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Latest Issue: Nov/Dec 2018

The Last Mile of the supply chain demands precision

Supply chain modelling will help organisations meet consumers’ increasing demand for precision over speed in last mile delivery says Will Lovatt, Vice President EMEA at LLamasoft

Speed has long been at the heart of last mile delivery. Where next day delivery was once the benchmark for retailers competing to provide the utmost convenience to consumers, same day delivery quickly became the standard. However, precision in the last mile is what consumers are beginning to truly demand and retailers are starting to catch on.

With the likes of Amazon pulling the volume out of more traditional delivery networks through the ability to offer delivery in precise time slots, competing retailers relying on traditional supply chain networks must find ways to adapt.

Many of the larger retail organisations are already chipping away at their traditional supply chains to fashion a more agile approach. Those that are succeeding are doing so by repurposing their existing networks in inventive ways, implementing ‘dark stores’ that solely hold stock for online orders, utilising stock rooms in retail stores as localised delivery hubs and, in some cases, even picking stock ordered online from the shop floor.

These methods enable retailers to break down bulk stock more conveniently, providing a more streamlined approach to picking and shipping items to consumers in the specific time slots that they have chosen. However, the most plausible methods of achieving precision in the last mile are yet to be determined.

The principle of precision

Like so many other big names in retail, UK DIY retailer Wickes already offers one-hour click and collect, day-of-choice delivery and same-day delivery. However, recognising the growing requirement among consumers for speed instead of precision, the DIY retailer now also provides a choice of delivery the same day or delivery on a selected time and date.

This has been enabled by working with a third-party company to courier products to customers for less than £10 which is more than reasonable for most consumers. While there are many examples of retailers recognising the consumer drive for precision over speed, many retail organisations are yet to come to the realisation that speed is not the answer.

Early adopters of the push towards precision have gained a competitive edge, but the challenge is finding a viable route to providing precision delivery that is practical for the specific organisation and the type of products it supplies.

Retailers could all too easily become distracted by emerging technologies that are neither mainstream nor established as the answers to transforming their supply chains. While technologies such as drone delivery and delivery by a self-driving fleet will no doubt transform the supply chain in the long run, those that need to transform their supply chains now can do so by taking stock of their existing assets and recognising more inventive ways to use what they have.

Transforming the supply chain

Those ready to adapt can do so through supply chain modelling, leveraging data from various points across their existing assets such as stores, warehouses and distribution centres to build living models of their end-to-end supply chains.

By providing a clear visualisation of supply chain operations, modelling software allows organisations to recognise and iron out inefficiencies that stand in the way of precision fulfilment in the last mile. When it comes to restructuring supply chains, key elements such as risk and cost can be manipulated allowing different outcomes to be tested.

Given that every retail organisation is unique, with its own network of suppliers and routes to market, each organisation’s supply chain is also a unique entity. As such, retailers will benefit from adopting a supply chain application building platform, allowing them to tailor their supply chain solutions without having to adapt to a generic model that does not fully benefit their business.

By adopting the right supply chain management software solution, retailers can quickly analyse day to day the multiple sources of supply and all of the associated supply chain costs to consider any potential source, even when the service conditions change.

Traditionally, supply chain design has been a consultant-led process that has taken place on an annual basis or with even greater intervals. Supply chains must now be continually evaluated and re-modelled to ensure that retail organisations are able to meet consumer demand, even when that demand is shifting.

by Will Lovatt, Vice President EMEA, LLamasoft

This article appears in the May/June 2018 issue of Direct Commerce Magazine.