Global CPG organizations continue to face a number of significant challenges – rising supply chain costs caused by geopolitical constraints, subdued consumer demand due to inflationary pressure, lingering pandemic-related manufacturing disruptions, and increased popularity of omnichannel commerce but with diminishing brand loyalty.
These are testing times, and many organizations are finding it increasingly difficult to strike a fine balance between improving top line and managing bottom line.
Improving last-mile logistics operations fits exactly within this sweet spot.
According to Gartner, 81% of marketers expect to compete, mostly or entirely, based on customer experience (CX). Last-mile logistics play a critical role in CX. Many shoppers view visibility of packages in transit as one of the most important services retailers or online brands can provide. Hence, all organizations want to nail the ‘last inch of last mile’ operations to retain and increase their customer base and thereby improve their top line.
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As per the Gartner report, last-mile delivery expenses represent up to 41% of total supply chain costs. Operational improvements such as real-time shipment visibility, optimized route planning and minimizing returns by leveraging technology (AR-VR, AI-ML) will lead to cost optimization, thereby improving the bottom line.
To improve last-mile logistics, organizations can prioritize their focus on three areas.
1
Catalyze improvements in 3PL partners’ logistics operations.
According to a report by NTT Data, 51% of an organization’s transportation spend is managed by their 3PL partners. Most of the time, 3PL companies represent the CPG company’s brand to the end customer. Hence, they play a major role in optimizing last-mile cost and improving customer experience.
CPG companies should evaluate their 3PLs on:
- Technical maturity – Only 60% of shippers (manufacturers, distributors) are satisfied with the current technological capabilities of their 3PL partners. Seamless integration of a 3PL’s systems with a shipper’s enterprise systems (e.g., WMS, TMS, visibility platforms), automated workflow enablement for exception management and status updates, and user-intuitive role-based dashboards are some of the initiatives CPGs expect their 3PLs to pursue.
- Operational efficiency – Operational inefficiencies is one of the top three business challenges 3PLs are facing. Optimal route planning capabilities, operational scalability, continuous improvement as part of service contracts, and adoption rates for new and relevant technologies and trends by 3PLs (e.g., drone deliveries, robotics, sustainable transportation, crowdsourcing) are some of the levers CPG companies can use while working with 3PLs.
- Customer experience management – Real-time tracking and milestone-based delivery updates, AI-enabled chatbots for customer support (from order placement to post-delivery), proactive communication in the event of any exceptions such as delayed or damaged deliveries, seamless product delivery, and a smooth installation and return experience are some of the ‘must-do’ initiatives expected from 3PLs.
2
Consider real-time shipment visibility solutions.
According to another report from Gartner, 50% of global leading enterprises will have invested in an effective real-time transportation visibility solution by 2023. We have seen that many global companies are still struggling to extract maximum value from leading off-the-shelf visibility solutions due to:
- Lack of clear business value articulation – considered as just another IT project rather than a transformation opportunity
- Poor customization in prebuilt solutions as per business logic
- Integration challenges with internal and external enterprise systems
- Inadequate actionable insights from data – customer profiling based on sales/return/feedback data analysis and 3PL performance insights
A comprehensive solution approach is required to:
- Define clear business requirements and expected value realization in alignment with operations and technology teams
- Enhance existing visibility solutions with bolt-on applications
- Unify data platforms (integrating enterprise and other applications)
- Develop custom connectors to achieve seamless integration between different systems and applications
3
Calibrate internal processes.
Many inefficiencies in internal operations such as missing or incorrect customer details at order creation, suboptimal order segmentation logic, unnecessary manual interventions, and lack of in-process validations and compliance lead to delayed and/or inaccurate deliveries impacting OTIF and NPS/CSAT for organizations. Organizations must focus on improving their internal processes such as fulfilment and customer service with the help of:
- Comprehensive assessment and redesign of last-mile logistics processes
- Standardization of status messages across 3PLs
- Enhancements in their enterprise applications
- Design of a holistic set of KPIs and governance mechanism
Bristlecone can help drive an end-to end digital transformation of the entire last-mile logistics process with the aid of our industry-leading process assessment and design frameworks, best-fit technology recommendation and implementation services, system integration skills, user experience management expertise, and process automation capabilities.
PRATIK POKHARKAR
Senior Consultant, Business Consulting
Bristlecone
