On-demand Logistics Tops Holiday Wish Lists

Managing the last mile in your company's logistics processes can enable your supply chain to keep pace with the Christmas rush without having to deal with excessive delivery costs that can eat into profit margins.


Managing the last mile in your company's logistics processes can enable your supply chain to keep pace with the Christmas rush without having to deal with excessive delivery costs that can eat into profit margins.

As the holiday rush begins, retailers and their suppliers must manage exceptionally high order deliveries over a very short period of time. In an ideal world, they would like to manage this without increasing costs or compromising quality of service.

The 2004 Christmas season promises to add to the challenge. According to the National Retail Federation, total U.S. retail spending during the months of November and December is projected to be $219.9 billion this year, up 4.5 percent from the year ago holiday period.

Getting increased volumes of merchandise to warehouses, stores or end customers while maintaining profitability is one of the biggest challenges suppliers and retailers can face. This is especially true in an age where inventory keeps moving closer to the point-of-purchase and the demand for a direct-to-store or direct-to-consumer delivery models grows.

It is no surprise that the last mile delivery is one of the fastest growing areas of logistics. It is also the area where companies can achieve the biggest gains, since many dispatchers still manually manage daily scheduling and reporting. In fact, many delivery operations still rely on paper-based scheduling and dispatching.

This can be very costly when the stakes are high and competition increases. Statistics show that some operations have had to increase their staffing and/or trucks by as much as 50 percent to handle higher volumes during peak seasons. More efficient scheduling and dispatching could significantly reduce that number among other costs associated with missed deliveries, inaccurate addresses and other day-to-day challenges.

Companies are constantly looking at alternative ways to maximize their fleet and resource capacity, reduce transit time, minimize the use of additional drivers and vehicles, and keep their bottom-line intact. However, this kind of efficiency requires real-time visibility into orders and delivery schedules from the warehouse to the customer's house. That level of visibility is critical to maintaining quality service levels, especially when volumes are high.

The costs associated with owning and maintaining the technology has historically been out of reach, especially for smaller businesses. The capital costs are extremely high, integration needs are complex, installation can take months and, in many cases, the capabilities are limited. Staffing, training, specialized equipment and other infrastructure-related investment costs have placed these solutions well out of reach of most delivery operations.

However, in recent months managed logistics services have been making inroads in tackling the last mile delivery challenge. These subscription-based services provide organizations of any size with an affordable, comprehensive and integrated solution to address the delivery bottleneck. On-demand, pay-as-you-go services offer a highly cost-effective alternative to dealing with varying volumes of orders, since the fees can scale up or down according to needs. In addition, the real-time visibility provided allows managers to plan delivery routes and more accurately pinpoint scheduled delivery windows.

The Bottom-line Advantages

During peak delivery times, organizations must manage high order volumes, limited personnel and vehicle resources, and shortened delivery windows. The need to maximize fleet capacity and plan for additional resource requirements in real-time is paramount to managing costs.

Managed logistics services' planning and routing optimization capabilities help schedulers and dispatchers maximize delivery fleet capacity. It also allows for last minute changes or additions as the day progresses. For example, rather than having to increase staff/vehicles by 50 percent during peak periods, managed services can help organizations increase delivery volumes by as much as 30 percent with existing fleets, leaving only 20 percent to be outsourced.

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