E-commerce remains one of the main drivers behind the movement of packages globally. This is because, over the past decade, it has rapidly become ingrained in consumer behaviour. People expect multiple delivery options and flexible deliveries. This latter aspect is a consequence of the desire to have full control of the order, with delivery windows that can be changed quickly if required.
Deliveries within a matter of hours (or ‘same day’) are also becoming popular, which is changing the way people shop still further. In addition, the volume of returns is increasing. These developments mean that distribution companies are facing a number of challenges in meeting their fulfilment promises. They must strive harder than ever to facilitate customer expectations for fast and flexible deliveries.
These include the need to expand operations and handle rising order pick and transportation costs, as well as introduce state-of-the-art automation into their operations. Same-day orders, or delivery time and location changed orders must be kept at a specific site, which means that storage in the last mile is becoming a challenge for parcel and warehouse companies. However, this also creates opportunities for utilising an integrated value chain.
The key success factor in response to this challenge will be the integration of additional processes into the supply chain. For example, a small storage solution for parcel operators, and sortation and delivery activities for e-commerce companies. This would allow warehouses to sort items directly into different carriers and distribute these to multiple locations, thereby maintaining control of deliveries.
“E-commerce companies are being put under tremendous pressures,” says Vanderlande’s Director e-Commerce Warehousing Ruben Jakobs. “The moment they don't deliver on their promise, consumers immediately take to social media! That’s why retailers are beginning to see the appeal of controlling the whole supply chain process – that is, A-Z – which includes final mile deliveries.”
Flexible and same-day deliveries represent a significant opportunity for all retailers to improve their overall levels of service, but it will require new ways of thinking to overcome any immediate obstacles. These include real-time product visibility across multiple locations, fulfilment of lead-times and flexible final mile deliveries, as well as reducing costs for consumers.
A question of storage
One noticeable change for parcel operators will be how to handle – and store – increasing volumes of items of which the delivery time and/or location has been changed, or items that will be returned. “For the parcel industry, it’s the right time to start thinking outside of the box,” adds Vanderlande’s Market Director Parcel Rob Qualm.
“An integrated value chain is not new for parcel operators and we expect that, in the coming years, they will need to increase their activities in this area. As an example, because the e-commerce market has specific peaks, some pre-orders can already be pre-shipped to other facilities that have temporary storage areas. This not only optimises the distribution network, but allows companies to think differently about capacity.”
In certain metropolitan areas around the world, same-day deliveries are already part of daily life, for example in Singapore. In the coming years, it is predicted that the business case for European cities will become more competitive. However, there are additional challenges to overcome in connection with final mile deliveries.
“Urban pollution is a hot topic,” adds Rob. “If you look at certain capital cities, it’s getting harder for cars with diesel engines to be permitted into the centres. In the biggest cities, where there is much congestion, who will be allowed to perform final mile deliveries.”
Innovative concepts and solutions
Changes to technology and the creation of new sortation and warehouse solutions hold the answer for a wider integrated value chain. “Vanderlande’s solutions are based on an extending product portfolio of sorters, conveyors, AGVs, AS/RS systems, and the latest technology, such as our Pocket Sorter,” says Rob. “This offers high efficiency, because it requires minimal involvement to sequence products.”
Vanderlande is planning to use its market knowledge and technological expertise as an integrator to translate this trend into total logistic solutions. “We now have the perfect opportunity to capitalise on our know-how in order to help companies investigate ways to facilitate same-day deliveries,” adds Ruben. “We want to reach out to the market and have in-depth discussions with our customers to create innovative concepts and solutions that match their individual requirements.”
Rob also draws confidence from Vanderlande’s close relationship with its customers and the market: “As a company, we really understand how to manage the flow of goods inside a distribution and sortation centre, and that knowledge is something we are keen to share with the market for a long time to come.”