Why retailers are changing the last mile of supply chain

According to PwC, Canadians will spend an average of $1,500 during the holidays, with gifts accounting for more than 40 per cent of that figure.

For the retail sector, the holiday season is our Super Bowl.

These days, consumers can browse a product in-store, purchase it online, and have it delivered to their home the next day. However, the ease with which consumers receive their product belies a complex supply chain that can often span thousands of kilometers, cross oceans and international borders, involve multiple modes of transportation and has extended directly to a customer’s doorstep.

This final segment of the supply chain — the “last mile” — is one of the most critical for retailers. Not only is this phase cost-intensive and time-sensitive, it also facilitates a primary touch point with customers. Which is why last-mile logistics has undergone such dramatic innovation and transformation in recent years.

Two decades ago, most consumer purchases were made in traditional brick and mortar stores. Today, consumers are offered an integrated, omni-channel shopping experience, as the lines between e-commerce and traditional retail are increasingly blurred. For example, our customers can reserve an item online and pick it up at a store within 20 minutes. With approximately 80 per cent of Canada’s population living within 25 kilometres of a Best Buy store, use of this purchasing option has grown by a staggering 865 per cent over the past five years.

These changes have been driven, in large part, by shifts in consumer behaviour and expectations.

In 2011, only 50 per cent of the Canadian domestic market used the internet. Today, that number is closer to 90 per cent. The impact for retail? Canadian e-commerce sales skyrocketed more than 425 per cent, with total online sales growing to $34 billion in 2016 from $6.5 billion in 2003. The implications for last-mile logistics? Retailers now deliver more products to customers than ever before and buyers expect online shopping to provide the total retail experience, including rapid product acquisition.

In response, buyers are connected to their products quickly and early in the digital-retail process. For instance, our website provides a delivery estimate function, which leverages geo-location technology and carrier partner data to provide an accurate delivery timeline as customers browse products and order online.

Delivery times, which used to be measured in weeks or months, are now counted in days or hours. During the holiday season, increased truck deliveries and expanded home-delivery capacity ensure millions of products reach stores and customers expeditiously.

By using physical store locations as both shopping and distribution centres, our ship-from-store program provides customers with access to inventory across the distribution chain, regardless of location, and shortens delivery times. More than 90 per cent of ship-from-store orders are fulfilled within just 48 hours, with next-day delivery available in major Canadian markets, including Vancouver.

Within the B.C. context, last-mile logistics also includes the region’s trade gateway, anchored by the Port of Vancouver, Canada’s largest port. Last year, nearly six million tonnes of consumer goods arrived via the port, including more than 215,000 tonnes of consumer electronics. From our headquarters in Burnaby, we have witnessed the importance of investment in infrastructure that helps get products to customers, the preservation of industrial land for distribution centres, and the growth of a local trade-related ecosystem – essential components for the efficient movement of goods in the new era of retail.

Supply chain management is changing, especially the last mile. To remain competitive, retailers must continue to innovate across the supply chain spectrum and be prepared for quantum leaps on the horizon, such as AI, drones and automation. Ultimately, retailers will need to continue pushing the limits of that last mile, because that’s the one consumers remember most.


Source: The Province, “Why retailers are changing the last mile of supply chain“. (http://theprovince.com/opinion/op-ed/phil-arrata-why-retailers-are-changing-the-last-mile-of-supply-chain). Phil Arrata, December 13, 2017. 

Image source: The Province

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