The last mile starts with a single step
A journey of a thousand miles starts with one step. Or so the ancient Chinese proverb goes. It feels appropriate for today’s retailer dealing with last-mile fulfillment. Consumers place an ever-growing amount of strain on brands and retailers. Shoppers are looking for (demanding, even) free or cheap shipping, and we want our stuff within hours, not days... Let alone weeks! But what are brands and retailers to do? Simply providing better bells and whistles at the front end of the customer experience does not suffice. Much like the Chinese proverb states, the success of last-mile fulfillment starts well before a package arrives at the customer’s front door.
You can’t manage what you can’t measure
One of the biggest challenges with last-mile fulfillment is that it costs brands money - a lot of it. Consider that our retail supply chains are built for volume. We optimize the movement of goods by consolidating inventory, delay final assembly to allow for shipment of less expensive materials, containerize bulk items to maximize efficiency and leverage massive vessels to move goods around the world—everything from mammoth container ships to freight trains and 18-wheeler trucks. The supply chain isn’t optimized for single orders, much less thousands of them each day. The chain breaks, or gets very pricey, when businesses are trying to serve their stores and DCs as well as individual ecommerce customers. And last-mile shipping costs vary. If I don’t have a good sense of where all my inventory is in the supply chain, it becomes that much harder to fulfill an order at the lowest possible cost.
We tend to focus on the last mile because it’s got the most direct impact on customer satisfaction. But before you tackle that last mile, make sure you understand all that is happening in the miles prior. What are the true costs associated with getting that inventory passed through the entire chain?
The nodes in your supply chain should be strategic, not cost centers. Supply chains are complex networks that include suppliers, manufacturers, warehouses, stores, banks, and logistics providers, to name a few. When you consider each of these nodes a cost center, they become a necessary evil that shifts the mindset to one of reduced spending and margin protection. Retailers and brands must recognize that the extended supply chain is the main enabler of differentiation. We all looked at Dell in awe in the 1990s as they revolutionized the personal computer market because of their finely tuned supply chain, or how Zara’s supply chain ensures the fast fashion giant has fresh new batches of style in the stores in a timely fashion. Before you optimize your last mile, are the other nodes of your supply chain acting as strategic players in this choreographed dance? Can your warehouses and stores act in unison to tackle your last-mile deliveries? With the explosion of ecommerce, and the empowering of the consumer via digital technologies, the entire supply chain must step up to become strategic in chasing last-mile fulfillment optimization.
It’s the network, stupid
All the partners and players within your extended network are vital to your overall success, and by extension your last-mile delivery. The network goes beyond your supply chain; it encompasses all the players that touch your ability to bring product to the customer. While the main cost of last-mile delivery is in the labor, as part of your network, how can you better optimize it? While some may look to eliminate that cost by automating it, can your brand use that as an opportunity to interact with the consumer? Your network includes all the nodes mentioned above, as well as other aspects such as labor, partners, and those not directly within your supply chain. How can you leverage these assets to ensure the last-mile fulfillment does not become a cost center, and where you can ensure maximum returns on your relationship with your end customer?
Getting that new Cleveland golf wedge, Tiffany’s infinity bracelet, or latest Patagonia puffer vest to your location is becoming an ever-growing challenge for brands and retailers. Due in large part to our expectations that seem to have no boundaries. But savvy retailers are understanding that their supply chain and extended network are vital tools to get that last mile right. Rome wasn’t built in a day, so don’t expect your last-mile fulfillment to happen overnight.