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Final mile trends bring opportunities and challenges to companies big and small. The biggest challenge facing those who deliver in the final mile is cost-effectively meeting customers’ heightened delivery expectations. COVID raised the delivery expectation bar to levels we’ve never seen before. Everybody in our industry responded to that well, but most of the time, they did so without looking at the bottom line. People wanted things now, and last-mile providers responded. They added more resources, the supply came in, and the industry got it done. But, those demand levels did not sustain post-Covid. The biggest challenge for last-mile providers is adapting to and responding to the new normal in consumer demands because almost everything is getting delivered everywhere today. Even in the most traditional verticals – ones we thought would never be touched by this – such as healthcare are handled by those in the final mile sector.
“It’s not just about technology for the sake of technology, but technology for the sake of making life better,” Guru Rao.
This month, Thinking Outside the Box interviewed Guru Rao, CEO of nuVizz, Inc., a last-mile TMS platform company and CLDA member. Rao will also be a presenter at next month’s Final Mile Forum. Here are some excerpts from our conversation with him.
This industry is undergoing significant transformation. Here are some of the trends and challenges we see as shaping the landscape for those in the final mile.
Service providers must learn to work with various partners and operate many different types of businesses to sustain and operate profitably. Couriers must also have the flexibility to work across different verticals and for different customers.
That means that carriers must operate in co-mingled consolidated delivery scenarios. They will need to find ways to interact with many different shippers. These will be other types of businesses, each with their own requirements. You won’t be able to operate in the traditional ways of responding to demand, answering customer queries, and handling billing manually. And you will be doing more of it every day. That’s where technology comes into play. It will help you do all those things in an automated fashion so you can do more with less.
The world is evolving into a dynamic ecosystem. We used to live in a static world where everything was known. You could plan for the next few weeks and know what to expect. But that has completely changed. Now, you must pivot to react to demands that change by the minute.
The ever-changing nature of business operations today calls for dynamic optimization. You can no longer depend on your dispatchers to react and find the right answer in today’s compressed time spans, which may be minutes or even seconds.
This is where the technology comes into play. Because it is humanly impossible for anyone to look at millions of data points to make a decision. But computers and technology are designed to be able to do that. They can handle dynamic optimization so you can operate in this new, ever-changing world of delivery without having to invest in more people. The technology takes what is more complicated and allows you to do more.
The need to be able to deliver everywhere has fueled the trend toward microfulfillment centers. Shippers that want to cover more and more zip codes are eyeing these microfulfillment centers. When a shipper wants to deliver to more people, transportation is a huge cost. Their response is to take the inventory closer to where the deliveries need to be, cutting transportation costs and increasing customer service by getting things to them faster.
AI will be a tremendous asset to those in the last-mile delivery system because they must deal with large amounts of data.
Logistics, especially in the final-mile area, operates in a real-time environment that generates millions and millions of data points. And when you have so much data, AI is the best tool to use that information and provide the right answers. We see it as a critical tool for planning, execution and post-execution analysis.
When last-mile providers are planning, you need to look at millions of data points, whether inventory planning, network optimization, opening new distribution centers or daily route optimization. Those decisions involve millions of permutations and combinations for the right answer. AI plays a huge role here because you cannot rely on humans to be able to do that.
You can do all the planning in the world, but exceptions will still happen. And in today’s delivery environment, you don’t have two days to react to those exceptions. You have minutes or even seconds. During that time, you’ve got millions of data points to figure out what to do next. What resources do you need? How can you redirect the work? How will you interact with the customer? How many people can you put in front of this problem right now? AI is a great tool, but it has one caveat: you must have the right data. Data is the most critical part of any AI conversation. As long as you have good data, the AI agent can quickly figure out and answer most of your customer queries. It can help you manage those exceptions and remove human involvement.
You’ve done planning and execution, and those steps give you reams and reams of data; that data is golden. Learn from it. AI can help you look at the patterns in the data you have generated. AI will help you figure out what the opportunity is. Are you consistently delivering late to one customer? What are the factors contributing to that? AI can look at the historical data elements and suggest a better way of planning. It will create a continuous improvement cycle, refining your business and adding efficiency every time you use it.
Couriers looking to do more with fewer people can mobilize the power of AI to create their own autonomous delivery ecosystem. Consider the alternative—the spreadsheet. If you are putting 100 things into a spreadsheet day in and day out, there’s no way a person can master all that data. On the other hand, you can easily automate that process with AI to create what we call an autonomous delivery system. Technology is very smart. As long as you track everything that is happening, it can be more efficient than one person trying to make sense of all that data.
Let’s take the example: Suppose a driver can’t deliver a product because the customer is not there. They have to mark it as “not delivered.” That typically means getting one of your dispatchers involved in watching for and reacting to that exception. In an autonomous delivery environment, the system sees that exception and creates a rule based on what needs to happen next. If this is the type of order that can be delivered the next day, it looks at the scheduled routes for tomorrow going to the same area. If not, it can find the right route to insert that into for the next day, sending a communication to both the driver and the customer with that information. All of that can happen without anybody sitting in front of their computer and watching for these exceptions.
If you’re a small company using technology appropriately, you can behave like a big company. Today’s technology enables what we call a democratization of capabilities. You don’t have to be Amazon to have the level of sophistication to provide visibility every step of the way. You don’t need to spend billions of dollars. It is readily available today with today’s technology. Today’s technology democratization allows you to do that.
If you use technology well, your service becomes more human. Technology creates the space for real interaction. Suppose you let technology handle the mundane tasks of managing millions of data points. In that case, you can use your people to add value and cultivate more relationship-based interactions with your customers, especially when context is important.
Why make your people go through spreadsheets with 100,000 lines of data? Let technology do that, and then you can use members of your team to talk to people and establish relationships. Technology can do wonders, but it cannot do simple things like looking into someone’s face to see that they are in pain. People can easily do that. So, use people in those areas and let the technology do what it is best suited to do.
It’s not just about technology for the sake of technology, but technology for the sake of making life better.
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Want to hear more from Guru Rao? Catch his presentation, “Demystifying AI and Logistics,” at the Final Mile Forum next month. There’s still time! Register now so you don’t miss out.
Here’s a sneak peak in Guru’s own words:
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Let us know what you think of “Thinking Outside the Box.” Let us know if you have follow-up questions, reactions, or ideas for future posts. Email us at aobston@aomc.com
