STORAGE OPTIMISATION DELIVERING ON THE ‘LAST MILE’ CHALLENGE
By Louisa Hosegood, digital and strategy director at Bis Henderson Consulting F
aced with mounting challenges on urban congestion, cost pressures and environmental concerns – how should businesses adapt their delivery models to meet rocketing ecommerce order volumes? Ecommerce has grown massively, and probably permanently, during the pandemic to 30 per cent or more of retail trade. Customers increasingly value the convenience, assurance, immediacy, pricing and safety of ordering online. The performance of many home delivery operations during the Covid crisis has been truly impressive, ramping up capacity at break-neck speed, running continuously at peak levels, or for some new entrants being truly creative with “emergency models”. However, the traditional ‘last mile’ delivery model – from distribution centre to home addresses, collection points, ‘click and collect’ stores, locker systems and the like – is under huge pressure to serve more customers and greater volumes, and many existing approaches are simply not sustainable in economic, environmental and social terms. Currently, last mile delivery using IC engine vehicles generates significant Co2
and noxious emissions, and raises many other
environmental and social problems, including noise, health issues and congestion – particularly in dense urban areas. With increasingly stringent emissions regulations and planned urban area vehicle restrictions, there is now an urgent need to create a ‘sustainability plan’ for the fast- expanding fleet of vans that is rapidly replacing the old regime of large trucks delivering to stores. And that’s only the vehicle side of final mile, the green agenda extends much wider with the conscious consumer now expecting more in terms of packaging and choices over how and when their parcels are delivered.
The expansion of ecommerce has also placed great demands on physical space, whether it be fulfilment centres or sorting, consolidation and delivery hubs, and this has become a contentious issue. As consumers demand ever
14 DECEMBER/JANUARY 2021 | FACTORY&HANDLINGSOLUTIONS
faster deliveries, more localised fulfilment models are required. Yet these same consumers, as residents, oppose plans for industrial development in conurbations, as seen by the recent rejection of Ocado’s fulfilment centre expansion in Islington. Many logistics property experts suggest that local government bodies are being slow to realise the mounting urban warehousing challenge heading their way.
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What’s more, current models are economically moribund. Consumers expect ‘free’ delivery, but eCommerce is hungry for resources – warehousing, vehicles, order pickers and drivers – which have to be paid for and, as in the case of warehousing and labour, are in short supply. Meanwhile, the push for speed of deliveries means that many delivery trips operate ‘on demand’ and at well below capacity. For omni-channel retailers the switch in emphasis to online sales fundamentally challenges the cost structure of the business, requiring the challenges of ‘final mile’ to be addressed in a more holistic way in order to rebalance costs.
The performance of many home delivery operations during the COVID crisis has been truly impressive, ramping up capacity at break-neck speed, running continuously at peak levels, or for some new entrants being truly creative with “emergency models”
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