As supply chains transition from a supply-driven to a demand-driven process, transportation companies will need to adapt to this growing low-volume/high-frequency delivery environment.
We’re undergoing a paradigm shift in the supply chain. What once was a supply-driven process is continuing to evolve into a demand-driven one, due to the seemingly endless ways today’s empowered consumers can not only purchase goods but also dictate their delivery.
Supply chain traditionalists often used a linear-style diagram to depict a sequence of steps involving forecasting, manufacturing, and distribution to illustrate the flow of goods, information, and cash from supplier to consumer and back. The single-channel, manufacturer-to-customer processes eventually evolved into multi-channel distribution involving wholesale, retail, and support services. The goal of both single- and multi-channel distribution has always been increasing market penetration while optimizing the delicate supply and demand equation.
Today we see the term “omni-channel” being applied to steps in the supply chain, be it retail, distribution and transportation. Spurring this major supply chain change is the omni-channel consumer – armed with a laptop computer or smartphone – who wants to be able to use all channels simultaneously to search for, browse, evaluate and even negotiate the terms of a purchase of a particular item. The result is a system that is quickly becoming a demand-driven one, requiring new tools and solutions that should be adopted by everyone in the network of those who produce, handle, or distribute goods.
In this brave new world, brands still compete as brands always have – based on product innovation, quality, and value. But now a new dimension is surfacing. As quickly as a consumer can make a purchase with a click, that same consumer is dictating the expectation of fulfillment, in terms of delivery time and method. All of this adds up to a new level of customer experience, where among many logistics considerations, final-mile transportation plays an important role. The omni-channel consumer doesn’t necessarily care about how the product gets there; he or she just wants it at a specified time and place. But where will this place be?
The answer to this question may have significant impact to the transportation industry. Common among all of these channels is the need for purchased goods to be transported that final leg, or final-mile as it is sometimes referenced in the industry. What constitute the final leg can be many things. It could be a product being shipped directly from a manufacturer, from a distributor, or a retail store. Delivery could be to a home, a local store for pickup, or even innovative locations such as Amazon Lockers. So the battle lines are being drawn among transportation companies for a piece of the final-mile delivery business.
All of this creates many challenges and exciting opportunities for those engaged in the commercial transportation business, including trucking companies, truck leasing, rental and logistics providers. Of course, the express delivery giants – UPS and FedEx – will benefit from the increasing e-shopping population but what about intra-city parcel carrier, the DSD contract carrier, or even a private fleet carrier servicing a dense market store network? How might the types and configuration of trucks change to adapt to a low-volume/high-frequency delivery environment? Is it conceivable that a fleet of vehicles used today to deliver goods during the night can be double-utilized to fulfill store or consumer orders during the day? Think of auto parts, baked goods, maybe even newspapers.
What will it take for transportation providers to capitalize on this opportunity? Certainly, technology must be a significant enabler, including satellite and cellular tracking, driver communication, order visibility, proof of delivery, customer signature capture, returns processing among other functionalities. And as challenging as it is today to recruit, develop and retain drivers, how might the job description similarly adapt to final-mile delivery? Does some of this harken back to the days when the homeowner knew the milkman by name?
We’re interested in your thoughts.
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