Parcel delivery facing challenges: some key stages in digitalization
The logistics of the last mile played an essential role during the period of confinement that our society has just experienced !
The intelligence of the Humans and their deep expertise of their trade allowed a certain number of actors to reinvent themselves and to rebound. This ability to adapt has often been facilitated by the digitalization of its actors, a priority subject for many parcel delivery players.
The technological solutions with which they are equipped also have played an important role in the capacity of those involved in parcel delivery to react to periods of activity different from the usual volume of business.
If the challenges facing shipping players do not seem at first reading to be very different from those of yesterday (e-commerce boom, constraints linked to urban logistics, new regulations, etc.), they seem entirely similarly more significant at the end of confinement. The forced digitalization of part of the industry and new consumer habits could accelerate already known trends and make it even more necessary to continue or resume the technological projects undertaken.
Take care of your data
To facilitate decision-making in a logistics organization, it is necessary to understand what is going on there. The data must therefore be accessible, as complete and as reliable as possible. It will thus be usable for analytical and reorganization purposes. The projects undertaken by the shipping companies to consolidate a unique and good quality data repository will therefore once again be at the forefront, with “guest stars” such as the delivery addresses, the weights and the volumes of the packages and customer-specific delivery constraints.
For some, the delivery addresses are of excellent quality thanks to rigorous processes of upstream processing or corrections (sometimes even manual). In others, the address data is more sparse and the geocoders used are not suitable. A good geocoding tool for shipping should be able to work on unstructured data through the use of Deep Learning, including NLP (Natural Language Processing) techniques. It must also be able to distinguish the addresses of individuals and professionals, in particular to ensure the most suitable delivery possible.
In the case of B2B delivery, the recurrence of orders makes it possible to manage daily life because the information is known to the driver even when it is absent from the databases. But it makes it impossible to easily re-challenge an organization through data analysis and the use of optimization solutions.
Because they are at the end of the chain, shipping companies also suffer the breaches (if any) of their own customers from the point of view of the data. To facilitate the sale, some e-merchants sometimes do not require enough information from Internet users, thus penalizing the quality of service which the carrier guarantees. In a future where e-commerce could accelerate, raising awareness of online sales players on these issues to encourage the use of auto-completion or verification of delivery addresses before validation will be a prerequisite.
Regarding the weights and volumes of the packages, here again all the companies are not equal: the data is fragmented for some when others have already set up systematic weighing processes for packages, making the data reliable and available to 100 %.
Implement agile solutions
If Humans have managed to adapt, what about the tools used by parcel delivery companies? When the parameters of a problem are changing, what solutions can keep up ?
Take route optimization, for example, parcel delivery conventionally use it to optimize the order of deliveries to be made within a given sector.
In order to function, route optimization solutions use a certain amount of information which constitutes the “input data” of the problem to be solved. As we have seen, the crisis that we have just gone through has profoundly modified these “input data”: the volumes processed by the players have experienced strong variations and the characteristics of the parcels as well as the geographic distribution have changed.
The optimization technology used, must be agile and reactive in order to be able to take into account, on the fly, new objectives, new constraints and new data, while maintaining maximum performance. To find out more, read our article on optimizing crisis-proof tours here.
Resize your vehicle fleet
The characteristics of the parcel delivery fleet very often depend on their customers. Carriers will not use the same fleet of vehicles to deliver many small packages in ultra-urban areas as they do to deliver pallets to industrial areas.
Strong changes in the volume of activity or its nature make it necessary to periodically resize vehicle fleets. This work of re-optimizing the vehicle fleet in relation to changes in the volume of activity and its nature is also an opportunity to rethink things in depth.
The regulations which apply more and more to large urban centers in terms of logistics of the last mile already encourage modal shifts and the use of clean and silent vehicles (electric vehicles, bicycle, electric scooter, etc.) .
Why not include in the simulations the costs of renewing part of the fleet to greener vehicles?
Rechallenge your sectors regularly
Some organizations use a segmentation of sectors to manage their operations and only use their optimization solutions to determine the order of visit of points within a geographic area. This is often the case with parcel delivery, the use of sectoring making it easier to organize the sorting of packages in the warehouse.
During the confinement, for companies for which the health crisis is synonymous with reduced volumes, the sectors are no longer relevant because they generate inconsistent tours. Conversely, if activity has been boosted by the crisis (home deliveries for example), the sectors must be reduced so that the tours are feasible.
Later, if we imagine an increasing trend in the share of B2C deliveries, many parameters will vary:
- visited will not be the same,
- packages will be of lower weight and size,
- there will be fewer packages delivered by stops,
- different delivery times and slots (office hours for B2B versus evenings and weekends for B2C),
- higher average time spent per parcel delivered and longer rounds.
All these changes make the sectors in place until then, obsolete and the parcel delivery companies should therefore equip themselves to acquire the capacity to re-challenge their sectorization on a regular basis.
As we have seen, the questions asked during the COVID crisis will, sooner or later, have to find answers, some of which will be technological. As such, Kardinal is developing a whole range of distribution optimization solutions that constitute an innovative and relevant answer to these questions, some of which have been developed in contact with the major players in parcel delivery and transport. To learn more about our solutions, contact us!