Logistics Complexity and the Strategic Moves Companies Are Making to Reduce It
The last mile is typically the costliest and most complicated leg of a supply chain, accounting for, on average, 53% of overall shipping costs. Last-mile delivery has become the center of attention for shippers and carriers in recent years as strong e-commerce growth has increased demand for home delivery.
Stuck with legacy last-mile practices, logistics companies have struggled to meet consumer demand, which has compelled courier, express, and parcel (CEP) companies to rethink their last-mile delivery operations and how technology can play a role.
Enterprises have started looking at technological innovations to simplify the last mile, investing in machine learning (ML) and artificial intelligence (AI) to automate processes such as scheduling and routing, improving supply chain visibility and reducing costs overall.
Artificial Intelligence and Machine Learning’s Impact on Logistics Complexity
Logistics companies are leaving no stone unturned in modernizing and streamlining their last-mile delivery operations. Recently, United Parcel Services (UPS) in collaboration with Google analyzed Radio Frequency Identification (RFID) data and used it to plan the most efficient routes for more than 25 million packages it delivers globally each day.
Radio-frequency identification (RFID) technology helps logistics companies increase visibility into their last-mile operations. Visibility in the delivery process gives logistics companies more control over their last-mile operations.
FedEx Dataworks, an organization embedded within the courier giant FedEx, harnesses the power of data science and ML to improve supply chain visibility. Dataworks uses AI to predict shipping times and accurate delivery dates.
In the Last Mile Mandate survey conducted by FarEye in 2022, U.S. consumers claim the ability to have delivery tracking as a top factor for creating a positive delivery experience. Logistics companies must invest in technologies that provide more visibility to not only their dispatch managers but to end consumers as well.
Intelligent computer vision, an offshoot of AI, helps CEP companies automate repetitive tasks, handle massive shipments with ease and considerably reduce last-mile delivery complexities. Royal Mail recently opened Super Hub, with the latest scanning, sorting, and tracking technology. The hub is set to process close to 800,000 parcels per day.
Postal companies like Swiss Post benefited from Autonomous Mobile Robots (AMRs), upping their parcel handling capacity to 40,000 parcels a day. Automation in the CEP industry is not restricted to warehouses and sorting centers. InPost, a parcel locker technology company, saw its profits rise by 67% thanks to investments made in deploying automated parcel machines (APMs).
Rise of Drone Technology
CEP companies are also embracing drone technology to help deliver packages quickly and efficiently across multiple locations. Skyports Drone Services, a UK-based division of an advanced air mobility company, has been selected by Royal Mail to manage aerial distribution routes linking Scotland’s Orkney islands. The drone service provider aims to enhance the efficiency and reliability of drone deliveries for Royal Mail, demonstrating the growing integration of unmanned aerial vehicles in the logistics industry.
The CEP industry’s future is being reshaped by new-age technologies like AI, ML, robotics, big data analytics, cloud computing, and predictive analytics. Investments in tech are being made to make last-mile logistics simpler, more cost-efficient, and more customer-focused.
Reducing Logistics Complexity and Delivering Superior Consumer Experiences
According to McKinsey, successfully implementing AI-enabled supply-chain management has enabled early adopters to improve logistics costs by 15 percent, inventory levels by 35%, and service levels by 65%, compared with slower-moving competitors.
The answer is clear: if companies want to simplify the most complicated aspects of delivery logistics, especially in the last mile, they must optimize their end-to-end omnichannel fulfillment with precision while minimizing last-mile costs.
And to do so, they must pivot to modern technologies to reduce logistics complexity in their last mile operations with the end goal of delivering a superior consumer experience.
About the Author
Jorge Lopera has over 15 years of global logistics experience in senior roles encompassing customer growth, product management, and strategy. As Vice President, LATAM & Industry, Jorge is responsible for FarEye’s expansion into the LATAM region, overseeing commercial and operational activities including sales, account management, and channel & ecosystem partners. Jorge serves as FarEye’s industry expert, contributing to major publications and supporting analyst relations.