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Innovations in Last Mile Delivery

The Definition of Last Mile Is Changing and So Are the Solutions and Options

* By Sandy Smith *

If there was any doubt just how important the last mile was throughout the supply chain, consider this cautionary note from the 2018 MHI Annual Industry Report:

“An inability to solve the riddle of the last mile has driven many promising companies out of business,” the report’s authors write.

It’s clear to see why. “Look at where distributors were 15 years ago, with one big distribution center and customers ordering every two or three weeks,” said Bill Denbigh, director of logistics business development for MHI member Tecsys. “Fast forward to today. They actually are getting the same value of customers, but now, are getting an order a day. The order hasn’t gone up, but size has gone down. Transportation costs have gone up almost exponentially.”

Perhaps “riddle” is too simple for the heightened pressure that today’s last mile brings. It might be more akin to a Winston Churchill phrase: “A riddle wrapped in a mystery inside an enigma.”

That’s because the very definition of “last mile” is changing, says David Schwebel, senior director of business development at MHI member Swisslog Warehouse & Distribution Solutions. “There is the perception that last mile still means that I open up my front door and the package should be sitting there, or I order something and have to go pick it up for in-store delivery.”

Rather, he sees last mile as encompassing the physical, digital and cultural. Physical means that the package is in the hands of consumer “whether someone in the brown suit shows up and delivers it, or Walmart incentives me with a five percent off because I’m willing to pick it up in store. It is enticing the consumer to be part of the supply chain.”

Digital can mean anything from an Amazon delivery person snapping a photo of the actual package sitting on the consumer’s doorstep, or the enticements to wait for a longer delivery time.

But the most interesting shift is happening on the cultural side, he said. “We’ve been teaching consumers that you get your package in five days, back in the 1990s. Yet by the 2000s, Amazon declared, ‘Speed matters because speed is what we want to teach the consumer to accept.’”

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According to the recently released 2018 MHI Annual Industry Report, “Overcoming Barriers to NextGen Supply Chain Adoption,” eight out of ten survey respondents believe these supply chains will be the predominant model within just five years. However, the report found that the adoption of some of these technologies was slower than originally reported when MHI started the annual report in 2014. The report cites three top barriers to adoption of these technologies: 1. Making the business case for NextGen supply chain investments. 2. Tackling the supply chain skills gap and workforce shortage. 3. Building trust and security in digital, always-on supply chains. This issue of MHI Solutions focuses on the adoption of these digital solutions, from best practices in robotics and artificial intelligence to blockchain and innovations in last mile delivery.

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