E-commerce supply chain design – a factor in city planning
The substantial and ongoing increase in the e-commerce sector poses a challenge for existing supply chains in terms of efficiency and sustainability. Warehousing and last-mile delivery solutions are particularly affected, which in turn has consequences for cities and urban structures. To meet with consumers' new demands, today's footprint of warehouses, terminals and collection points may need to shift considerably.
This article looks at the e-commerce supply chain's impact on city planning using excerpts, perspectives and recommendations from the Sweco Urban Insight report "Signed, sealed, delivered – analysing the impact of e-commerce on urban areas".
Why new e-commerce supply chain strategies are needed
Consumers' new purchasing behaviour and demands due to the growth of e-commerce often has a negative effect on supply chain efficiency as well as the journey towards a sustainable society. For example:
- Warehousing operations are profoundly affected when individual products must be stored, handled, packaged, and delivered.
- Inefficient solutions and poor fill rates in last mile distribution are common. The growth of e-commerce risks increasing traffic load from distribution vehicles and regional road transports. For parcel deliveries, time is the constraint on achievable fill rates.
- Increasingly high demand for fast deliveries further amplifies the difficulties in achieving a high fill rate, due to problems for logistics companies to consolidate efficiently.
- E-commerce involves increased energy use for packaging and product returns.
- Returns result in additional transports and handling throughout the entire reverse supply chain. Increased return volumes also add new complex functionality for the retailer: processes, space and equipment for receiving returns, quality checks to determine whether the goods are resalable, repackaging, and finally reintroduction into the warehousing system to prepare the goods for redelivery.
- The increased volume of home deliveries, combined with consumers' wishes not to be tied into a delivery window, also places new demands on the logistics interface in individual homes.
In short, the new needs and expectations generated by e-commerce serve to move the supply chain’s "centre of gravity" closer to the consumer. Today-s footprint of warehouses, terminals and collection points may alter considerably as a result of this.
The need for efficient supply chain solutions extends across the spectrum, ranging from warehousing and delivery networks all the way into the consumers' home. There is no question that many aspects of today's solutions are highly inefficient. Innovative thinking will be required to find solutions for improving supply chain strategies and design and develop efficient distribution principles.
- To improve the efficiency of e-commerce logistics, smart packaging solutions would play a natural part in reducing waste, enabling reuse/recycling and improving fill rates.
- The entire supply chain will benefit when stakeholders look beyond their present boundaries and find efficient solutions that involve collaboration and coordination, as well as co-location and co-transportation.
- An intra-urban positioning of logistics hubs, relatively close to the end delivery point, is another aspect that will decrease the traffic load – and support the use of more sustainable transport modes.