“Change at the Speed of the Consumer: How E-Commerce is Accelerating Logistics Innovations” was authored by Professor Lisa Harrington, President and CEO of lharrington group llc. It looks at six principal areas where e-commerce is challenging the supply chains of merchants and logistics companies: customer expectations for a perfect buying experience; consumers’ desire to buy and receive goods ‘anywhere, anytime’; exploding demand for urban delivery; competition for labor and wage inflation; the emergence of new online sales models and unexpected surges in demand; and environmental concerns.

 

The impact of these challenges is most keenly felt in the areas of fulfilment and last mile delivery. Labor in the U.S., for example, which is the world’s second largest e-commerce market accounts for 40-60% of warehousing operating costs. With real estate company CBRE predicting in 2018 that an additional 450,000 warehouse workers will be needed in the U.S. by the end of 2019  and unemployment at a consistently low rate, his presents a risk in terms of both cost and recruitment, particularly during peak periods. Increased urbanization, combined with heightened pressure – from both socially conscious consumers and municipal authorities, in particular – to reduce the environmental impact of transport operations is forcing retailers to seek out creative ways of balancing delivery convenience with reduced mileage for diesel-powered vehicles over the last mile.

 

Across each of the profitability challenges, technologies already exist that allow companies to reduce unit costs, better forecast needed inventory or increase productivity to absorb additional growth. Robotics and automated sorting systems, for example, allow companies to process higher order volumes without the need to engage large numbers of temporary workers. Advanced Warehouse Execution Systems, combining Internet of Things capabilities, machine learning, business intelligence and data mining agents can increase performance and responsiveness to meet rising customer expectations.

 

While autonomous vehicles for last-mile delivery still await regulatory approval in many markets, digitalization can already support better demand forecasting to allow inventory to be placed closer to the end customer and to optimize transport routings, reducing time on the road.  As many of these technologies evolve further and new innovations come to the market, companies that are able to deploy them effectively within their supply chain will be best positioned to address the costly inefficiencies, volatile order trends and demanding customer expectations that characterize the fiercely competitive e-commerce market.

 

Acknowledging that innovation can itself be a profitability challenge, particularly if approached at the wrong pace or with excessive outlays of capital, the research also detailed a three-step approach to innovating successfully: focusing on innovations that provide differentiation; adopting a long-term, strategic view of innovation; and bridging the silos of people, software and machines.

 

DHL opened its newest Innovation Center – its third globally – in September 2019 in Chicago, U.S. The center acts as a hub for innovation, where DHL conducts research into the major trends shaping the logistics industry, explores customers’ needs and readiness for more innovative solutions, and tests and pilots technologies with the highest potential for deployment.