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The Last Mile: Revamping Distribution Logistics with IoT

By Jeff Hawley, Contributor | August 12, 2020

On the second leg of her delivery route, a driver is scheduled to drop off several pallets of dog food to a grocery chain, but an unexpected traffic accident backed up the interstate. When the driver finally parks at the loading dock, a dozen pallets of soft drinks are being unloaded, further delaying the delivery.

The cost of delays like these can add up quickly. The driver has to wait more than an hour, costing the grocery store late fees, while the distributor covers overtime for the driver. Then there's the fuel waste, traffic snags around the grocery store parking lot, CO2 emissions as the truck sits idle, and the cascading effect that a single late delivery will have on all the rest of the driver's stops.

The last mile represents 41% of total supply chain costs.

Goods are hauled thousands of miles around the world to arrive at an end customer. Still, it's this last mile—from the local distribution center to the business's loading dock or doorstep—that's the most expensive and wasteful part of distribution. In fact, the last mile represents 41% of total supply chain costs, according to a 2019 study from Capgemini Research Institute. That figure will likely climb as the trillion-dollar ecommerce market continues to grow, and B2B (and B2C) customers continue to expect quick delivery.

The need to solve the last mile extends beyond profitability. There are also environmental imperatives. Expectations of rapid delivery means more trucks leaving depots with smaller loads. That contributes mightily to traffic congestion, which means both wasted time and fuel, as well as more greenhouse gases. The U.S. Department of Transportation says growing demand in the freight delivery industry has increased air pollution by more than 50% since 1990, and carbon emissions from last-mile delivery is expected to climb 30% by 2030.

Technology-based solutions are helping distributors make smarter decisions on managing the last mile. The connected devices found under the Internet of Things (IoT) umbrella are particularly helpful, with sensors providing updates on deliveries—location, potential traffic impacts, re-routing—as well as cost-saving intel on the vehicles themselves.

All told, these systems provide distributors and delivery drivers with better information and tools. That helps them reduce their environmental footprint and gain new efficiencies while tackling the most challenging part of distribution.

How IoT Drives Better Customer Service

B2B deliveries have ample room to become more efficient and customer-friendly, even as demands on distributors grow.

Amazon, Home Depot, and other large retailers, not to mention logistics companies like FedEx and UPS, have pushed consumer expectations for package delivery to a new level. "Amazon has changed everything. Now there are expectations that you can get product next day or same day, and the B2B sector is making adjustments to meet these expectations," says Mark Jensen, senior director of product marketing at Epicor.

Distributors looking to get ahead of rapidly evolving customer expectations are investing in sophisticated logistics systems integrated with IoT sensors. The connected sensors are installed across the factory, warehouse, and on delivery trucks, wirelessly feeding information back into a central monitoring system. These smart technologies do more than hasten faster delivery times, says Jensen. They also provide more consistent communications, alerts, and an overall better level of customer service.

Faltering in the last mile of B2B distribution can erode important customer relationships.

B2B deliveries have a different set of characteristics and challenges than B2C. Deliveries are often larger, and transactions can rise up into the millions of dollars. From construction sites to grocery stores, faltering in the last mile of B2B distribution can quickly erode important customer relationships. And though they may not be at fault, drivers often get the blame for late deliveries, which can impact employee retention.

IoT systems can equip both sides of the transaction with data and tools to keep those relationships strong. Location data, combined with asset management dashboards, give distributors and customers visibility into the status of an order. IoT can be used to help with route optimization, improving on-time performance. Dynamic notifications fed by IoT data can trigger alerts about when an order is just a few minutes away. Other systems can be configured to offer automatic reorders and restocking.

Together, these solutions turn the last mile of delivery into an opportunity to delight, says Alyson Wilcoxen, Epicor senior product marketing manager. "I look at delivery as customer engagement. It's really the last chance to make a lasting positive impression in the eyes of the customer and to keep them satisfied."

How IoT Advances Distribution Quality and Efficiency

A great customer experience relies on timely delivery, good relationships, and strong communication. Still, efficiency is perhaps the most important element in the distribution business, since reducing wasted time and resources is key to increasing profitability and growth. It hangs over the entire distribution process, up until the last mile.

Indeed, IoT sensors and other applications do much more than ensure timely delivery. Besides monitoring the truck itself, they also lend a hand in product verification and quality assurance. Many B2B orders contain heavy industrial products that may travel thousands of miles from the factory.

IoT-enabled applications using RFID tags and blockchain are two systems that help distributors track theft and verify the authenticity of products when they change hands at their final destination, Jensen explains. Ensuring product safety is also within the realm of what IoT can provide. Certain food products, medical devices, and pharmaceuticals that must retain specific temperature, humidity, and pressure levels during transit can be tested and validated with IoT sensors throughout their entire journey. The testing could, for instance, help take some guesswork out of product recalls.  

How Covid-19 is Driving Last-Mile Innovation

Safety and security have never been more important than during the COVID-19 pandemic. Keeping workers and end customers safe from the virus has inspired fast-growing innovations. They include no-touch delivery and tracking, as well as the ability to take pictures of signatures to avoid contact.

Sophisticated locker systems are another innovation that's taken root during the pandemic. It's where coded lockers are connected to distributors' ERP systems to enable on-demand product transfer. A distributor picks a customer's order, places it in the locker, and shares the code with the customer. Customers can then more efficiently slot the pick-up into an existing route.

Effectively using data reduces human error—and human contact. Technologies like smart glasses and augmented reality push the envelope further by giving customers the ability to pick their own orders remotely at a warehouse.

Indeed, warehouse automation and process innovation may be geographically distant from the last mile of distribution, but they are intimately connected. To further reduce the environmental impact of their activities, quicken turnaround times, and bring distribution closer to the final destination, many companies are piloting or innovating the use of smaller distribution centers located inside cities.

The Future of Last-Mile Delivery

Also increasingly common in cities, drones and other driver-less vehicles are rapidly gaining in popularity for last-mile distribution. "For B2B delivery in industrial parks that are not as heavily trafficked with cars and trucks, you'll also see the flying and rolling robots," says Jensen.

In many ways, the future of last-mile distribution innovation is now. But all the sensors in the world—and the significant bytes of data they produce—won't solve the formidable problems posed by last-mile distribution.

The truck driver is the face of the company in many instances

Smart distributors still need the right strategy, thoughtful planning, and a detailed approach to implementation that includes all the stakeholders on both sides of a delivery. Including an incredibly important but overlooked population: the drivers themselves. "The truck driver is the face of the company in many instances, so we need to get better tools into their hands to serve customers, get there on time, and save time," says Wilcoxen.

Distribution's future looks bright. Take, for example, our stalled dog food delivery driver. IoT and other strategic tech will streamline her deliveries, optimize her route to avoid slow downs and idling, and provide instant location updates to customers. At the dock, she'll rely on an autonomous robot to whisk heavy dog food pallets off the truck and onto the dock.

Behind the scenes, no-touch signatures, automated billing, and automatic ordering triggered by low stock inside the customer's warehouse puts the process into motion again. It's efficient and cost-effective. What's more, reduced CO2 emissions make a difference to Mother Earth, too.

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