Whether the pandemic fades away or lingers, e-commerce remains table stakes for all distributors, as an eye-opening study revealed massive shifts in the industry.
Supply chain discussions and studies today mostly focus on procurement, given that the last two years have visibly disrupted supply chain strategies across all industries. If you try to buy a car or plan home improvement projects, you’ll experience first-hand how businesses are struggling Everything from computer chips to raw materials like steel are in short supply. Just-in-time, pre-pandemic concepts are often stretched to the breaking point.
Equally impacted, but not discussed as much, is the other end of the supply chain – order fulfillment, or last mile delivery.
In the last two years, the pandemic significantly accelerated the growth of both B2B and B2C e-commerce, dramatically increasing overall shipping volume. Customers expect premium, flexible, and fast deliveries more than ever.
To meet these expectations and capitalize on new opportunities, wholesale distributors must adapt. Let’s take a closer look at last mile delivery challenges, possibilities, and solutions.
What is last mile delivery?
Last mile delivery usually describes the last leg of a product’s journey, often from a wholesaler’s warehouse to a customer location. It accounts for about half of the total delivery cost, and executing it well is vital to customer satisfaction.
Safeguarding profitability while meeting customer expectations is a complex problem with many variables. With the ever-growing delivery volume, warehouse operations and delivery fleets are stretched to their limits. And let’s not forget the shortage of qualified warehouse employees or truck drivers, to name just two challenges.
Once loaded on a truck, deliveries often battle their way through congested streets. Some wholesale companies actually budget for traffic violation fines and parking tickets in addition to fleet maintenance, payroll, and fuel. More recently, regulatory requirements (like sustainability considerations) are adding boundary conditions.
To balance speed and cost with inventory positioning, businesses must establish the best fulfillment concept that provides flexible last mile delivery options, improves profitability, and demonstrates a commitment to sustainability (or at least fulfills regulations).
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Warehouse networks and micro fulfillment centersA well-designed network of strategically located warehouses that ensure on-time deliveries across the customer base is a key element for successful order fulfillment. Often, wholesalers continuously expand these networks with new locations or via acquisitions.
However, with the growing customer demand for highly flexible last mile delivery options, wholesalers are limited in how many large warehouses they can add to the supply chain – both from a financial and an infrastructure perspective.
Businesses can consider alternative ideas, such as complementing traditional distribution centers with micro fulfillment centers (MFCs). MFCs are small warehouses located close to key demand areas; they’re designed to fulfill orders fast and efficiently.
With intelligent forecasting and inventory planning, MFCs can expand options in fulfilling fast orders on time-sensitive, key products.
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Last mile delivery: Instant order fulfillment
Some wholesale companies are taking this concept another step closer to their customers with sales points at the customer’s location. In its simplest form, this could be a vending machine for most needed items.
But increasingly, these sales points have grown into full-scale kiosks much like what is used by Trusco Nakayama or on-site sales trucks. These types of instant order fulfillment provide a more convenient shopping experience, boosting customer satisfaction.
They also give businesses full insight into consumption patterns and trends – who buys what and why. Armed with that insight, wholesalers can guarantee immediate replenishment and create new offers and tailored promotions.
In addition to the product sale, these sales points can also be designed as service points, offering maintenance or repair options, for example.
By automating order processing, wholesale distributors can streamline the sales ordering process and improve the customer experience for competitive advantage.
3D printing bridges the gap
Both micro-fulfillment centers and on-site sales points have one thing in common: due to the limited space, they can only carry a smaller inventory.
With 3D printing, this can be partly compensated – especially for long-tale, but essential products. If a customer needs a critical part to continue operations, it might be possible to print it at a location nearby and shorten delivery times significantly, even for parts that were traditionally not always on stock.
Increasing the delivery speed of other tangible products is just as important, which is where 3D printing can help close inventory gaps in these small warehouses by producing the products on-site.
By placing these centers closer to consumers with the added benefit of additive manufacturing, businesses can significantly cut down on last-mile delivery times. Furthermore, at a drastically reduced size than their predecessors, these small centers would cost a fraction to start up and could help reduce order-related costs.
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Getting closer to the customer with fine-tuned delivery
Inevitably and in due time, businesses need to adapt to new realities and more demanding business situations.
Wholesalers must get closer to their customers, fine-tune their offers to their customer demand and introduce new, flexible, and more agile last mile delivery strategies that empower them to re-shift priorities on the fly. As they implement these objectives, they must balance the drive for superior service with safeguarding profit margins.
So perhaps it’s in the best interest of a business to consider several fulfillment concepts in parallel. The solutions must be as diverse as customer expectations.