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The Future of Last Mile Logistics: How the Pros Deliver When Demand Spikes

If you haven’t planned for Q4 2021, there’s no way you’re gonna win it.

That dire prediction has been tossed around conversations about last mile delivery trends a lot in recent weeks.

To that, our panel of industry experts from our recent Parcel Pinch webinar say a collective bah humbug. There’s still time to triage some aspects of Q4 and have a more profitable EOY.

In fact, the future of last mile logistics depends on what you do now — for the Q4 we’re living in, and for Q4 2022.

But how exactly do you consistently deliver success when demand is sky-high? Take a few pointers from our supply chain pros:

1) A Backup for Your Backup Plan

When demand spikes — which cyclically is now through the end of the year, though we all know demand has been through the roof since March 2020 — executing last mile delivery means equipping yourself with something crucial: a backup plan. Whether you’re a shipper or a customer, you’re gonna need more than one.

You’ll need a backup plan for customer service, a backup plan for delivery, a backup plan for any last-minute last mile delivery issues — basically, a backup plan for everything that will cause the delivery volume to go up, up, up in Q4.

Cue the music from that Madagascar movie song by will.i.am:

Back it up, back it up,
Back it up, back it up
Back it up, back it up.

And if another COVID shutdown occurs, you’re gonna need to be ready for those unknowns as well.

So what’s a good starting point for creating your backup plan, and your backup to your backup plan? Each of our panelists agreed: documentation.

As the holiday chaos commences, the more documentation, the better. You can determine a game plan all day, but you need a documentation plan ready to execute when it comes down to it.

NEIL ACKERMAN

Neil Ackerman, Global Supply Chain Executive, Johnson & Johnson

Documentation is your friend

Documenting each last mile delivery touchpoint with every detail to your team, including what will be done and where each team member will be each step of the way, will pay dividends.

This includes what will be done during a normal delivery, as well as what will be done when delivery exceptions occur. Create internal manuals using whichever program you prefer; they don’t have to be lengthy, but they do have to show that you’ve thought of everything.

You’ll also want to document the types of responses the Customer Service team will provide when customers email, text or call to ask, Where Is My Order? (known in the industry as WISMO calls) after delivery exceptions occur.

Set expectations with your team, and your customers

You’re already planning for a steady diet of delays throughout the holiday chaos, but equipping your team with the knowledge required to see those deliveries through, both on the supply side and on the distribution side, is equally as important.

Stemming from the documentation you’ve created for your team, you’ll also want to get ahead of any WISMO calls by setting proper expectations with your customers.

Let your customers know what delays may occur, whether related to stocking or shipping. This will help ease some of the customer service woes you might face in Q4, by setting those expectations up front.

CHRIS CASHIN

Chris Cashin, CEO & Co-Founder, IndyShip

For example, shippers can piggyback on the order confirmations or shipping confirmations they send out to announce any delivery delays.

Take a cue from one national retailer who sent out the following email message one day after sending the customer a shipping confirmation:

email message

Managing customer-facing expectations is key to preserving brand reputation and brand loyalty. A message as simple as the one above goes a long way in instilling confidence and trust in the minds of consumers, plus it helps consumers plan for gift-giving this time of year.

NOTE: Just as you need a backup plan for your last mile delivery logistics, consumers need backup plans for what to do when their E-Commerce holiday gifts do not arrive. But that’s another blog post.

2) Be All Over Your In-Stock Plan

One of the biggest problems that all product manufacturers face is out of stocks.

Mastering your in-stock plan is essential to success this holiday season, especially if recent last mile delivery market trends hold true. Shipping delays could be anything from carrier capacity to staffing issues inside your facility to simply waiting for items to clear the port side in order to hit your shelves. No one wants to be the one who lets details fall through the cracks.

All shippers, especially those on the end-to-end side, should prioritize their in-stock plan by asking themselves the following questions:

  • Where are the items in the network?
  • Are they distributed correctly?
  • Do I have enough?
  • How can I get more?
  • What is my customer messaging when I run out?

The answers to those questions depend on how connected your network is, how often you communicate and how transparent you are with your customers.

So take the time to figure out how you can quickly restock, even if it means thinking creatively and teaming up with other companies, and then determine exactly what you’ll say to your customers in the event of an out-of-stock item.

For example, following Sorry that item is out of stock with an email capture form for being notified when it’s back in stock is a far better customer experience than a virtual shoulder shrug. Giving customers a bit of hope that you’re actively working on restocking the item might keep your brand top of mind.

