How will Last Mile Delivery Transform in the Post-Pandemic World?
COVID-19 has dramatically shifted consumer habits and the retail industry. Many businesses have struggled to keep up with the boom in demand for home delivery. Moreover, the last mile comprises over half of the total cost of shipment of goods, so there is zero room for inefficiency in the final step of the shipping process anymore.
E-commerce has been directly affected by Pandemic as people staying at home turn to online shopping. Shipment volumes projected for 2026 now look likely by 2023 all over the world. Also, the profile of goods shipped has changed, with more people ordering even the largest purchases online.
The dramatic changes in people's buying habits look like permanent; even before Covid-19, retailers were shaping shopping experiences promoting delivery to people's homes. As consumers increasingly turn to e-commerce for all their shopping needs, the speedy delivery is not just a "nice to have" - it is a "must-have" for customer satisfaction. However, the "last-mile" of delivery, the point at which the order finally arrives at the buyer's door, is the most expensive and time-consuming part of the shipping process. As a result, businesses have begun looking at new technologies to increase parcel volume, to accelerate deliveries, and delight customers - all while trying to cut costs.
The parcel locker systems in which customers themselves collect or deliver their own parcels from suitable locations across the city seem like the best solution comparing to other last-mile delivery innovations in the market.
With parcel lockers, logistics carriers can deliver orders to a set parcel locker location, eliminating the inconvenience and cost of failed first deliveries, rescheduling deliveries, and solving the uncertainty of having someone at home to pick up an item within an indefinite period. Thus, they get higher first delivery success rates and deliver more packages per journey - up to 5 times more packages. Also, recipients can pick up and return orders at their convenience with minimal queueing and indirectly lowering service costs by effectively located parcels. In a recent analysis on the global parcel locker market by Belgium-based International Post Corporation, parcel lockers are already heavily used in Finland, Denmark, China - with a usage rate of up to 43%.
Investment Case for Warehouse Automation
The world economy is growing stronger, with statistics about more jobs being added every month. What these numbers don't say, however, is that the warehouse and manufacturing industries have a hard time filling jobs on a daily basis. It is inevitable that this negatively impacts operations, productions, and eventually bottom lines. The good news, many companies have started to realize the importance of warehouse automation.
While the global industrial sector has been seen various ups and downs over the last few years, the acceleration of warehouse automation has held as a steady trend. The main driving force behind this success is the changes in the operating environment; such as labor costs, labor shortages, increased throughput requirements, etc. Also, the coronavirus pandemic has resulted in companies making deeper investments into logistics technology. Now, the trend is being driven by two new pushes:
the extra levels of traceability and speed that customers now expect by exploding of online shopping
social distancing restrictions within warehouse operations, which is furthering a need for more automated solutions.
The global market for warehouse and logistics automation was valued at about $46bn in 2018 and it is expected to grow at a CAGR of 14% in the next seven years, according to dataM Intelligence. The core reason for this increase could be the growth in e-commerce.
ARC Advisory Group’s survey-based research on expectations of warehouse executives indicates that over 60 percent of respondents expect to invest in conveyors and sortation over the next 3 years. Conveyors and sorting systems are at the heart of intralogistics and İf implemented effectively, these technologies can make the whole material handling process more efficient and cost-effective. So, this high rate is understandable. However setting up conveyors and sorters can take large capital outlay, and how such equipment effectively works depend on exactly what is being processed. So, investment in such core elements requires careful planning.
To optimize investment, the automation provider should understand a customer's operations at first. Analysis of product handled, turnover, unit load, recirculation, budget, space, and scalability requirements, help determine the most suitable technology. For example, only a shoe sorter can give the best result when weights exceeding 35 kgs and throughputs above 6,000 per hour need to be processed.
Automation within logistics benefits both business and customers through cost efficiencies and faster distribution. Other advantages include fewer errors, scalability improvements, and increased warehouse safety. Many companies refer to these overall movements as ‘Industry 4.0’ – basically, it means the digital transformation of the industrial sector.
