Material Handling Focus: Pressure grows in the e-com last mile

Retailers are investing in retrofitting stores to double as online fulfilment centres and shrinking selling space to accommodate e-commerce pickups and returns.
Mhe, Material handling, Warehouse, Last mile, E-commerce, Dubai, Uae, Gcc

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Over 80 per cent of retailers in the Middle East use store inventory to fulfil digital orders while 78 per cent of logistics companies expect to provide same-day delivery by 2023, according to a new report.

The report by Zebra Technologies Corporation, a market leader in rugged mobile computers, barcode scanners and barcode printers, highlights the myriad of ways e-commerce will impact last mile logistics in the GCC.

According to the report, “Future of Fulfilment Vision Study”, some 29 per cent of retailers expect the use of stores as fulfilment centres to increase over the coming five years.

Retailers are investing in retrofitting stores to double as online fulfilment centres and shrinking selling space to accommodate e-commerce pickups and returns.

These end-user clients for 3PLs believe that a network of stores can get digital orders faster and more efficiently than a handful of centralised warehouses. Their customers are increasingly demanding a seamless, faster purchasing journey, and in response they are demanding better solutions from 3PLs.

As a result, a staggering 40% of third-party logistics companies globally expect to offer delivery within a two-hour window by 2028. Many of them will be turning away from the current hub and spoke distribution model to instead embrace new Uber-style solutions.

Some 87 per cent of survey respondents expect to use crowdsourced delivery or a network of drivers that choose to complete a specific order by 2028, in order to achieve these two-hour and same-day KPIs.

Jim Hilton, manufacturing and transportation and logistics global principal, Zebra Technologies said: “Driven by the always-connected, tech-savvy shopper, retailers, manufacturers and logistics companies are collaborating and swapping roles in uncharted ways to meet shoppers’ omnichannel product fulfilment and delivery expectations.”

Jim Hilton, manufacturing and transportation and logistics global principal, Zebra Technologies

“Zebra’s Future of Fulfilment Vision Study found that 89 per cent of survey respondents agreed that e-commerce is driving the need for faster delivery. In response, companies are turning to digital technology and analytics to bring heightened automation, merchandise visibility and business intelligence to the supply chain to compete in the on-demand consumer economy,” he added.

Illustrating the challenge facing retailers attempting to turn stores into fulfilment centres is the fact that one-third of respondents in the report said reducing backorders was the biggest challenge to reaching omnichannel fulfilment, with inventory allocation and freight costs coming a close second.

This is where new technologies can help. Slim4 by Slimstock is a sales forecast tool that utilises tens of thousands of algorithms to accurately predict the individual sales of every SKU at every store in a given region. When it was implemented by Sephora Middle East in the UAE, it cut logistics cost by up to 25%.

Sadi Abdel Kariem, director, Middle East & Africa, Slimstock

“What Slimstock does specifically is it takes your demand data and it sorts it out in terms of normal distribution, seasonal distribution, one-off spikes, and it then automates all of the forecasting for 90% of all SKUs,” says Sadi Abdel Kariem, director, Middle East & Africa, Slimstock.

“It then enables you to plan your distribution stock, your buffer stock and for a retailer, the presentation stock as well. It allows the planner to automate that, so all they do is press the order fill button and our software then tells them what to order, at what volume and at what time,” he adds.

The report also finds that 76 per cent of surveyed retailers use store inventory to fill online orders, and 86 per cent of retail respondents plan to implement buy online/pick up in store in the next year. Retailers are investing in retrofitting stores to double as online fulfilment centres and shrinking selling space to accommodate e-commerce pickups and returns.

The digital logistics platform FarEye has introduced a new parcel shop technology – ‘Drop&Pick’, which enables local stores in malls and other retail locations around the UAE to do this on the backend.

Launched in January 2017 the technology is already being incorporated by various large businesses like DHL, DTDC, First Flight and many others to facilitate paperless, high speed and secure dispatch/delivery of parcels through its parcel shop network.

Physical stores in the parcel shop network are effectively able to turn their retail locations into e-commerce fulfilment centres, with the app designed to fulfil the need for fast and convenient dispatch/delivery of parcels with minimal cost of infrastructure.

The app enables any parcel shop to quickly register a parcel, and the sender’s details (including capturing handwritten information), followed by scanning the shipment and adding recipient name, delivery details and parcel size.

It then calculates shipping fees which the sender can pay in multiple ways – prepaid, wallets, cash or card. The parcel shop personnel can also book multiple parcels under one sender ID. In the back end - data entry processes convert images to actual data.

The parcel is then handed over to the courier and electronic proof of transfer is collected. The courier then delivers to the end customer and once again, receives electronic proof of delivery from the customer.

While this technology enables quick and seamless dispatch and receiving of parcels, FarEye says it has two additional benefits, namely that it creates a platform for SMEs to join the e-commerce boom in the Middle East.