The key is communication. You simply can’t communicate enough. The future of package delivery depends on communication. (We’ll delve more into the customer experience side in a future blog post.)

3) Dissect Historical Data

Data doesn’t lie. In an effort to gauge end-of-year performance, shippers should take a look at their 2020 Q4 performance. If 2020 Q4 was a rough one, It’s not far-fetched to assume this year will play out in a similar way.

And if it doesn’t, you get to be glad it didn’t get as bad as that, especially when you know it could actually be worse.

If you’re a shipper:

  • Be sure you’ve analyzed your historical performance data
  • Familiarize yourself with contingency plans to back you up with volume
  • Determine your own personal contingency plans

You can’t go deep enough with your data. Create a plan from it, then document your plan, and be ready to execute when it comes down to it.

BILL HANCOCK

Bill Hancock, Chief Supply Chain Officer, US Foods

Again, be sure to set realistic expectations for customers as well, and set those expectations up front. If you’re expecting capacity constraints, or inventory issues, don’t set unrealistic expectations. Be cautious with your messaging and provide continuous updates to your customer.

4) Find an Elastic Capacity Solution

If you’re a shipper, ask yourself the following questions:

  • What does my current shipper capacity look like?
  • What is their ability to staff their business?
  • Are they able to meet my needs?

If any of those questions brought on a sense of uncertainty, you may want to weigh your shipping options.

Keeping up with demand

Demand shifts everyday, especially in the last few years. Global retail E-Commerce amounted to 4.28 trillion in 2020, and is anticipated to reach 5.4 trillion by next year — and that number will only grow. (Source: Statistica)

From pandemic panic buying to social media-influenced purchase habits, the predictability of consumer demand has never been more trying. You need to ensure you have a plan in place that covers the ebb and flow of consumer demand

Adopting an internal fleet may work in some cases, but it can be risky and often inefficient. It’s hard to guarantee the ability to match capacity levels — and it’s incredibly costly.

By opting out of the internal fleet, you gain an ability to leverage various delivery networks, resulting in paying for the things you do need, rather than the things you don’t.

BILL HANCOCK

Bill Hancock, Chief Supply Chain Officer, US Foods

Taking an approach that provides elastic capacity not only minimizes risk and cost, but also increases the probability of customer satisfaction. The ability to scale will allow shippers to efficiently expand with demand.

Which brings us to our last tip for how to deliver successfully when demand spikes …

5) Take a Platform Approach

The current state of the supply chain industry won’t be solved overnight. In fact, it will take a few years to work together to solve this problem. The panel’s suggestion: Reset your mindset.

Consumer’s heightened E-Commerce purchase behavior has fueled the need for a supply chain reset. What we are seeing now unfold before us all is a reset of technology, of processes, of providers and of thinking.

There’s no doubt you’re familiar with perhaps the biggest player in last mile delivery. It goes by the name of Excel.

Yes, the ubiquitous Microsoft software quickly became an inexpensive tool for managing couriers and deliveries, but now with the supply chain so fractured, you simply can’t scale with a spreadsheet.

Get off Excel. Get out of Google Sheets. Close out those files and start taking a platform approach.

BILL CATANIA

Bill Catania, CEO & Founder, OneRail

OneRail takes a multimodal platform approach to solve last mile delivery — doing all the behind-the-scenes work like rate shopping and exceptions management on your behalf, saving you valuable  time and OPEX costs.

Why is last mile logistics important? Exposed gaps within the supply chain have proven the need for shippers, retailers and providers to revisit their processes. Taking a platform approach simplifies processes while enhancing efficiencies.

In fact, platform thinking is the future of last mile delivery. Start planning ahead now.

Last but not least, here’s a bonus tip from Bill Catania: It always helps to surround yourself with great advisors and great partners!

The Parcel Pinch: Your End-of-Year Guide to Reducing Risk in Last Mile Delivery featured the following speakers: Neil Ackerman, Global Supply Chain Executive at Johnson & Johnson; Bill Hancock, Chief Supply Chain Officer at US Foods; Chris Cashin, CEO & Co-Founder at IndyShip; and Bill Catania, CEO & Founder at OneRail. The panel was moderated by Nate Skiver, Founder of parcel consultancy LPF Spend Management, and hosted by OneRail VP of Digital Transformation Ashley Dellinger.

Watch the webinar replay in full.

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