Goliath (digital) vs. Goliath (operations): Who Owns the Last Mile?
As tradition would have it, the last mile was always operationally focused. Merchandise, warehousing and transportation coming together to ultimately deliver a product into the hands of a customer.
DIFOT, optimisation, network efficiency… all terminology that whilst important, did not have any focus on the end consumer.
Arguably, most receivers had no idea, nor did they care about the many complicated components and supply chain challenges that came together to enable the result of a successful customer delivery.
However, we now live in a digital first age… one that centres around the ability to access data and seek transparency like never before.
This increased visibility and demand for data across the supply chain is powering significant shifts into the way “last mile” is now operated and consumed.
The explosion of consumer-facing marketplaces that power our need to seek instant gratification around things such as the delivery of our Pizza, to the arrival of our rideshare are significantly raising the bar around customer expectations.
Next Day, Same Day, 2-hour, on-demand… all terminology and brand promise that if executed correctly, becomes a marketing departments dream sell.
Consumers now ask I can see where my pizza delivery is at every step of the journey, why can’t I see the same for my online orders? How is it possible that today, I am still blind on my last mile?
Unfortunately, the answer is complicated and multi-layered, however the question around the digitisation of the last mile is quite simply, one that can no longer be ignored.
So, where is the battle fought and what are the current trends? Below we look at some of the key questions:
How do digital supply chain teams intesect and collaborate?
In a world where digital first last mile becomes the standard, brands much understand that they can only prevail if there is a mutually agreeable and respected cross-section of digital, operations, customer care and third-party suppliers.
Whilst marketers are responsible for brand equity and increasingly want to own each customer touchpoint, do operations teams toe the line, adapt, or ignore the need?
All stakeholders must be aligned on the strategic brand promise and accordingly be expected to agree on what is achievable and the scale of deployment. This can be in itself very, very challenging.
To be blunt, digital first CX and market leading customer promises do not often adequately consider the operational effort and supply chain process required to stand up the offer.
Operations are motivated by warehousing and inventory, DIFOT, network capacity and cost efficiency, whereas digital teams are motivated by customer promise, digital centricity and post purchase reviews.
Stakeholder alignment about the operational capability to deliver on the promise is key. Systemisation, united operations and customer support must all intersect to ensure a brand can deploy competitive advantage across last mile.
Where are the new stakeholder battlegrounds?
Speed vs. convenience vs. customer choice.
Its no good been the fastest if reliability is poor. To stand up a national offer, the capability must reach the masses. Time and time again, consumers are sold on a digital promise only to be let down by a lack of capacity / ability to meet that promise.
The reasons may be multiple and outside the brands control, however where promises are either set too high or subsequently broken, so too can there be a breakage in stakeholder relations.
In other words, without the horse, the cart can’t operate. We have all had this experience across omni-channel retailers in 2020 and 2021.
Those that get the balance right will succeed. The offer must match the capability.
Operational transparency, welcome insight or big brother watching?
The largest barrier we see in stakeholder alignment in last mile, is the transparency the model commands across the brand.
In 50% of cases, digital first last mile can be summarised as great for the customer, terrible for internal collaboration.
With increasing service levels come an increased requirement to provide immediate and direct access into the offer… more directly, when the offer breaks, there needs to be transparent accountability and this accountability (or lack thereof) is often exposed bare for all to see.
It is with this in mind that first and foremost brands must remember that transparency, whilst having huge benefits can also threaten and intimidate. In some instances, it can cleanse.
Digital first last mile, by its very design, encourages real-time access by customer care and digital teams, who are provided access into the operational complexities of supply chain. The supply chain will often have underlying challenges that quite simply, are not visible above the surface.
There is often no quick fix to these problems, however better investment in strategy, planning and systemisation can go along way to enabling insight without the threat of micro-management.
Communication and proactive insight are all key trends to enable effective cross-functional collaboration.
Does optimisation override brand compromise or customer choice?
One of the key intersections in the challenge for last mile ownership is how to balance optimisation against brand promise and customer choice.
Optimisation may be in the speed of inventory availability or efficient delivery to the end consumer; however it must always be remembered that the higher the promise, the greater the customer expectation, the greater the cost… and unfortunately, higher cost is not a metric that many supply chains can absorb.
Market distortion is prevalent with unsustainable offers and seemingly too good to be true capability, however at what cost?
Investment is heavy into digital. It directly impacts revenue generation in a P&L.
Investment in supply chain is moving the opposite way. Operations are continually asked to do more with less. How can a brand outsource with the same (or better) service level?
Will the consumer pay more for convenience? Will they understand the layers of challenges as to why that convenience is deemed expensive? Likely not.
All in all, digital first last mile is evolving, at significant pace. However, to keep up with modern expectations, first and foremost, digital and operational teams must come together, partner for success and ask the tough questions:
- Who owns what?
- Who eats the margin?
- Who claims the ROI?