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The race for “last-mile” fulfilment

By Quinton de Villiers

 

“Out-of-the-box” thinking is reinventing “last-mile” fulfilment, the last step in the supply chain that is currently the most crucial and problematic for retailers.

Poor road infrastructure, geocoding issues, extremely remote areas and intense security that inhibit access to locations are among those factors that contribute towards the high costs and inefficiencies in this critical component of the delivery process in developed countries.

These are compounded by other common problems, such as inaccurate addresses for delivery, unavailable customers, as well as impulsive cancellations and returns of orders.

Staving off threats, such as Amazon, has meant that global retailers have had to find innovative ways of overcoming these challenges to also deliver products faster to their customers’ doorsteps.

This has led to ”disruptive” solutions, such as Postmates and Instacart, which use an “Uber”-based model to connect businesses to individuals who are able to swiftly and reliably deliver their products to customers.

This is in addition to novel crowdsourcing-based solutions, which partner a network of pre-qualified drivers to transport goods to customers who schedule the delivery on-demand.

Other novel “on-demand” solutions include service points and “smart” storage lockers, where goods can be delivered and collected by customers at their convenience.  In some countries, they have driven down parcel delivery times by more than 70% and even completely eliminated failed-delivery service.

Meanwhile, “click-and-collect” models that enable consumers to buy goods online and delivered to a suitable point where they can collect them at their convenience are already disrupting the South African transport logistics industry.

The largest such service provider in the country has “pick-up” points in almost any every town. This includes in the rural areas and informal settlements, a vital component of the new “township economy” and which have been notoriously difficult to service effectively by traditional transport logistics companies.

It also tracks the deliveries from the warehouse and notifies customers when they are ready for collection to eliminate missed deliveries, confusions, delays, or disappointments.

Meanwhile, another enterprising local company uses an “Uber-based model” to connect businesses to a network of   freelance drivers, who have undergone extensive driver training, and those who belong to an existing professional network in real time.

The company was recently acquired by a leading retail chain in yet another development that points to the changing face of “last-mile” fulfilment in the country.

There are also many more examples of the so-called “Uberisation” of transport and logistics in other African countries, where “last-mile” fulfilment is significantly more complex and long been a hindrance to the growth of online shopping.

A significant driver of these models has been the increased uptake of mobile phones and internet penetration on the back of a growing middle class in many of these countries.

For example, a mobile app is connecting businesses and individuals to a large network of informal couriers, comprising cyclists, motorbike riders and owner-operator trucking businesses in Lusaka, Zambia.

Goods are being cost-effectively delivered to consumers in the city within one to three hours, while merchants are able to track packages in real time and couriers manage delivery requests via their smart phones.

There are many more similar examples  in other rapidly-developing African countries, such as Kenya and Nigeria.

However, this is just the tip of the ice berg of the change that is now underway in the global transport and logistics industry, with many experts anticipating that these services will be automated in the foreseeable future.

The amount of venture capital flowing into crowd-sourcing apps, for example, mirrors the intense focus on innovating to enable on-demand or same-day delivery.

In 2015, just more than US$1,200-million worth of venture capital was invested into supply-chain and logistics start-ups, versus more than US$300-million the previous year. In the first quarter of 2016, alone, US$1,75-billion was invested into promising  innovators of “last-mile” fulfilment.

However, this focus on innovation has also benefited legacy carriers, which are under significant pressure to turn around orders at a faster pace.

Mobile technology has allowed them to cost-effectively overcome bandwidth limitations in some areas to provide traceability with proof of delivery, in addition to tracking information capabilities.

Smartphone apps, for example, enable customers to see exactly where the driver or package is and facilitate cost-effective proof of delivery with signature capture at the point of delivery. It is expected that consumers will increasingly demand this service from transporters and, in so doing, drive its uptake in the traditional courier sector in the foreseeable future.

Combined with customised software, mobile technology is even assisting transporters “connect” drivers to provide first-hand experiences and insights needed to proactively attend to unplanned events.

Clearly, it is no longer business as usual in the transport and logistics sector. Survival is dependent upon agility to adapt to market trends and being open to new learning and reinvention to remain relevant!

Quinton de Villiers is the founder and managing director of Bridgewater Logistics with a long and impressive track-record in African logistics and security. Follow Quinton at #InTheFastLane for more insights and expert commentary on African transport and logistics.

 

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