Automation Solutions Closes the Gap on Last Mile Delivery for Retailers
Industry experts are forecasting that e-commerce sales will reach $4.2 trillion in 20211.
Because of this, retailers can no longer solely rely on customer facing factors such as brand, product and price as their only differentiators from competitors. Fulfillment is now a key component of a successful end-to-end retail strategy. With retail giants like Amazon and Walmart setting the bar with 2-day deliveries, retailers are feeling the pressure to also provide a speedy fulfillment and distribution experience for their customers. One way these organizations can accomplish this goal is by incorporating automation solutions in their fulfillment process.
According to a recent retailer’s report conducted by Blue Yonder, only 14% of the 300 executives surveyed say their fulfillment locations are fully automated. Of that same group, 21% are expecting their fulfillment process to be fully automated by the end of the year. Furthermore, 23% of those organizations expect to have most of their fulfillment centers automated within that same timeframe. Having omni-fulfillment capabilities in place as well as locations equipped with automation resources will be the determining factor for quick and efficient fulfillment.
Automation capabilities for fulfillment can help retailers:
- Eliminate manual processes
- Improve operational efficiency
- Reduce input costs; Increase profitability
- Get back to a customer-centric approach
Another critical reason for retail organizations to adopt fulfillment automation relates to the increasing expense of what’s known as the “last mile delivery”. This is the part of the fulfillment process where the product goes from the distribution center to the back of a delivery truck and then to the customer’s doorstep – hence the term “last mile”. This portion of the product’s journey accounts for over 50% of the delivery expense2. To combat these elevating input costs, retail organizations have relied on strategically located pop-up distribution centers (also known as pop-up DCs) and micro-fulfillment centers to bring products closer to the consumers. Over the next few years, the usage of pop-up DCs and micro-fulfillment centers is set to nearly double3. Having these locations fully automated allows retailers to reconcile orders with more agility and more profitability, especially with increased order volumes driven by the pandemic and migration to online shopping.
At Data Ideology we have worked with several retailers helping them deploy automation resources. Our approach is to collaborate with the organization’s IT and business groups to centralize the multiple data sources utilized during the fulfillment and distribution processes and create a single source of truth (SSOT) for all relevant data. With SSOT in place, these organizations can now apply their supply chain intelligence to enable automation capabilities. By implementing automated solutions and removing manual processes from operations, retailers can prevent congestion in their fulfillment centers and keep orders flowing seamlessly. Predictably, this will reduce costs and ensure higher profitability. Implementing a SSOT for fulfillment and distribution data is a foundational step in the fulfillment automation process. Once complete, retail executives can close the gap on competitors and refocus on a more customer-centric approach to improve the overall online shopping experience. Contact us today to learn how we can help accelerate your automation initiative using our proven methodology.
Written by Mike Sargo
Co-Founder & Chief Data and Analytics Officer at Data Ideology
Mike Sargo is Chief Data and Analytics Officer and Co-Founder of Data Ideology with over 18 years of experience leading, architecting, implementing, and delivering enterprise analytics, business intelligence, and enterprise data management solutions.