“The technology is providing significant benefits for small and medium-sized enterprises (SMEs) and micro-SMEs who want to sell their products online but cannot build an in-house delivery infrastructure,” says Kushal Nahata, co-founder and CEO, FarEye. “They hence need fast and convenient delivery services for their customers.”

Although 72 per cent of organizations utilize barcodes today, 55 per cent of organizations are still using inefficient, manual pen-and-paper based processes to enable omnichannel logistics, says Zebra Technologies.

By 2021, handheld mobile computers with barcode scanners will be used by 94 per cent of respondents for omnichannel logistics. The upgrade from manual pen-and-paper spreadsheets to handheld computers with barcode scanners or tablets will improve omnichannel logistics by providing more real-time access to warehouse management systems.

With this in mind, Honeywell has announced a new hardware and software platform available in the Middle East for the next generation of its mobile computers, with growing demand for e-commerce logistics expected to be a key driver of adaption.

“The Middle East is one of the fastest growing e-commerce markets globally, and Honeywell understands the competitive pressures being faced by the region’s retailers and logistics operators in this space,” said Edmond Mikhael, general manager, Honeywell Safety and Productivity Solutions (SPS), Middle East, Turkey and Africa (META).

Edmond Mikhael, general manager, Honeywell Safety and Productivity Solutions (SPS), Middle East, Turkey and Africa (META).

“Consumers have high expectations that need to be met, including a desire for faster delivery times, and for their online orders to be shipped free of cost,” he added. “To respond to these increasing demands, Honeywell saw the need for comprehensive and scalable solutions, and has introduced the Mobility Edge Platform as a result.” 

The Mobility Edge Platform comprises common hardware architecture and a suite of tools on which Honeywell and its partners will build future mobility solutions, which include rugged handheld computers, wearable devices, voice-directed technology, tablets and vehicle-mounted computers.

The platform is designed for Google’s Android Enterprise operating system, which is increasingly becoming the standard for industrial mobile devices. It offers a long product lifecycle by supporting current and future versions of Android OS– more than any competitive offering on the market.

Additionally, the common platform provides consistency across Honeywell’s next-generation devices and makes it easier for customers to upgrade current models, manage device refreshes and quickly deploy software applications.

“Because we built the Mobility Edge Platform with an Android-first mindset, businesses will have the confidence that our devices will support future versions of the operating system without having to make new hardware investments to upgrade their infrastructure,” Mikhael adds. “Leveraging a single, unified platform will make adding new devices and testing and deploying business-critical mobile hardware and software easier and faster.”

Radio-frequency identification (RFID) technology and inventory management platforms are expected to grow by 49 per cent in the next few years. RFID-enabled software, hardware and tagging solutions, offer up-to-the-minute, item-level inventory lookup, heightening inventory accuracy and shopper satisfaction while reducing out of stocks, overstocks and replenishment errors.

According to future-oriented decision makers in the report, the next generation supply chains will reflect connected, business-intelligence and automated solutions that will add newfound speed, precision and cost effectiveness to transportation and labour.

Surveyed executives expect the most disruptive technologies to be drones (39 per cent), driverless/autonomous vehicles (38 per cent), wearable and mobile technology (37 per cent) and robotics (37 per cent).

Eniverse is developing a delivery drone for the UAE called the DoorBox. The company is currently waiting for the green light from the DCAA to conduct its first proof of concept in Dubai for a real drone delivery test, but there are plans to collaborate with Fetchr and RTA to complete the missing pieces in the first drone delivery system in the region.

“As the first company to implement this new technology in the UAE, we are looking forward to receiving the approval sought from the DCA to officially begin conducting business and solving the many problems associated with the traditional supply chain in today’s fast-paced marketplace,” says Mohammed Johmani, founder, Eniverse.

Eniverse hopes its fully autonomous delivery drones will revolutionise the traditional supply chain model by reducing costs and increasing efficiency, guaranteeing an air delivery time of thirty minutes or less.

Markus Kückelhaus, VP innovation & trend research, DHL Customer Solutions & Innovation, was in Dubai recently to discuss how DHL is continuously looking at ways to enhance the business through ground-breaking projects that challenge the future of transportation.

“Artificial Intelligence, virtual reality and automation are driving intelligent supply chains and transforming the future of the global logistics industry,” he said. “In this region, the UAE is home to a growing population that is becoming increasingly reliant on the convenience and efficiency that technology provides, making it a key market for the transportation and the logistics industry in the future.”

DHL completed a successful trial of the ‘DHL Parcelopter’ – an autonomous transport drone that drops packages to people’s doorsteps. This was the first time worldwide that a parcel service provider directly integrated a parcelcopter logistically into its delivery chain.

As the UAE looks at digitizing large parts of its economy through new technological innovation, including artificial intelligence, 3D Printing and automation, there is a tremendous opportunity for the logistics sector to benefit from private and public sector initiatives that push the boundaries of logistics to new levels of speed and efficiency.