The great growth of e-commerce in recent years has highlighted an old logistical challenge: the last mile or last mile. This is the final stage of the product's journey before it arrives at your customer's door, that is, the moment that the goods leave a distribution center (or the factory, if the sale is direct) to go to their destination. Final.
The emergence of e-commerce and the importance of last mile is directly related to the importance that Generation Y, or the millennials, currently owns. According to the last Census carried out by the IBGE in 2010, most of the Brazilian population belongs to this generation born between 1980 and 2000. This is the first generation of digital natives and, consequently, has an intimate relationship with new technologies and the Internet. Although these young people care about quality, this generation places great value on price, convenience and is not tired of looking for new opportunities, being a generation of difficult loyalty. For this reason, factors such as freight costs and delivery times have never been so important for companies that operate in e-commerce.
Figure 1 – Population of Brazil – 2010 Census
Source: IBGE
Projects for delivery of orders by drones or robots appear in the media all the time with the aim of tackling this problem and reducing the order cycle time. However, in addition to acting directly in transport, another alternative capable of minimizing this issue is to reduce the distance between the distribution center and the customer, using an Urban Distribution Center (CDU).
Unlike large warehouses located in more remote areas and generally close to roads that facilitate access to large cities, CDUs are smaller facilities, located at a distance of up to 15 km from large urban centers. In general, these mini CDs occupy the space of former factories, large retail stores or obsolete corporate buildings, meeting a minimum need for space and necessary facilities.
Still in 2014, Amazon, the most avant-garde when it comes to solutions for the last mile, launched its “Prime Now” program, which guarantees deliveries within 1 hour of more than 20.000 products to subscriber customers after placing an order. To allow this, she created facilities such as the CDU located in a building in downtown Manhattan (New York), as shown in the following video. Delivery people use bicycles, cars, public transport or even walk to ensure delivery within the agreed period and circumvent restrictions on movement in large cities.
Video 1 – Amazon Urban Distribution Center in New York
Source: Tech Insider
Despite providing much faster deliveries and reducing the company's stock coverage, it takes a detailed study and a very well-structured operation to ensure that the CDU will be profitable for the company. First, the square meter for renting an installation close to large urban centers is significantly more expensive than that paid in a traditional Distribution Center, since it is a nobler region of the city. In addition, it is not always an easy task to find in the large urban center a place with adequate dimensions and capable of constantly receiving trucks and other vehicles. To ensure high turnover of products, it is also necessary to restrict which items can be part of the company's express delivery service, as the reduced dimensions of the CDU do not allow wasting space with products with intermittent sales.
There are many challenges to mitigating problems related to the last mile, but, given the growth of e-commerce and the level of consumer demand, this is an issue that must always be a priority for managers to ensure the competitiveness of their companies in the long run. term. That's why I look at Urban Distribution Centers!
References
<http://fortune.com/2016/12/22/a-look-inside-amazons-two-hour-delivery-warehouse-in-midtown-manhattan/>
<http://www.portalnovarejo.com.br/2014/12/18/amazon-inicia-entrega-em-1h-em-nova-york/>
<http://saldopositivo.cgd.pt/empresas/abc-do-empresario-o-que-e-a-geracao-millennials/>
<https://www.mandae.com.br/blog/ultima-milha-entenda-seu-impacto-na-logistica-do-comercio-eletronico/>
Fernanda Monteiro
More than 11 years of experience in training and consultancy projects, focusing on Logistics and Supply Chain. In consultancy, he carried out projects such as Transformational Logistics Plan, Diagnosis of logistics operations, Strategy and Calendarization of Transport Operations, Measuring the Cost of Serving, Market Study, Mapping of Inventory Reduction Opportunities, Review of the S&OP Process, Management Plan Training and Implementation of Commercial Processes in companies such as Nestlé, Raia Drogasil, Ipiranga, Lojas Americanas, B2W, Coca-Cola, Andina, Embraco, Martins Atacado, Loja do Mecânico, Santo Antônio Energia, Ecoporto and Silimed. She is currently one of the teachers of the Inventory Management Course taught every six months by ILOS. She worked on the development and management of Online Courses in Logistics and Supply Chain, Supply Processes, Demand Planning, Inventory Management and Industrial Management. Still in the training area, she was responsible for applying ILOS business games in companies such as Raia Drogasil, Fibria, NEC, Novartis and Moove.
