to fill in this rapidly changing business ecosystem.
To learn more about how Globecon can empower your supply chain, contact us today.