Page 28 - Logistics News June 2019

Future Logistics

Today’s express delivery

model is not sustainable

Courtesy www.supplychainbrain.com

Major players in e-commerce sales are using next-day or same-day delivery to motivate
their customers to click. This is not sustainable with the current distribution methods.
New norms will be transforming the logistics of delivery right before our eyes.

FROM THE peak of the mid-90s,
only about 60 percent of the US
mall population still exists. The
continued shuttering of brick-and-
mortar stores will continue as more
and more people turn to the internet
to place orders. This is the largest
upheaval of a retail market since
Walmart moved out of the south and
into other neighbourhoods.
The current method of building
large distribution centres to house
pallet loads of inventory to support
a region of the market is not suitable
nowadays with the velocity of small-
volume orders. Even subcontracting
3PLs in lesser markets to fulfi l orders
won’t help retailers keep up with the
amount of business. In today’s online centres that have very simple and direct
sales market you have to off er next-day and even processes and a little automation, if any. These
same-day delivery in order to compete. This mini-distribution centres can support same-day
means that the DC must be located closer to the deliveries within a short radius of them.
customer, with few people touching the order
before it reaches the end customer. The outlook
Presently, distribution hands the order off to In the next fi ve years, more, smaller warehouses
a carrier, who moves it through their own sorting will be built closer to the end customers.
centre to get it to the local delivery centre. Some Because of the high cost of real estate in urban
even hand it off at that point to a third party for environments, these warehouses will be very
delivery. This is too many moves to make next- compact and effi cient. More and more retail
day and same-day deliveries economical and stores will fulfi l orders out of their brick-and-
standard. mortar presence.
For fulfi lment to be standard next-day, Signifi cant emerging technologies will
businesses must have inventory that exists shape the warehouse in the future; these
within a four-hour drive of the markets. Instead include artifi cial intelligence, machine learning,
of assigning the delivery to a carrier who moves autonomous vehicles and drones, robotics and
it through a sortation centre, an on-the-fl y 3D printing. Urban warehouses will be equipped
system will need to be created that bypasses this to make products as well as house them, along
function. The destination area will be assigned with packaging and shipment. The urban DC will
at the DC and moved from there in mass to a support same-day deliveries using autonomous
cross-dock location. Groups of orders can then vehicles and drones. Systems will be used within
be moved to a delivery vehicle. these DCs for even faster picking for faster
This will mean more and smaller distribution delivery. •

26 June 2019 | Logistics News