Overcoming the Last Mile – Omni-Channel Logistics

As retailers continue to struggle with the demands of modern consumers, 4C Associates’ Christian Pohl considers how to tackle the costly last leg of online deliveries

The term ‘last mile’ was first used in the telecommunications industry, where it denotes the final stretch of cable which connects a network to a consumer’s home. Put simply, it’s when a main distribution artery reaches a bottleneck and has to break in to many much smaller sections to reach its final destinations.

The same is true in a supply chain. The last mile is the final stretch which separates a good from a consumer. In the past, this leg of the journey was not an issue as consumers would pick up their chosen goods in a shop. However, the rapid rise of internet shopping has complicated matters.

An evolving challenge

In the last decade, traditional bricks and mortar retailers have come to accept that shopping will increasingly take place online. John Lewis, for example expects 40% of its sales to be made through its website by 2020.  This change in behaviour has led to a number of challenges, one of which is the high cost associated with the last mile of a delivery.

Rising demand in residential delivery services has meant an increase in costs and issues related to capacity. These issues are a particular concern during times of high demand. Christmas, for example, is a particularly difficult period to manage, and companies find themselves having to balance ever-growing costs with consumer expectations. This situation has led many major retailers to explore their options outside of home delivery.

A multi-faceted approach

The largest retailers soon realised that adopting a single approach to personal deliveries was not only unsustainable, but also counterproductive. Whereas consumers enjoy receiving their purchases at home, they do not enjoy coming back from work to find a failed delivery note. Or, even worse, having to spend a day at home waiting for a delivery.

The modern consumer wants a choice and the modern retailer wants a cost-effective means of delivery. Put both together and it’s no surprise that market leaders have turned towards omni-channel logistics. The term simply refers to giving consumers multiple delivery options. One of these options, which is rapidly growing in popularity, is Click and Collect.

The rise of Click and Collect

The Click and Collect system allows customers to order goods online and then pick them up either in store, or at a select location. Recently, online retailer Ocado, for example, recently began offering click & collect services on the London Underground, following in the footsteps of several major supermarkets.

Click and Collect has so far proved successful as it responds to the needs of both consumers and retailers. It offers the former an easy and convenient way to pick up their goods and retailers a cost effective way to deliver. Neither party has to worry about missed deliveries and both can tailor the solution to fit their needs.

No one-size-fits-all approach

The above model is one of many which major retailers have been using. Other popular options include direct home delivery, delivery to third-party collection points (i.e. Doodle) and more. Providing such a multitude of options is not without its complications. Suppliers are having to align multiple delivery strategies with inventory management, increasingly complex and segmented delivery routes and, of course, customer returns.

Here at 4C Associates, we have found our experience of working with both retailers and the transport industry an invaluable asset when generating value for each side. Our flexible approach to finding solutions which suit all parties, is focused on reducing costs in each channel and innovative demand management.  There is no one-size-fits-all solution, but by working hand-in-hand with suppliers, logistics companies and customers, it is possible to devise an array of options to suit every need.

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