Demand-Driven Logistics: Direct To Consumer And The Last Mile

<p style="text-align: justify;">With retail storefronts under siege, the smart move for manufacturers is to strengthen direct consumer channels.&nbsp;</p><p style="text-align: justify;">We can use network-based strategies to protect the business, get a better match to supply and demand, increase real-time responsiveness, and enable world-class logistics execution capabilities down to the last mile.&nbsp;</p><p style="text-align: justify;">This will improve service levels, create a great customer experience, and increase loyalty and market share.&nbsp;</p><p style="text-align: justify;">Is it possible to move to smaller order quantities and decrease costs simultaneously?&nbsp;</p><p style="text-align: justify;">Yes, as long as real-time network visibility and collaboration are used to reduce variability for all trading partners and eliminate information lead times across all tiers and echelons in the supply chain.&nbsp;</p><p style="text-align: justify;">&nbsp;</p><h2 style="text-align: justify;"><span style="font-size: 14pt;">How COVID-19 is Changing Business</span>&nbsp;</h2><p style="text-align: justify;">Consumer-driven needs and behavioral shifts have generated a rapid and ongoing shock to most supply chains.&nbsp;</p><p style="text-align: justify;">This is causing many companies to re-evaluate the architecture of their supply chains to adapt to the current conditions and mitigate future vulnerabilities. This shift has also created structural change in supply chain networks, which will also change business processes.&nbsp;</p><p style="text-align: justify;">Government-mandated quarantines have driven a global increase in ordering food, groceries, medicines, and other essential needs online.</p><p style="text-align: justify;">Even for non-essential goods, businesses have seen an enormous surge in e-commerce. Where consumers would ordinarily have gone to a local retailer, the transaction has shifted online or direct from the manufacturer.&nbsp;</p><p style="text-align: justify;">COVID-19 will permanently change consumer behavior. Consumers&rsquo; attitudes, behaviors, and purchasing habits are changing - and many of these new ways will remain post-pandemic. Accenture reports that; &ldquo;Much of this new e-commerce activity has been from new users. The trend toward digital commerce is expected to continue post-outbreak, with consumers reporting that the proportion of instances they shop online will increase from 32% to 37% after the outbreak, illustrating the clear need for a substantially increased investment in this channel.&rdquo;&nbsp;</p><p style="text-align: justify;">&nbsp;</p><p style="text-align: justify;">New Dominance of the Direct-to-Consumer (D2C) Channel&nbsp;</p><p style="text-align: justify;">During the past few months, variables to consider across tiers in the supply network have been the ability to respond to single-item demand generated by the &ldquo;at home&rdquo; consumer along with the associated last-mile delivery. For example, the ability to respond to the recent demand increase for home delivery of food, grocery, and medicines.</p><p style="text-align: justify;">Whether you need medicine delivered the same day/the next day or you want to support your local restaurant through home delivery, those capabilities are made available cost-efficient and effectively.&nbsp;<br />All the capabilities that enable the entire network to provide the highest levels of customer service at the lowest possible cost are fully extended to the consumer through our demand-driven logistics capability.&nbsp;</p><p style="text-align: justify;">We will look at achieving economies of scale with single-item demand.&nbsp;</p><p style="text-align: justify;">Yes, it is possible!&nbsp;</p><p style="text-align: justify;">By mutual partnerships of large Consumer Packed Goods (CPG) /FMCG / companies with existing last-mile delivery infrastructure companies, integrate their supply chain networks. (Synced with last-mile delivery partners)</p><p style="text-align: justify;">Last-mile infrastructure companies like Swiggy, Denzo, Zomato, and Dominos are all app-based and can even deliver single-item customer orders.</p><p style="text-align: justify;">This would be network-based omnichannel last-mile delivery, while reverse pick-up is possible through a partner network.