Same-day deliveries, parcel tracking, flexible delivery options – customer expectations are growing as the e-commerce industry expands. The amount of data and the speed of information exchange necessary to meet their expectations place strains on their software providers
by Beata Socha
Just like the taxi business has been disrupted by Uber and as Airbnb encroaches on the hotel industry, the logistics market could be next in line. In fact, Uber is working on two new products that may well revolutionize the food and parcel delivery markets. The first one is called UberEATS. “You can order a meal from your favorite restaurant that gets dropped off at your place in a matter of minutes. It uses a new application because ordering a meal is obviously different from ordering a car on the client’s side. But it uses similar back-end infrastructure [to the car ordering service],” said Anthony Le Roux, general manager for Middle East and Africa at Uber. The second product is called UberRUSH and basically means that anyone who registers in the system can deliver parcels for a fee. “We are testing UberRUSH in a number of US markets. It applies the same concept to product delivery. Today it’s a bit challenging and expensive to deliver your products, especially if you are a small manufacturer, but once UberRUSH comes into the mix, it’s so much cheaper than anything else out there and it really increases the access to the market,” said le Roux. There are already several similar concepts budding in Poland, like the website jadezabiore.pl (which translates into “I’m going, I’ll take”). The critical mass necessary to make such initiatives functional has yet to be achieved but major logistics operators are likely aware of the challenges they could pose.
The quicker the better
One thing is certain, deliveries are getting faster, because customers expect them to be faster. Yesterday’s express dispatch is today’s standard and same-day deliveries are becoming a reality. The leader in the fashion e-commerce business Zalando has express deliveries which, for an extra fee, shorten the process to a single workday. E-commerce branches of food retailers (Carrefour, Tesco, E.Leclerc) offer 1-2-day delivery times. Shorter delivery time is not the only thing consumers expect these days. They also want to track their parcel online. “Customers like to think that their order is being continuously processed and not waiting to be processed,” explained Piotr Bielicki, business consultant, managing director at ScoutSolutions.eu, preiviously logistics director for Europe at Beiersdorf (NIVEA) during a webinar on data integration in logistics organized by Appgration. Another selling point is non-standard delivery points. Not many have the luxury of waiting all day at home for the delivery of our online orders. Many people prefer e.g. to have their parcels delivered to their workplace. But those who are “on the move” most of the workday opt for the click-and-collect option, where they order online and pick up their shopping at the nearest store. That works well for retailers who run both e-commerce and brick-and-mortar stores but is not an option for the companies focused predominantly on the online aspect of their business. Parcel lockers are one solution, but operators are working on making their delivery options even more flexible. “This poses an interesting situation, where the only actual person you meet in the online shopping process in the courier. He becomes the face of the company you purchased from, he is to some extent responsible for developing brand loyalty between the customer and the retailer. I think there is a lot of potential here,” said Konrad Kurzydło, IT manager at Bluesoft, a software house delivering solutions for logistics firms.
Embrace the digital
As consumers demand more from online retailers, so do online retailers from their logistics partners. “We are witnessing the fourth industrial revolution, characterized by efficient information and communication systems, groundbreaking innovations and the growing share of various platforms in the process of selling goods and services,” explained Hans-Christian Pfohl from Technische Universität Darmstadt during the Logistics 2016 conference held in June. “Technological innovations are generating rapid changes in the business environment. The way companies conduct their business and cooperate in the supply chain are undergoing radical changes,” he added. In order to meet the growing demands of the business, logistics firms need to significantly improve their data handling systems. “Today we can collect massive amounts of data, reading sensors that delivery trucks are equipped with, as well as pallets, mobile phones or even fitness bracelets,” said Jos Mariuns, president of the European Logistics Association. “And you don’t need to be an analyst to understand the processed data that we receive even if we don’t consider how it is being created.”
Zero-tolerance for errors
Knowing full well that reputation is everything in e-commerce, online retailers are becoming increasingly intolerant of any errors in the delivery process. “We are implementing a number of projects aimed at eliminating any and all inaccuracies,” said Bielicki. Logistics operators are hard pressed to meet the ever growing expectations of their clients. “While the unit volume of a single transaction is decreasing, the number and frequency of the transactions are growing, as is their speed, including non-standard orders,” he explained. Many firms still struggle with inefficiencies leading to the corruption of data and thus entire logistics processes. “It is unacceptable when a person entering an invoice into the system calls the warehouse to ask e.g. for the number of pallets. This data must be entered by the warehouse worker,” stated Bielicki. Entering the same data twice is another source of cost-generating errors. “Situations in which the warehouse worker enters the number of pallets into the inventory management system and then later on enters the same data into the accounting program are also unacceptable,” he added. Typing in the name of the product or weighing it at the warehouse are some of the practices that generate the most errors and should be avoided. The data needs to be imported from the supplier in order to maintain consistency. However, importing and migrating data between a number of proprietary IT systems is always a nuisance that requires substantial software integration and makes switching from one supplier/logistics partner to another difficult. Even such basic things as addresses can be a source of many problems when migrating data from one system to another. “Sometimes the same street name is typed in a number of different ways, like Jana Pawła II, JPII or J.P. II. Seemingly innocuous changes pose significant problems and require dedicated tools to repair the data,” Kurzydło said. Such tools are also rarely 100 percent accurate. “95 percent accuracy is considered a success,” he added.
The most obvious answer to these problems is creating universal standards. Major logistics firms are making efforts to standardize their data system at least internally, which given the size of the firms and their global reach, is not trivial. “I believe the growing competitiveness and the challenges of the digital world will in time lead to some standardization,” Kurzydło added. Currently, the most prevalent electronic data standard used in the logistics industry in Poland by GS1 members is Edifact/EANCOM, which is used by 71 percent of all systems, according to a study prepared by the Logistics and Warehousing Institute (ILiM) in 2014. A quarter of systems are also compatible with Fortrass, 18 percent with Comarch XML and 12 percent with GS1 XML. “However, 24 percent of systems also use standards that are compatible with less than 5 percent of existing systems,” explained Tomasz Dębicki, expert at ILiM, as well as at the GS1 European standards development workgroup for the logistics industry. Put simply, a quarter of systems in the industry use some data formats incompatible with the majority of other systems. It may come as a surprise that despite the global reach of electronic retail, the logistics industry still seems to be lagging behind other industries when it comes to digitization and standardization. “There is a digital revolution happening in finance and in telecoms. The logistics business has yet to embrace it,” Kurzydło stated. The sooner it does the better, especially with the likes of Uber circling around looking to disrupt yet another industry.