Editor's Desk

By Michael Hughes

Keep costs down when replacing Mom and Dad

Back in the day, mom or dad handled a lot of last-mile logistics. Parents would pack up the family vehicle and drive to the store (or stores, depending upon the needs and the driver’s affinity for shopping – usually it was my Mom, so trips were extensive). The family would pile in the purchases and head back home. During the holiday season, the parental unit would squirrel away these treasure hunts in attics, basements and other nooks and crannies to hide presents until Christmas.

These days, well, not so much.

The online explosion of e-commerce has a lot of deliveries going straight to the house, bypassing the retail store. This adds convenience for the customer and relieves the supply chain of the costs that come with manning a store.

But like much of life, when you improve things in one arena, problems crop up elsewhere.

First off, the price of delivery escalates. And as Gurram Gopal and Alvaro de Miguel report in this month’s cover story, “Tackling the difficult last mile,” last-mile logistics costs could range from 28 percent to 50 percent of the total transportation bill.

The final leg of the supply chain historically is the most inefficient and polluting. A whole bunch of vehicles delivering parcels spews a lot of carbon dioxide into the air. And sometimes the apartment/ house/condo is vacant – how often have you returned home to see a UPS or FedEx notice taped to your door?

Those costs, environmental concerns and delivery failures mean a lot in a world where customers demand speed and service at a minimum price. And on Page 28, Gopal and de Miguel describe a model that might help. Supply chain managers can compare costs from a variety of interventions: setting up collection points or security boxes, using bicycles for those tricky last steps, investing in supply chain software, improving material handling and return practices and other innovations.

Examine it for yourself. See if you can save your supply chain money without relying on your parents.

Michael Hughes is managing editor of IISE. Reach him at mhughes@iise.org or (770) 349-1110.