Supply Chain Transformation Blog

Supply Chain Transformation Blog

Opinions expressed on this blog reflect the writer’s views and not the position of the Capgemini Group

TaskRabbit stole my Truck – The Future of Last Mile Delivery:

Categories : LogisticsSupply Chain

Crowdsourcing is the quickest and most cost effective way to get something done, and I’m betting that Last Mile Delivery won’t be done by big name companies building their own private fleet (e.g. Amazon), or behemoth parcel delivery companies like FexEx, UPS or USPS providing Last Mile service at courier-pricing.  My chips are squarely placed on crowdsourcing as the means by which most big companies will get efficient, cost effective, delivery of the last mile.

Last Mile Delivery is traditionally defined as “the movement of goods from the final commercial shipping point (e.g. a transport hub, distribution center, or sortation center) to the final destination (usually the end customer)”.  This piece of the logistics puzzle is notorious for being the most expensive leg of logistics (sometimes 40-50% of the cost), the hardest to plan (random); and requiring execution in highly congested areas and nimble vehicles with flexible schedules.

If I am a retailer who is looking to develop a last mile capability, can I trust crowdsourcing as a means to create and execute a higher quality last mile delivery service at a cheaper price?  Just ask that question to Jacqui Safra (principal owner of The Encyclopedia Britannica) or a taxi cab driver (who doesn’t live in Houston)? 

Safra will direct you to Wikipedia, which is now a reputable source of information and in a few short years outnumbers the content of the former Encyclopedic Britannica (which had been amassing and refreshing content since 1768).  Even better Wikipedia is free! 

Taxi drivers are constantly complaining about Uber (a crowsource service for rides), which has already taken over the long time established Taxi cab business by providing more convenient service, higher quality service, all at a cheaper price.  Why else are the Taxi cab companies fighting so hard to keep Chapter 46 alive in the Houston city code.

The fact of the matter is anything can be crowdsourced, and I would argue it is an effective way to test a market for a fraction of the price, and iterate a service quicker than by any other means.

So what would crowdsourcing of the last mile look like?  A retailer (either Brick & Mortar retailer like Target or an On-line retailer such as Amazon with a proper sortation center) would leverage a Uber-like broker just as they would a 3PL, Parcel Service, or Courier.  The Uber-like broker/service would take order details (pick up location such as a retail store, and drop off location such as customers home or even current location within a zip-code) and match them to a prescreened driver database.  As pickup and drop-off pairs are presented drivers can pick the pairs and execute the delivery. 

There are some big benefits to this type of service over the traditional carriers that exist today, namely:

  • Same day delivery is executed at the cost of 3-5 day delivery
  • Delivery flexibility is expanded.  I no longer have to wait for a delivery at home, but instead my driver will deliver to me at the soccer field where I am waiting for my son at practice
  • Real-time tracking is enabled.  I can see on a map where my package is at any given point in time.
  • Flexible work arrangements for High-schoolers and college kids.  A large labor force has new sources of income

But there are a few things to work out:

  • Retailers have yet another reason to develop a certain level of inventory accuracy to enable store fulfillment, and many of them are far away from being able to do that today
  • Which entrepreneurial company will be the first to take this market?  Will it be hot start-ups like Deliv or well established players like Uber?

My bet is that executives at the big retailers aren’t going to make the capital expenditures to build their own last mile delivery capability. With Fed Ex and UPS screwing those retailers with Dimensional pricing, who better to give a chance to than the high-school kid down the street (or the Uber-like executive that he works for)?

About the author

Adrian Penka
Adrian Penka
Mr. Penka is a Vice President in the Supply Chain Practice of Capgemini, specializing in procurement strategy and transformation with a strong background in process design and SRM and ERP implementations. Adrian also leads Capgemini’s Global Procurement Transformation Center of Excellence. Adrian has held a diverse set of roles during his 16 year tenure with Ernst & Young and Capgemini such as Mergers and Acquisitions Synergy Savings Strategy Advisor, Process Design, Sourcing, Contract Analysis and Management, Source to Pay Transformations, Technical Report Development, and Project Manager for full life cycle implementations of SRM and ERP systems such as Commerce One, Ariba, SAP SRM, and PeopleSoft.

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