Intralogistics: the Secret of Smart Supply Chains
Logistics is about how we move things from point A to point B across the supply chain. Intralogistics is the same concept but the much more expanded version. It is related to how we most efficiently get goods from the receiving dock to the shipping dock in the warehouses and distribution centers. Companies who invest in intralogistics technologies to ease supply chain management, obviously get a distinct advantage. However, the time at which these kinds of investments will go out of being a plus point and turn into a need seems very close. Because customers expect immediate accessibility with continuously decreasing prices in today’s manufacturing and that is only possible with an Industry 4.0 concept that can enable the smart integration of manufacturing and logistics operations in the supply chain.
The main difference between a regular supply chain and a smart supply chain is the management of the internal process of material handling and movement – in other words, how things work in the warehouse.
The traditional supply chain comprises three stages: supplying goods to a manufacturer, the manufacturing process, and the distribution of finished goods through distributors and retailers. In addition to those, a smart supply chain requires two other conditions: efficient stock-keeping and optimally matched processes.
Intralogistics essentially aims to satisfy the two conditions of a smart supply chain system. Indeed, it is not a new idea but now has a trendy name with the rise of smart factories worldwide and the need to optimize their supply chains.
Intralogistics system can be basically defined as optimized warehouse logistics and it focuses on getting the best results out of physical assets such as conveyors, sorters, and robots by automating as much as possible.Intralogistics solutions are about finding the optimal integration of technology, labor, and equipment. This integration enables many additional benefits in the overall operation:
- Minimized inventory
- Reduced running costs
- Improved employee safety
- Improved throughput
- Improved traceability
- Enhanced flexibility
- Enhanced accuracy
- Real-time communication from the warehouse
Companies are facing ever shorter delivery times, requiring higher flexibility and efficient goods management with radical growth in online shopping. Those failing to adopt automated intralogistics solutions will be unable to compete. So, intralogistics solutions have evolved from being a competitive advantage to a necessity for companies.
Is Your Warehouse Ready to Black Friday?
No industry has ever changed as dramatically as retail after the rise of e-commerce. With stores are open 24/7 online, people are ready to purchase 24/7 as well. Moreover, customers now expect fast deliveries, smooth returns, flawless service, and instant visibility. And there’s no challenging test for meeting those demands successfully than major shopping events such as Black Friday.
Black Friday sales statistics show that 93.2 million buyers (about 40% of the total buyers) shopping online on Black Friday 2019 and online shopping sales hit $7.4 billion, which is an all-time high. On Black Friday 2020, it is expected that the online shopping trend will grow to 61%.
The time is now to think about the two critical success factors in warehouse management so you can deliver a seamless performance under Black Friday’s pressure and gain a competitive advantage.
1. Optimizing of Warehouse Logistics:
As e-commerce continues to grow and the number of orders on Black Friday is growing each year, so does the pressure on the company’s warehouse logistics. Companies have two options to prepare for the future: constantly building new facilities or rather optimizing their existing buildings. To speed up the delivery and increase capacity, more and more companies rely on automated warehouse solutions. Compared to manual picking processes, automation combined with a Goods-to-Person work station achieves a pick rate improvement of up to 1,000 picks per hour with fewer employees while increasing fulfillment accuracy and improving inventory.
Even better, full automation in the warehouse is an exact game changer as it helps to organize priority orders, including same-day shipping. Also, return processes are easy and quick with automated tools: once an item is returned and checked for quality, it can be put back directly into the system for quick sales.
2. Helping Associates Adopt to Changes:
So far we talked about upgrading the technical performance. But the real success criterion for warehouse management tools is how they can help managers react preventively and deal with a rapidly changing environment.
To be ready for a critical event, warehouse managers probably have to:
- Schedule available labor based on anticipated work levels
- Operate the flow of orders to meet delivery plan
- Coordinate with carriers
- Minimize overtime work to meet budget
- Provide real-time feedback and coaching to your teams throughout the day
Meeting all these challenges is basically about using technology to help warehouse associates adapt to a dynamic work environment. Warehouse management tools need to be highly automated to enable the associates to play a stronger, more efficient role and to be better engaged in the business by the reveal their abilities.
A peak season can bring many opportunities for the business. The best way to guarantee this is to experience it and to collect as much data as possible for the next year. As LODAMASTER, we know that each company requires a unique solution. Our dedicated teams analyze your retail strategy and our extensive product portfolio combined with IT expertise offers customized solutions to meet your needs.
Get ready for next Black Friday with LODAMASTER!