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The Future of Last-Mile Delivery

by Vanguard Software

Multi-tiered global supply chain management is a beast that spans countries, regulatory environments, and seemingly innumerable partners. Omnichannel commerce ups the challenge further with an explosion of options in how we shop, sell, and ship.

While upstream operators play a huge role in meeting omnichannel demand for fast and free delivery, the greatest challenge is perhaps on those furthest downstream, in last-mile delivery.

Last-mile delivery is the final link in the consumer supply chain. It’s where carriers deliver products from final distribution node to end consumer, be that a city condo, rural home, store, workplace, car, or Amazon Locker. It’s hard to do well because unlike port-to-port freight movement via ocean, rail, and air, the last-mile delivery is fraught with unpredictability in traffic congestion, delivery route, receiver availability, and more. That’s why many experts consider the last mile the toughest slog of consumer-goods logistics. By some estimates, it accounts for up to 30 percent of shipping cost.

Alas, mega advances in delivery technology are on the way. As these technologies scale, so too will the need to integrate them with existing enterprise systems for planning and optimization.

Security and convenience build trust

The United States Postal Service, United Parcel Service (UPS), FedEx, and many others have been working for decades on the last mile, trying to improve both security and convenience. More recently, Amazon has attacked the challenge with new data, logistics, and sensory technologies developed for Amazon Prime.

Last year the company introduced Amazon Key, a keyless entry system. The service combines Amazon’s Cloud Cam with a smart lock to let couriers open front doors, drop off parcels, and re-lock homes, thus preventing thieves from stealing packages off of front porches. While only a small slice of customers have acquired the requisite tech (and trust in delivery drivers), it’s a bold move that may lead to numerous variations.

Already, Amazon has expanded the concept to deliver packages to customers’ cars, or at least the makes and models that can be unlocked remotely with services such as OnStar. Again, trust is an issue, but solid security and convenience have proven to be strong market motivators. Time will tell.

Drone delivery takes off

Meanwhile, in Reykjavik, Iceland, the online retail platform AHA made a deal with autonomous drone maker Flytrex to kick off the world’s first drone delivery service. Reykjavik is a sprawling coastal city with few skyscrapers and a mishmash of rivers, making the sky a more efficient delivery path than the ground. Clearly, there are many physical and regulatory hurdles to success. While such a system is as of yet impractical for many U.S. cities, it’s another bold move in last-mile delivery that will find applications, experts believe. Amazon, Uber, and other tech giants are testing small autonomous aircraft of their own.

In the U.S., researchers and entrepreneurs are experimenting with self-driving delivery robots designed to roll along sidewalks carrying lunches, groceries, or pizzas. Starship Technologies is currently testing a six-wheeled robot that can make deliveries within a 2-mile radius of its charging station. The bots have already racked up more than 100,000 miles of test driving and have convinced Domino’s Pizza to give them a go.

Cycle delivery beats driving

In Europe, DHL Express has introduced cubicycles, or manned bicycles, that haul up to 275 pounds in a cube-shaped trailer. The cubicycles have taken over 60 percent of DHL’s inner-city delivery routes in some urban centers. The operation is especially popular with carbon emissions watchers, and especially useful in cities with narrow streets where cubicycles can more easily bypass stalled traffic. Meanwhile, in Portland, Oregon, UPS has developed its own cycle delivery program in another bid to curb carbon emissions and a great example of old tech charged with new life.

Innovations must integrate

None of these examples represent the last word on the last mile. Rather, they represent innovation at work, and they’re sparking last-mile investments across the planet. With that, look for big changes in delivery, both on the road and in the sky. Indeed, the last mile has, at last, become a 3-dimensional passage, with the physical and informational dynamism to speed delivery, cut cost, and lower carbon emission. As we progress, enterprises must also focus on the capture and dissemination of last-mile data streams, and on the integration of that data with critical IT and enterprise planning systems.

Ideally, this will enable supply chains to optimize upstream workflow with last-mile execution, and vice versa. For omnichannel, this will increasingly require the capture, share, and analyses of point-of-consumption data, as well as Point-of-Sale data. The upside is that live vertical data integration has the potential to almost completely automate work orders and other requests between last-mile operators and upstream suppliers, whether for capacity planning, production, shipment scheduling, purchase orders, drone requests, and more. That’s collaboration in a nutshell, and most surely an improvement in both customer experience and supply-chain profitability.

About Vanguard Software
Vanguard Software introduced its first product for decision support analysis in 1995. Today, companies across every major industry and more than 60 countries rely on Vanguard Software’s Integrated Business Planning (IBP), forecasting and advanced analytic cloud platform. Vanguard Software is based in Cary, North Carolina.

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