Ketan Badhwar is the Supply Chan Solutions and ECommerce Lead (Pacific) at GEODIS. In this guest post, he shares his thoughts about how the last mile is one of the highest focus areas of eCommerce logistics. After all, millions are being spent by both seasoned players and startups alike to solve the last mile puzzle.
Now the logical question is - why so much focus on last mile? The last mile cost represents approximately 28% of the total cost of delivery. However, according to independent estimates, depending on the industry, the last mile cost may represent up to 40% of the transport cost of goods.
Money is being invested in new technologies and innovations alike for example electric vehicles, drones, cycles (for very congested delivery roots) combined with route optimisation technology, GPS, IOT and Big Data to identify and manage this leg of transport.These are very exciting developments with huge implications on the way companies engage with clients and deliver convenience. With introduction of Bots and Artificial Intelligence, some human interaction is also expected to be replaced by technology to enable customer interaction.
What last mile technology your company decides to employ is determined by your industry, geography, socio–political fabric and infrastructure as main factors. However, instead of just focusing on technology deployment and cost optimisation, the focus must come back to the customer. Here are four steps for last mile strategy success:
Determine the positive differentiation factorDo you wonder why, despite the advancement of very large eCommerce companies with billions in their war chests, your corner florist or cake shop with a simple booking tool often has thriving business?
It is the customer experience, the personalisation factor, the warm factor, or whatever you may call it. It is imperative that your customer feels a connection with you to repeat the business. In advanced economies especially, positive customer experience trumps technology and cost factors. Start with discovering the ‘X’ factor which attracts customers to your business model.
Talk to your customers and service providersIf you are working in transport, there are chance that DIFOT (delivered in full on time) is one of your scorecards. While DIFOT is certainly an important measure of last mile success, it is a good idea to pick up the phone and talk to your customers and service providers to find out the ground level situation.
You will be surprised at how many more insights you receive when you put the numbers aside and apply the “human” aspect to any situation. Following this, classify your learnings in categories ranging from exemplary to need urgent improvements.
Cascade down the learnings and improve the obviousTry this experiment: Go to a review website for a service with average reviews and notice the pattern of reason for the negative experience. What did you notice? Surprisingly, the reasons are similar for most positive / negative experiences.
Therefore, as a third step, once you have classified what works best and what does not, talk to your supply chain management team. Share your organisation’s vision and expectations with the last mile partners, your internal staff etc. Conduct training and make the organisation understand the benefits of a focused approach. On the other hand, quickly find out what did not work and how you can eliminate the occurrence.
Find synergies with partnersThe way your business model works is unique. While standardisation works well in other businesses, standardisation can stem your innovation in eCommerce logistics.
You want to work with partners who offer flexibility and speed of execution rather then a large standardised solution because it works for other customers. Staying relevant by differentiation and innovation should be your top focus, and you should maintain these standards when choosing your last mile partner.
About the author
Ketan Badhwar is the Supply Chain Solutions and ECommerce Lead (Pacific) at GEODIS. GEODIS is a Supply Chain Operator with a direct presence in 67 countries and a global network spanning over 120 countries, managing its customers Supply Chain by providing end-to-end solutions.