It’s a great question, and I think that’s the beauty of the last mile as it is today. There are so many players, and you as a retailer do not need to build your own logistics, to be in house. You can leverage so many logistics arms,and fleets, driver fleets out there. You can work with 3PLs, couriers, crowdsource companies…you can actually build your own crowdsource [fleet], you might even just have your store associates delivery for you.
There are so many ways to do that, and [use] what we call different point solutions to augment a strategy to create the customer experience that you want.
However, what is an imperative: You want to control that from one place, so you still keep the customers on your platform, you keep the data on your platform, you keep the branding on your platform. Then you’re in the best position not just to deliver the perfect customer experience, but also, the most optimized one.
Absolutely. The next stage to it is, that’s what currently available. But where do you see the next evolution of last mile technology?
Guy: Well, last mile technologies will be different in terms of evolution. We’ll see it going in different ways. First, we’ll see a lot of consolidation in the work of 3PLs and crowdsourcing, we’re going to see bigger and bigger companies hiring more and becoming an army of drivers that can come and help you. That will keep help costs down and drive efficiencies, and help you optimize how you serve your customers. It will be a great thing to have.
Another thing is we’re going to see more autonomous vehicles and, maybe later on, drones, come in and help us drive even more efficiencies by reducing the need for drivers and autonomously connect and serve your customers.
Moreover, the more you want to create the perfect customer experience, the more you need to go from last mile and start stepping up into the middle and first mile. If a customer selects merchandise and selects that they want it within an hour or same day, but that merchandise is not in a store near them – it’s on a truck that’s on its way to the store and should get there by later today – having visibility into that will allow you, by connecting middle and last mile, to serve the customers to their SLAs, their expectations.
“The complexity will grow, and the need to digitize, connect, and centralize all the last mile resources one place will become an imperative.
So what we’re seeing is more options, more resources, more different types of fleets coming in.
This world will be more convoluted and complex, on one hand. It will put us in a great position to drive more efficiencies and do more with what we have. However, the complexity will grow, and the need to digitize, connect, and centralize all the last mile resources one place will become an imperative. So you can orchestrate, automate and optimize it, regardless of what you use.
Today you might use this [particular] 3PL; tomorrow you might work with 5 different 3PLs. You might work with crowdsourcing, a different market, different rush hours, different mechanisms, different strategies…everything can change, but the one thing that will not change is your workflows, your business flows, and all the exception management that is centralized.
In a way, you’re building a future-proof solution that will help you handle not just today’s challenges, but also the growing challenges of tomorrow.
Ok. I suppose the final thing is, it’s a great concept – technology is definitely a last mile enabler that glues it together. Retailers do know what they need to achieve, but the biggest thing is the cost.
Having those KPIs and metrics to justify the return on investment of the board is huge, and it comes up a lot in my conversations. How would you advise a retailer on the metrics which will actually justify the ROI for them?
Guy: There is soft and hard ROI. The soft ROI that can be material to every business is you expanding your business.
A great example is, we worked with an auto parts company in the U.S. It’s a large company in a very competitive market. One of their challenges was when a mechanic wants to order a part, they need that part as soon as possible, so they contact multiple vendors, and the first vendor to show up will win the beat. What they wanted to do is drive more automation into that. So today they connect the orders with inventories in the local stores, with mega stores, they connected their drivers…and now it’s [just] a question of data algorithms. An order comes in, they see where the nearest inventory is, they find the nearest driver, perform autodispatch, they deliver in much less time than ever before, and as a result they win so much more business and returning customers.
That’s soft ROI, because it didn’t reduce any cost; however, you increased your business, your customer base, number of transactions, and returning customers. There are endless examples like that, where you are in a position to digitize the customer experience and offer so many more delivery options.
In hard ROI, there are endless ways of doing that. It can be route optimization, where you do more deliveries with fewer drivers, saving significant costs. With increasing fuel prices in the market, route optimization makes you drive fewer miles than ever before. With warehouse time and loading of merchandise, when you drive the right optimize…we actually have a customer who reduced time at the warehouse by 40%. That’s material savings for them [and] means that they need fewer resources to fulfill demand for the day.
Same for time on site. If you assume it’s ‘x’ but it’s more than that, you’re hurting customer experience and won’t fulfill certain orders. But if the time on site is less, then you miss the opportunity to do more with the same fleet.
It goes into replacing hardware – we have a customer that actually replaced their scanners that drivers used to scan in the warehouse, that reduced major costs to them.
It goes into support. If you think about customer support, so many people are ready to call and ask where their packages are. Now that everything is connected, you see a dramatic decrease in calls to customer support.
There are so many pieces and players in the last mile getting involved, driving that in the most efficient way: soft ROI as well as hard ROI savings.
Exactly. It’s kind of like looking at the long term as well as short term, and actually having benchmarks to reflect that.
That was extremely informative. I want to remind everyone that Guy will be joining us at the D3 Retail Supply Chain Summit. Guy will be talking about delivery in the Age of Amazon.
Guy, I know you’re a busy man, but I want to say thanks for joining us today.
Guy: Thank you, I look forward to D3 and to our session.