Australian multi-carrier shipping software company Shippit shares how retailers can navigate and succeed in last-mile delivery in 2023.
Optimising supply chains and fulfilment has been a top priority in retail over the past few years because increased levels of online shopping are ultimately here to stay. So for many retailers, avoiding supply chain delays and disruptions across the network is a key focus this year.
What should a supply chain look like in 2023 and beyond?
A recent study by Bain & Co argues that retail executives need to focus on building agility and resilience in supply chains rather than reducing cost or increasing efficiency. That means moving towards a distributed rather than a concentrated set of suppliers and operations, with alternative partners, manufacturing sites and assembly nodes waiting in the wings if needed.
Speed is another ‘must-have’ for supply chains going forward. According to Accenture, 66% of Australian consumers say same-day shipping is valuable to their business, and 42% are more likely to shop if multiple delivery options are available. To meet consumer demand for fast delivery, retailers need to rethink the traditional warehouse model and tap into local inventory to support a range of fulfilment options — from home delivery to click & collect.
To improve the agility, resilience and speed of their supply chains in 2023 and beyond, retailers should focus on these three areas:
Omnichannel fulfilment
In the past, online fulfilment tended to occur in large, centralised facilities, where orders were picked, packed, and collected by couriers for delivery nationwide. But delivery bottlenecks due to the increase in online shopping demonstrated the need for a range of fulfilment options.
Many retailers have already started turning their store networks into mini-fulfilment hubs and opening ‘dark stores’ in city centres to facilitate faster delivery to local customers. Bain & Co also found that nearly 60% of retailers and consumer goods companies plan to increase their investment in multiple facilities that can respond to online orders.
At the same time, customers increasingly want the option to collect online orders from stores rather than wait for them to be delivered to their doorstep. McKinsey found that “buy online, pick up in-store” grew by almost 50% in the US over the last couple years.
One of the key challenges of a distributed fulfilment model is the need for inventory accuracy and a good understanding of what inventory should be held and where. Without this, retailers won’t be able to deliver on the promise of rapid same-day shipping or click & collect.
Another challenge is accumulating higher total inventory levels in the network, which could lead to unsold stock and costly markdowns. That is where predictive planning and demand forecasting come in.
Flexible, on-demand delivery
One of the most promising supply chain trends to emerge is the collaboration between retailers and ridesharing platforms like Uber and meal delivery platforms like DoorDash. In Australia, Petbarn partnered with Uber to enable same-day delivery in metropolitan areas. These partnerships not only offer retailers a clever workaround in case of delivery bottlenecks, but they also provide fulfilment platforms with an alternative revenue stream. A win-win.
Predictive planning and demand forecasting
Retailers increasingly require advanced analytics to allocate inventory across stores and fulfilment centres. And while, in the past, they might have just looked at online and offline sales data from prior years, now they need to take into account external data, such as sporting events or weather, which could impact demand for certain product categories in particular locations.
Bain & Co found that 56% of retail and consumer goods companies plan to increase investments in predictive planning and demand forecasting. But this doesn’t need to be a big and costly exercise. According to McKinsey, there’s a new breed of plug-and-play analytics solutions that can be quickly deployed alongside many retailers’ existing systems.
If you want to save yourself some time (and money), we’d suggest using our free ROI calculator! Quickly estimate the time and costs you could save by fulfilling orders with Shippit. In the meantime, we hope this guide has helped you understand the power of last-mile delivery and how to master it.
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