World Trade - March 2009 - (Page 46) TR A N S P O RTATI O N & LOGISTICS Has Last (Mile) Been Least for too Long? Customer service functions such as last-mile delivery count for more than you might think. BY WILL O’SHEA E ach spring some of the world’s fastest drivers compete for one of the most coveted spots in sports: the starting pole position at the Indianapolis 500. Since pole position is awarded to the driver with the fastest qualifying time, it would be easy to assume that he or she is a shoe-in for first place. Yet fewer than 25 percent of these honorees have gone on to win. There’s a similar phenomenon taking place in the world of transportation. Although companies place considerable emphasis on the start of their supply chains, it’s often how they move and manage materials closer to the finish line that determines whether they actually win or lose customer loyalty. Case in point: According to a survey conducted by the Warehouse Education and Research Council several years ago, customers are willing to accept no more than two negative service experiences before deciding to take their business elsewhere. And in a December 2008 report, Forrester Research indicated that the quality of a customer experience can mean as much as a $184 million difference in revenue for large retailers. In other words, customer service functions such as last-mile delivery count for more than you might think. To some people, the mere mention of last-mile may seem like a blast from the past. It’s been missing from headlines since the early 2000s, when dotcom fever reached its peak. And it’s been conspicuously absent from many corporate agendas for just as long. However, it’s been anything but dormant. Government statistics say that online sales are nearly 30 times higher than they were in 1999, and many of these sales ultimately involve a home, business or job site delivery. Plus the value of the large-product home delivery market alone has been estimated at $8 billion. While these figures admittedly could decline as a result of the ongoing economic downturn, there’s every reason to believe that last-mile delivery should continue to be an important part of the retailing equation. After all, it’s highly likely that price-sensitive consumers could seek out Internet sales channels more often as they search for the best deals on products. And no matter how bad things get, people will always purchase certain necessities such as major household appliances that are too large to transport without professional assistance. There’s also every reason to believe that lastmile should continue to be the area of the supply chain where there’s the greatest degree of inefficiency—and hence the greatest opportunity to make improvements and carve out a competitive advantage. Timing is everything Consider, for example, the matter of delivery timing. Few consumers enjoy being tied down to their homes for half a day while waiting for a new sofa, big-screen television or treadmill to arrive—especially not if they’ve had to leave work or cancel an important appointment to receive it. Companies that can shorten—and consistently arrive within—their delivery windows could win huge service kudos and more repeat business from their customers. 46 WORLD TRADE MARCH 2009
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