The Last Mile—History Repeating As Supply Managers Face Peak Season
Nothing new is ever really created, just updated to meet the current environment or situation. When looking beyond the "hype" of all the new, innovative services and suppliers in the logistics space, we find that delivery service capability has already been efficiently and successfully implemented in the past. We only need to look back to the 1940s and the successes America experienced during World War II.
As the U.S. emerged from World War II, military tacticians credited a majority of the U.S. military's success to the U.S. capabilities of mass production, enabling the buildup of large inventories of supplies and the ability to combine civilian and military storage and transportation operations to move vast quantities of supplies to the battlefield when and where they were needed, and in the right configuration. These important logistics lessons were quickly forgotten as the war concluded.
Shifting from a wartime to peacetime economy unleashed years of pent-up consumer demand. The mass production processes that were able to produce war supplies were quickly adapted to consumer goods. However, the processes of efficient distribution methods to deliver goods to the point of consumption were not given as much emphasis—even after noted logistician Ohio State University professor Bernard J. (Bud) LaLonde provided research showing the positive impacts efficient delivery methods could have on consumer satisfaction and profitability. Consumers were content to acquire their products wherever they were available, as long as they were purchased at the "right" price.
This situation, while being updated with modern processes and technology, persisted within the retail sector for the next 60 years until the emergence and now dominance of the e-commerce retail channel and delivery of consumer goods. Moving from its status of being a consumer novelty to view goods online, it has rapidly risen to being the preferred shopping channel, enabling consumers to having virtually 24/7 access to a wide variety of products across domestic and now international geographical boundaries, bringing goods directly to their homes in a matter of days.
The efficient delivery operations that focused on movement of goods from a manufacture to a retail location are being radically redesigned to handle movement of consumer goods from a manufacture, distribution, or retail location. The lessons learned during World War II regarding the importance of being able to deliver goods when and where needed, and in the right configuration, to consumers have now become the guiding concept.
As e-commerce continued to grow throughout the 2000s, consumers continued to demand faster delivery of goods to their homes. As this shopping channel has increased, delivery time requirements have decreased. Today e-commerce business is driving approximately 12 percent of total U.S. retail sales. During 2016, same-day delivery service usage increased over 30 percent from 2015. These rapid changes are severely challenging traditional retail logistics models and operations.
To prepare for this coming shopping season, supply chain managers need to engage key stakeholders (consumers, buyers, manufacturers, procurement/sourcing, service suppliers, etc.) to review current logistics operations and strategically assess whether or not they are prepared to meet existing consumer expectations.
To achieve this goal, supply chain managers and service providers will need greater levels of collaboration and trust, to honestly and openly operate their combined logistics network. Development of a collaborative partnership framework is essential to success in this endeavor.
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