Before eCommerce, consumers shopped in stores, not from their homes. Inventory was sent in scheduled, bulk shipments and the destination was a shelf, not a doorstep. Online shopping has not only changed how consumers find the items they want, it has completely disrupted the supply chain, especially “last-mile” delivery. As a result, fulfillment is decentralized, delivery time expectations have rapidly shrunk, and consumer expectations are heightened. Customers don’t care that last-mile logistics is more complex. They expect orders fast and on time.
That means understanding your customers, anticipating their needs and meeting or exceeding expectations to keep their business. This type of customer-centricity is not a new concept for retail, but today it extends even further: Your entire supply chain needs to become customer-centric, too, and that requires an entirely different model than its predecessor. Supply chain leaders everywhere are having to become customer-experience experts and require new capabilities to meet these “need-it-now” demands.
From new data sources for planning to forward-stocked inventory to better issue resolution, adapting your last-mile supply chain to be customer-centric requires that you:
- Anticipate demand: know your customer and their expectations
- Make informed promises: understand inventory, locations, and transportation times
- Orchestrate execution across all parties: enable consumer self-service, execute handoffs, and proactively resolve issues
Doing these things is not for the faint of heart. In fact, Convey’s Maturity Model suggests that only a small percentage of retailers have achieved maturity across all three of these requirements. But as supply chain leaders know, unless you can invest at Amazon levels, you shouldn’t have to mean going it alone.
Anticipate last-mile delivery demands
This capability starts well before the last mile and implies some aspects of market-based demand analysis, from product planning forward. Once you’ve got SKUs and merchandise sorted—there’s an art to understanding what short-term demand looks like. Because when a consumer needs it now, there are only so many opportunities to win that perishable dollar. You need:
- Visibility and insights into customer demographics: Who are your shoppers? Where are they and what kind of delivery promise do they want / expect? Delivery expectations have been consistently on the rise, so you need to know if they expect same-day or not.
- Inventory data and purchasing patterns: What are their purchasing patterns? Are they seasonal? Does certain inventory sell better by region? Does certain inventory get returned more or less by season, region, or other variables?
- Alignment between merchandising and logistics departments: Can your current / anticipated inventory levels meet the promotional calendar? There’s only so much you can control, but cross-departmental alignment is one of them. How will the efforts of your merchandising department impact inventory management and fulfillment?
- A fulfillment network and last-mile delivery strategy that meets demand: Based on your current network, can you reach your customers as quickly as they expect—as quickly as you’re promising? Is your network agile enough to support fluctuating demand throughout the year?
Getting these insights from your own or third-party data is possible. Forecasting and order management tools are making great strides in illuminating customer demands. Additionally, using data and expertise from fulfillment and visibility partners can inform trends by looking at aggregate behavior. Have you tapped all your partners to understand what demand signals they can share?
Make informed fulfillment promises
Once customers are ready to buy, it falls to your brand and logistics team to properly set expectations. More than 83% percent of customers won’t come back when a delivery has failed—costing your brand not just that sale, but possibly many more. On the other hand, if you pad delivery timelines to ensure you meet expectations, you’re likely to lose the sale to a faster brand (or one that claims they are). Mature supply chain leaders are narrowing in on the best possible promise date by:
- Optimizing fulfillment footprints: What is the ideal fulfillment network design based on customer demands? How should you allocate inventory across a wider fulfillment network? How can you leverage 3PLs or forward-stocking depots to enable agility at different seasonal peaks and valleys?
- Minimizing costs to enable free delivery: A better fulfillment footprint means that your average shipping costs are lower—which means you can pass those savings on to consumers. Shipping costs have a huge impact on abandoned cart rates, so proper fulfillment planning can actually improve your top-line revenue as well as lower your bottom line costs.
- Predicting delivery ETAs: How can I get visibility into the complete post-purchase delivery lifecycle from order to last mile? What are the trends in carrier performance across different deliveries? Where are my most critical exceptions happening and how can I avoid them?
What once required large investment in owned assets is now made possible by a mix of partners and technologies to create flexibility and expose data to inform smart promises. From on-demand warehousing and fulfillment to network analysis and expertise, you don’t have to do it all alone to succeed.
Orchestrate flexible supply chain execution across all parties
Perhaps the most important shift in supply chain leaders’ thinking is that from two-way to multi-party execution. In the old ‘pallet to the store’ model, there was no need for collaboration or communication with the end consumer. Today, you can’t avoid it. Customers expect to be not just informed, but consulted along the way. If it’s delayed, don’t just tell me—offer me some options to expedite it, cancel and reship, or at least appease me. The most sophisticated brands are opening their minds and processes to take brand, carrier, and customer needs into account. To improve last-mile execution, you must:
- Marry order and shipping data: How can I get visibility from the time an order is placed, through the warehouse, all the way to the customer’s front door? How can I optimize each step along the way to reduce delays, damage, and costs?
- Give customers control: What can I do to surprise and delight customers in the last mile? How can I differentiate from just ‘fast and free’ to offer personal and convenient options differentiated from Amazon and other retailers?
- Enable collaboration and automation: How can I handle the growing numbers of exceptions everyday? What tools can I use to enlist my fulfillment and shipping partners to solve issues from order to shipping? How can I ensure that my partners are compliant with my system?
Overwhelmed? Don’t be.
Brands and retailers don’t need to go it alone. Now is the time to involve ecosystem partners and customers in your last mile to create a truly customer-centric supply chain that responds to market demands with speed and agility.
Transforming disparate data sources about customers, orders, and transportation into a valuable business asset that can define and manage your ideal distribution network requires investments in people, process, and technology. The urgency to respond to consumers’ “need-it-now” mentality is what gets the software and logistics experts at Convey up in the morning—to help our clients master Delivery Experience Management. Similarly, our friends at Flexe are solving the on-demand warehousing and fulfillment challenge in a way that helps brands better compete.
Some see this as a daunting time, but we see it as an exciting opportunity for brands that are ready to deliver. Can we help your supply chain adapt?
