Fast-changing consumer habits have put businesses under intense pressure to focus on last-mile delivery. But if they don’t get the rest of their supply chain in order first, 2018 could be a logistics nightmare.
A record number of stores closed in 2017, causing many to declare a retail apocalypse. But just because stores are struggling doesn’t mean consumers have stopped shopping. In fact, retail sales grew about 4 percent. Much of that comes from e-commerce, which grew an astonishing 14 percent in 2017. That shift has many in retail, fashion, and consumer products focusing on business models that get their products directly to consumers faster, cheaper, and more efficiently than ever before.
The net effect has been an increased focus on last-mile delivery. And we’ve seen lots of ideas for how to solve it — autonomous vehicles, drones, subscription services, and even Uber, to name a few. All out of recognition that consumers are mobile, have high expectations, and don’t always buy from stores.
Here’s where it gets tricky. These novel delivery methods cost money, and unless you’re Amazon and have millions of paying Prime members, you’ll have to offset the cost of last-mile delivery somewhere else in the supply chain. And even trickier, if the products are not positioned in places you can ship from, it doesn’t matter how good your last-mile capabilities are.
The last mile is only about 5 percent of the total supply chain. If we’re going to build a brighter future, now’s the time to focus on making sure the other 95 percent is up to the task. That means enhancing connectivity and visibility across the global supply network, streamlining the procure-to-pay process, and making sure every aspect of the supply chain, from stores and warehouses all the way upstream to carriers and factories are aligned to provide your end-consumers the best delivery experiences possible. Otherwise, the apocalypse will happen to you.