</p><p style="text-align: justify;">Inventory can be optimized since it is managed by selling CPG/FMCG companies, with visibility across both networks.&nbsp;</p><p style="text-align: justify;">I have a few examples of companies already partnered and integrated for home deliveries.</p><ul style="text-align: justify;"><li>Metro Cash and Carry India has inked a deal with food ordering app Swiggy for last-mile delivery of essentials within two hours through an intermediary, taking on online grocery platforms such as Big Basket and Grofers amid Covid-19 lockdown&nbsp;</li><li>India's largest pizza chain, Dominos, has joined hands with packaged consumer goods major ITC Foods to launch 'Domino's Essentials'</li><li>Food and beverages major PepsiCo India announced its tie-up with on-demand delivery service platform Dunzo to deliver its four food brands to consumers&rsquo; doorsteps. The initiative has been launched as a pilot in Bengaluru to deliver PepsiCo&rsquo;s products from food brands Lay&rsquo;s, Kurkure, Doritos, and Quaker.&nbsp;</li><li>Covid-19 impact: Britannia partners with Dunzo to home-deliver food essentials</li></ul><p style="text-align: justify;">&nbsp;</p><p style="text-align: justify;">&nbsp;</p><p style="text-align: justify;"><span style="font-size: 10pt;"><em>This article was contributed by our expert <a href="" target="_blank" rel="noopener">Chandan Laxman</a></em></span></p><p style="text-align: justify;">&nbsp;</p><p style="text-align: justify;">&nbsp;</p><h3 style="text-align: justify;"><span style="font-size: 18pt;">Frequently Asked Questions Answered by Chandan Laxman</span></h3><p style="text-align: justify;">&nbsp;</p><h2 style="text-align: justify;"><span style="font-size: 12pt;">1. What is the most effective way of last-mile delivery?</span></h2><p style="text-align: justify;"><span style="font-size: 12pt;">Seamless integration of entire processes (with software plus technology), right from order placement, picking product/items from warehouse to delivery at the destination (end customer), ensuring zero error/waste. (Right First-Time model).</span></p><p style="text-align: justify;"><span style="font-size: 12pt;">And, ensure each stage of the process is traced (barcodes/RFID) and the communication chain is established.</span></p><p style="text-align: justify;">&nbsp;</p><h2 style="text-align: justify;"><span style="font-size: 12pt;">2. What technologies are used in last-mile delivery?</span></h2><p style="text-align: justify;"><span style="font-size: 12pt;">The last-mile delivery process has seen significant upgradation as well as technology usage, including software platforms like Blockchain and delivery innovations like Autonomous Delivery Vehicles (ADV) Drones and Robots. All work together to ensure communication and control. </span></p><p style="text-align: justify;">&nbsp;</p><h2 style="text-align: justify;"><span style="font-size: 12pt;">3. How many types of digital strategies are there? </span></h2><p style="text-align: justify;"><span style="font-size: 12pt;">Last-mile deliveries have an immensely complex network of warehouses, x-docks, dark stores, and local vendors. Without an adequate digital strategy, getting lost in the chaos is not hard.</span></p><p style="text-align: justify;"><span style="font-size: 12pt;">With the help of digitalization, Machine Learning, and advanced analytics, planning the supply chain journey, including forecasting, dark stores, and warehouse replenishment, each step is integrated seamlessly, with customer service in focus.</span></p><p style="text-align: justify;">&nbsp;</p><h2 style="text-align: justify;"><span style="font-size: 12pt;">4. How can D2C sales be increased?</span></h2><p style="text-align: justify;"><span style="font-size: 12pt;">Brand visibility takes the centerstage</span></p><ul style="text-align: justify;"><li><span style="font-size: 12pt;">Ensure omnichannel focus</span></li><li><span style="font-size: 12pt;">Stock up appropriately (never runout)</span></li><li><span style="font-size: 12pt;">Value-added kits (freebies, points, discounts, combos)</span></li><li><span style="font-size: 12pt;">Repeat sales<br /></span></li></ul><p style="text-align: justify;">&nbsp;</p><p style="text-align: justify;">&nbsp;</p><p style="text-align: justify;">&nbsp;</p><p style="text-align: justify;">&nbsp;</p>
KR Expert - Chandan Mangalore Laxman

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