I’ve had last mile logistics in my mind over the last few weeks. Between speaking at this year’s lastmileX event at the Hilton Manila, and attending the Last Mile Leaders Asia event in Bangkok organized by FarEye last week, I’ve had the chance to refocus on the importance of getting the last mile right, as an important element of both the satisfaction of our customers and the profitability of a business.
It’s worth noting here that, while we tend to associate “last mile” with direct deliveries to customers, it also covers the broader deliveries of goods to the destination in which the customer directly interfaces with – meaning, this should also cover deliveries to retailers. In the Philippines, retail formats such as minimarts, convenience stores and hard discount stores continue to expand, while the sari-sari store continues to be relevant in both urban and rural settings. That, coupled with geographical complexities and the usual delivery challenges we have long talked about, makes for a pretty complex last mile picture in the Philippines.
In Bangkok we saw the unveiling of the new Eye on the Last Mile report, specifically focusing on how logistics players in the Asia Pacific region are addressing these last mile concerns. (SCMAP is one of the research launch partners for the report.) It is interesting to see how stakeholders are dealing with the delicate balance of maintaining an optimal cost, ensuring speedy delivery, and playing its role as the front line of the customer experience – and how they are utilizing technologies to stay ahead of these questions.
The full report can be read at scmap.org, but its key findings make for some interesting reading:
The rising cost-to-serve is no longer down to external factors. In the Philippines, of course, we are still stressing about the higher cost of fuel; although things have somewhat calmed down in the Middle East, pump prices are still roughly PHP 30 higher now than they were a quarter ago. But the report finds costs going up in other areas we have more control over, such as operational bottlenecks and capacity issues. Some of them may be down to inaccurate address information – which remains a problem in the Philippines, and is a leading cause of failed deliveries, lower service levels and higher costs – but this should not mean deliveries have to go around in literal circles when a (relatively) straight line from seller to customer can do.
Customers now prefer predictability over speed. Across the region, last mile players have indicated that their customers much prefer knowing when their order arrives, over having their order arrive as fast as possible. Speed remains a key factor, but not the most important one; customers are willing to pay extra for the ability to know when a product will arrive. For logistics players, this not just means the need for a robust physical distribution network, but equally robust systems which can keep costs optimal while delivering on these asks for predictable delivery windows.
Last mile players are looking for the sweet spot between owned and outsourced fleets. This is to allow them to be more responsive: a degree of control over their own fleet, while maintaining a degree of flexibility with their outsourced fleets. In the Philippines, where the cost of maintaining your own fleet can be prohibitive, this could mean increased pressure on smaller transport players – from trucks, vans to riders – to deliver for their principals. Greater collaboration between partners remains key, especially if and when technology comes into play.
Last mile players are much further along their AI journey than previously thought. Among the firms surveyed, 75% are at some point in AI maturity; over 43% are in the early implementation stage, and 15% have extensively adopted the technology. This indicates the recognized potential of artificial intelligence in solving logistics issues. I feel the numbers are lower in the Philippines, but not for lack of trust or resources, but rather, local “role models” who can pave the way, as was the case with other technologies.
While the situation in our country is very much different from our neighbors, it is interesting to see how similar our last mile challenges are, and more importantly, how solutions and interventions are not very far apart. For us, what is important is to strengthen relationships with stakeholders to find appropriate solutions that deliver true value to customers and companies alike.
Henrik Batallones is the marketing and communications director of SCMAP, and editor-in-chief of its official publication, Supply Chain Philippines. More information about SCMAP is available at scmap.org.
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