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Downstream optimisation to improve last mile performance

Significant growth in e-Commerce sales has placed pressure on parcel operators and shippers to find solutions that meet or exceed customers’ expectations.

by Antonio Amadasi

Consumer buying habits have driven a significant increase in e-Commerce sales, contributing to over 20% parcel volume growth, equating to an estimated 5,000 parcels shipped every second.1 Likewise, customer expectations have also increased with demands for free shipping, faster delivery and more visibility into order status and location.

This shift in e-Commerce sales has placed pressure on parcel operators and shippers to find solutions to meet or exceed these growing customers’ expectations.

Central hubs handle large volumes of parcels, with many companies prioritising the application of automation to improve performance in these facilities. To retain efficiency gains upstream and improve last mile logistics, companies must consider ways to automate downstream, making the last mile a focal point for improvement and optimisation.

Despite robust demand, costs associated with the last mile are still rising, with industry reports showing that last mile costs make up over 50% of total shipping.2 Automating elements of the last mile can greatly increase efficiency and improve customer satisfaction, all while reducing costs.

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Last mile depot: automation inside the four walls

Each central hub feeds multiple last mile depots, with each depot serving as a strategic centre to convey parcels to their final destination. This is a crucial point where one process completes, sortation, and a new process begins, delivery. By embracing automation advancements, operators can improve quality of service, deliver on time, and offer a better customer experience, leading to increased customer satisfaction and retention. Having a high performing and efficient last mile depot can level up the entire operation.

Take a holistic approach

To  gain more improvements, it is important to focus on not just a single depot but the entire network, including how they work with hubs upstream and with last mile delivery downstream. Consider the scalability and flexibility of automation, understanding if the solution can be applied to the entire network and fits into the business’ growth and expansion plans.

Before implementing automation, it is important to partner with an industry expert. With a deep understanding of your operations and network, an experienced partner can assess, identify and prioritise opportunities for improvement. Using a data-driven approach, combined with a comprehensive knowledge of the processes, will ensure the best-fit solution that meets your business requirements.

Optimise processes

Each parcel must be processed quickly, handled efficiently, tracked and traced and securely delivered. As with a central hub, the last mile depot must ensure the effectiveness of parcel processes: loading and unloading, detection and tracking, and handling and sorting, while meeting the specific needs of operational activities, site size, and maintenance. Before considering technology for the last mile depot, it is crucial to understand the last mile depot operations and how it can be optimised.

Bidirectionality: from process to solutions

Typically, the last mile depot has two main functions: distributing the parcels that come from the hub to the final destinations (inbound operations) and handling and sorting parcels collected from customer locations (outbound operations). With packages moving both inbound and outbound, the parcel flow is driven by a bidirectional process.

Given this specific feature of the last mile depot, an automated bidirectional sorting solution is beneficial for optimised efficiency. Bidirectional automated solutions offer simplicity in design and operations. A compact and streamlined solution optimises workflow and requires fewer components.

Advantages of this approach include:

  • Space optimisation: bidirectional solutions provide a decreased warehouse floor footprint and allow space for other operational activities.
  • Cost optimisation: due to the optimization of the system layout, the sorting solution has fewer components in the system, as well as fewer spare parts.
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Technologies

Choosing the best-fit automated sorting solution is crucial for the success of the last mile depot. Today, there are several technologies available, and each has a specific application given the operator’s specifications, building limitations, and operational requirements.

Using these requirements, an operator can select the best-fit sorting solution capable of providing maximum efficiency. Typically, wheel sorter technology can be employed for sorting centres with up to 6,000 parcels per hour. This technology can also perform the functions of merging, conveying and centering parcels, transforming into a bidirectional sorting solution. For higher throughput, shoe sorter technology can be another ideal option for handling and sorting a wide range of parcel sizes.

Both technologies can offer a modular design with standard components for customer-specific solutions ensuring flexibility and reliability.

Collect – and exploit – your data

Today’s automated solutions come with sensors, scanners and photo eyes to track and trace parcels and simultaneously collect data from the system. Analysing machine data will assist with monitoring the system, providing notifications of potential problems, and optimise uptime. Data is key to assessing equipment, supporting troubleshooting, and preventing potential failures or outages.

An additional aspect of using parcel data is their application to the delivery management plan. By analysing the collected data, operators can develop an efficient plan, whether they are delivering directly to the customers’ doorsteps or to pick-up lockers. Data can improve the management of parcel flow and vehicle loading.

Open the potential of the last mile

According to industry research reports, the parcel industry is projected to have year-over-year growth.3 Customer expectations will remain steadfast and continue to scale in pace with the latest innovations. Embracing automation for last mile logistics increases operational efficiency, reduces costs, improves the customer experience, and drives profitability.

 

FORTNA Can Help

FORTNA offers a dedicated team of specialised experts who develop and design best-fit solutions for last mile logistics. Our Last Mile Solution Centre offers comprehensive services and solutions, including network strategy, distribution centre operational design and implementation, material handling automated equipment, robotics and a comprehensive suite of lifecycle services.

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1 Global Parcel Shipping index ebook 2022 – Pitney Bowes
2 https://www.insiderintelligence.com/insights/last-mile-delivery-shipping-explained/
3 https://www.statista.com/statistics/534123/e-commerce-share-of-retail-sales-worldwide/

About the Author

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Antonio Amadasi

Managing Director, Last Mile Solution Center Lead

Antonio Amadasi leads the Last Mile Solution Centre at FORTNA. He has more than 30 years of experience in automation, including 15 years focused on the last mile. Through a consultative approach, he and his team are committed to increasing operational performance and delivering value for last mile distribution globally.