The Impact of the Coronavirus on Last Mile Delivery of Supply Chain
The rapid spread of the new coronavirus COVID-19 irregardless of borders impacted our societies, markets and industries. We’re evaluating how delivery companies and retailers should adapt to translate the rising supply chain risks into long lasting customers.
The growing quarantine measures imposed by national and European governments restricts the free movement of people, nevertheless authorities are ensuring that supply chains risks are minimized and that goods keep flowing. However, the European Commission already reviewed its economic predictions for 2020 with a decrease of 1%. At this moment, it’s clear that businesses need to re-evaluate their models, the resilience of their supply chain and how to stay connected with clients.
What is happening?
For many companies the most important consideration is the impact on their supply chains, namely caused by the disruption in the Chinese industrial tissue. Currently, one of the main supply chain problems in Europe is related to the recent stricter movement measures, including the closing of restaurants and non-essential shops, leading to an unprecedented rise in demand for groceries with decrease in physical shopping for non-essential consumer goods. Many retailers are also incentivising customers to purchase online, alleviating congestion from the stores but pressuring the last mile delivery system.
Urbantz delivery operations data shows the doubling of the usual home delivery rates.
At this moment we can highlight three major events for last mile delivery operations:
1. Unbalanced demand
All across Europe we see that enforced border controls slowed down international commerce, leaving companies in shortage of supply while the demand rises, creating several delays in delivery and shortages. The most significant is felt in groceries and pantry-items, with supermarkets unable to meet high demand. This is clear when wholesalers and retailers report both doubling the demand, and huge limitations in delivery capacity dictated by the lack of human resources, with up to 30% of warehouse and delivery employees not being able to work. Even though companies are boosting hiring, there are several complications related to training, licenses and government incentives, especially if you are looking for drivers.
Urbantz’s conclusion: The on-demand model was the first sign of the fast-moving economy challenges, but the new coronavirus multiplied these challenges. Unbalance in demand and offer requires businesses to have digital flexibility and “on-demand operations”, as well as automated systems which help to easily onboard drivers, and adjust their capacity and load in real-time.
2. Exponential growth in home deliveries
French data from early March shows an average increase of 6.2% in brick & mortar groceries stores, mainly in anticipation of restrictions. But the most significant increase is seen in home deliveries with an average jump of 73.8% in metropolitan France alone. This unprecedented spike caused delays in the deliveries while companies adapt their supply chains and last mile operations, with news of European retailers scheduling deliveries up to two weeks. Another indicator is the overall increase in e-commerce purchase by 15.3% when compared with the previous quarter - some experts calculate that this new experience of online shopping might have a positive effect on the sector, as new customers see that it is possible to order online products that they usually wouldn’t.
Urbantz’s conclusion: Growth in home deliveries creates opportunities for e-commerce and carriers, but only if businesses will be able to quickly incorporate delivery scheduling systems, automated optimization of routing and real-time integrations between stock and delivery management systems.
3. Delivery experience is priority for retailers and carriers
Even before the outbreak of the new coronavirus, negative delivery experiences were a major concern for retailers’ reputation and client relationships. Sub-standard service often left them to deal directly with their contracted carriers. The current events shifted the attention of carriers and retailers, taking them to drastically adapt their last mile delivery operations on several fronts such as reinforce staff safety, respond to client needs, and reinforce internal operations.
The Belgian postal operator, bpost, chose to have the drivers sign the proof of delivery instead of the client, preventing unnecessary contact. In a similar fashion, the UK home delivery company Deliveroo is adding a ‘contactless drop-off’ option to their app, allowing customers to have their orders without facing the deliverer. In France, retailers are studying ways to better respond to customers. One of the options is to offer a predefined ‘basket of goods’ of easy purchase that is also simple to assemble, while responding to clients grocery needs. Also in the UK, similar to across Europe, retail giants like Morrisons are expanding their teams by hiring drivers and distribution staff. At the same time they strengthen their sick leave policy. This is part of an effort to keep offering home deliveries in a timely and safe way.
Urbantz’s conclusion: Logistics providers of all kinds can emerge from this pandemic with stronger operations and a greater knowledge of their clients needs and expectations. To have a real business impact, the level of customer satisfaction needs to be kept after the situation is normalised - that isn’t possible without a proper monitoring, feedback and communication system.
Last mile solutions
The predicted economic slowdown is still not felt by retailers due to the increase in spending. But this positive side of the situation can quickly become a challenge if not taken care of, namely the increase in home deliveries. We already see some challenges: shortage and delays in supplies, overwhelming increase in home deliveries and lack of delivery staff.
Unsurprisingly, technology and dedicated software can be an instant life saver for companies dealing with the issues in the last mile, and a prudent investment to prepare for economical challenges and differentiate from competition.
Achieve cost optimisation now
The 73.8% increase in home deliveries in France also means that deliveries are more geographically spread, resulting in the need to allocate more resources and costs to reach certain zones. This is not ideal when facing a situation where you lack human resources. Round & vehicle consolidation is key to keep up with the bigger volume and to properly allocate parcels and vehicles, guaranteeing that vans are not running empty. At the same time, route optimisation ensures that different vans don’t pass in the same street on the same day, hence reducing the number of vehicles, drivers and time needed to deliver.
Ensure full control over your operations
Having full control of the delivery operations is now more critical than ever. Our customers are reporting increases of nearly 100% in their ecommerce segments, and of up to 5 times more volume in the physical stores. These numbers added huge pressure on companies' last mile setup. Delays, wrong data and mistakes can put the entire operation for the day in risk. Visibility over the entire process anticipates any issue and allows for quick and flexible solutions, such as reallocating rounds, adding or removing stops and communicating with drivers and clients. Make sure to use advanced (all-in-one) software to automate route optimisation, have real-time visibility over the tasks and potential issues as well as to control customer experience
Respond to high volumes
The unusual volumes can disrupt your operations if your delivery volumes are not managed by a flexible software, capable of integrating variables (from traffic conditions package weight to van capacity, and even the time a driver might need to deliver) and still connect with your warehouse systems. Such software grants full control and coordination between the different departments involved in the last mile delivery. Another advantage is allowing for direct invoicing of all orders to the sender, facilitating the management of high volumes of tasks and ensuring mistake-free invoices. It also collects all data real-time, increasing the user view with daily reports on all activities.
It is true that the new coronavirus pandemic is imposing on companies a nouvel situation. It’s likely that consumers will come out of this period with a new level of expectations. They will demand not only faster, but more flexible, more transparent and greener deliveries. With software allowing for real-time tracking and optimisation, follow up of deliveries, and real-time contact with drivers there’s an opportunity for a fast adaptation to the new level of clients expectations.
Want to talk about your business continuity plans around coronavirus? Get in touch today. Based on our experience with the recent events in Europe, we can help you plan and optimise your delivery operations with a rapid setup.
We see how the unexpected COVID-19 outbreak is pressuring the last mile sector, and how companies' real-time response to those issues differentiates those who will emerge stronger from those just standing by. Those who adapt immediately manage not only to keep their customer base satisfied but also to stay ahead of competition.
Delaying the implementation of robust operations and reliable digital systems means to be in a more fragile position, not being able to respond to changing customer demand. It is hard to predict the outcomes of the Coronavirus impact, but there’s one conclusion the industry can already predict - customers' behaviour will change and supply chain players have to prepare for that change today.