Last mile delivery and reverse logistics are typically the most expensive and environmentally damaging aspects of the ever expanding supply chain, with some even predicting that carbon emissions could rise by a further 32% if the status quo doesn’t change. The rising popularity of returns and the post-pandemic e-commerce boom, as well as heightened consumer demand for faster deliveries, threaten to push that figure ever higher if retailers hope to keep pace without rethinking their supply chains.
Luckily however, delivery and return strategies also present a prime opportunity for businesses to cut their carbon footprint. A 2023 survey found that 46% of shoppers had opted for sustainable delivery options in the last year, a figure which rose 3% from the year before. In short: consumers are willing to go green and businesses must follow suit.
Whilst some may see fleet electrification as the solution, transforming underlying processes within the rest of the supply chain to make them more efficient can be equally effective, while streamlining operations at the same time.
1.) Optimise inventory along the last mile
Making sure vans are filled close-to-capacity and in a logical sense, as well as scheduling routes efficiently are crucial for logistics teams looking to achieve lowering costs and reduce the environmental impact of last mile deliveries. The same way retailers need to accurately forecast demand to avoid over- and under-stocking, last mile companies should mirror this approach. As it stands, delivery vehicles are on average only at 84% capacity when they hit the road. By designing routes more intentionally, however, logistics operators can ensure they don’t waste space and fuel on carrying air. In practice, this means grouping deliveries that are close together geographically, eliminating unnecessary stops. Loading vans thoughtfully would also minimise delivery times, ensuring drivers don’t have to rummage through packages at every address.
2.) Embrace new – and more efficient – delivery methods
Out-of-home (OOH) delivery methods – such as parcel lockers or pick up and drop off (PUDO) points – are growing in popularity among consumers, and businesses that bring them into their logistics mix can benefit from improved operational efficiency. By reducing the number of individual homes that drivers visit, companies can lower fuel consumption, decrease emissions and deliver more parcels within the same time frame.
In the UK, Royal Mail has recently joined leading locker providers like Amazon and InPost. This makes it even easier for businesses to offer return options to customers. Acting now will give businesses an early-mover advantage that could soon disappear, too, with 80% of last-mile deliveries in Europe expected to be via lockers within a decade.
3.) Don’t let returns derail your supply chain
Getting reverse logistics right is critical from an environmental and operational standpoint. Experts estimate that as much as 10% of returned apparel isn’t resold. This negatively impacts the planet directly. Retailers typically send returned stock to landfill or truck it off to discount outlets or charities. On top of that, returned items pose additional costs for retailers derived from transporting, processing, inspecting, cleaning and repackaging, not to mention resale markdowns.
Many companies are trialling new return policies to counter these issues. Nearly 80% of UK fashion brands now charge for returns while others have turned to offering store credit rather than cash refunds. It could also be worth considering a hybrid offering. For example, companies could charge a nominal fee for returns that don’t use the more sustainable option like a parcel locker or PUDO point. Improving item sorting processes across warehouses is another solution. Companies that effectively gather data from returned parcels will better understand the kinds of items being sent back, and why customers are doing it. This would then allow them to distribute stock accordingly to minimise future inefficiencies.
4.) Don’t shy away from technology
Advanced technologies, particularly artificial intelligence, are pivotal in conducting deep, analytical examinations of vast, complex datasets with unmatched accuracy and efficiency. This analytical power is crucial for uncovering evolving consumer trends that shape strategic distribution decisions.
By embedding smart data capture into the supply chain, supply chain managers can record and track inventory in real-time as soon as it is scanned. This means data-led decision-making is based on the most accurate and up-to-date information possible. The technology can also guide warehouse workers and drivers with augmented reality overlays when placed on their devices, helping the former find specific items with visual indicators and assisting the latter with loading their vans efficiently.
The intersection of sustainability and profitability
New strategies coupled with advanced technologies can help companies streamline last mile deliveries and reverse logistics, reducing both greenhouse gas emissions and costs. Leaders should prioritise these core components to boost efficiency, increase profit margins, and satisfy consumer demand for eco-friendly operations – in 2024 and beyond.
- Collaboration & Optimization
- Sustainability
