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Smart Retail (Part I)
- June 4, 2018
“Commercial vehicles and online deliveries make city traffic worse and carry significant economic and environmental costs that demand creative solutions.”
The last mile problem comprises one of the most costly and highest polluting segments of the supply chain in which companies deliver goods to end customers. The concept for this article is part of our ongoing long-term project and strategy. The long title reads: "Economic Strategy for Sustainable E-Commerce Solutions with Click & Collect Services including Automated Locker Systems (ALS) and its logistics derivatives as part of the Smart Urban Infrastructure Transformation."
The Smart Retail transition with e-commerce in high-density cities requires systems of understanding (knowledge) based on clear assumptions and integrity, with ethical data, meaning doing retail the right way, rather than any traditional economic doctrine. We need a better way of living our lives, as 80% of people will live in cities, virtually doubling the number by 2050.
Progress is creative problem-solving. Here we are trying to better frame the problem of smart retail with sustainability questions, always with a focus on feasible operational efficiency. This efficiency involves a consolidation and/or partnership of services, competitive advantages with selecting, fulfilment and delivery, to drive support and change management, with a focus on supply change management in organizations. Socially focused retail change in terms of sustainability starts with the individual consumer. Surveys show a significant percentage of consumers say they want sustainable products and services, but sales data shows only a small percentage of consumers are willing to pay more or put in effort to change their behavior. Everyone needs to take responsibility to help transition online business, developers and city planning authorities to a smarter urban infrastructure.
There are several UN-defined sustainable development categories in which creative last mile solutions can help. These include:
1. Industry, Innovation and Infrastructure
2. Sustainable Cities and Communities
3. Responsible Production and Consumption
4. Climate Action
Key economic factors include:
1. Customers expect free or low-cost shipping parcel shipping for most purchases
2. Acceleration of delivery speed (e-fulfilment velocity) for same or next day
3. Parcel Management spend as rate hikes will continue in 2018 and beyond
4. Enterprise-wide end-to-end supply chain visibility and technology
Not “just” a Logistics Problem
There are five main life cycle stages for products: material extraction, manufacturing, packaging and transportation, use and end of life.Similarly, with food products: agricultural production, processing, packaging and transportation, consume and waste. Combining the right solutions could bring significant benefits for all 5 of the life cycle stages — helping to cut delivery costs up to 35 percent and vehicle emissions by 65 percent, significant packaging reductions, efficiency of a demand economy with extended and improved sustainable life cycles of products and fresher food, with a significant reduction in waste. The smallest part of a system often makes the biggest change with a ripple effect both upstream and downstream. Five sectors in particular — retail, logistics, the public sector, automotive, and energy — with changes in urban commercial transport that will challenge their existing revenue and operating models.
Quality of Delivery (QoD) is a key Quality of Service (QoS) Imperative
The fundamental logistics problem is that small parcels in a big vehicle travelling thousands of miles is cheap; while the same parcel in a small vehicle travelling the last mile is expensive. Global to regional to local carriers to meet dynamic market conditions (holidays, weekends, after-hours), additional scale and quality of delivery, are keys to unlocking the problem, at least from the standpoint of profitability and growth. New last mile metrics are required based on QoD by focusing on the complete end-to-end value chain. Profitability (and efficiency) is about supply chain management and e-fulfilment automation.
Economic Benefits of ALS
There are significant Economic, Social, Environmental Costs of e-Commerce that include waste, pollution and congestion, as much as 2-4% of city GDP. 1
Value Proposition: Automate parcel shipping processes and use analytics to define/refine performance with e-commerce parcel lockers defining secure and convenient delivery points (Points of Consumer Convenience) allowing customers to pick up packages 24/7.
· Save time and mileage, because of more efficient routing and increase in parcel density
· Cut vehicle emissions as much as 70%
· Decrease labor time per parcel by 70%
· Reduce delivery costs per parcel by 35%
· No friction with customer time slots, access or theft
· First time delivery and returns (fewer failed deliveries)
· Customer-centric process and information flow
· Packaging reductions and reuse
· Competitive advantages such as moving to new locations where there is no presence
· Agility with access end-points adapting to changing market conditions
With better awareness and education by smart retailers for the locker pickup model, adoption demand rates will increase. Consumers can start the change with a home delivery free day every month, by using alternative delivery pick up locations near them including click & collect lockers, to significantly cut down on congestion and pollution. Automated lockers help define a solution to the problem with parcel delivery for cost controls, sustainable urban development and a smart retail strategy that are all key to managing e-commerce growth with total transportation capacity and the need for agile end-points.
- Shannon Bouton, Stefan M. Knupfer, Ivan Mihov, and Steven Swartz, “Urban mobility at a tipping point,” September 2015, McKinsey.com. Adding significantly to waste (materials recycling and) urban pollution based on using diesel engines, frequency of stops and aging fleets of small commercial vehicles (CV).