VDC Research: RFID, Barcode, Retail Automation & Self-Service Market Blog

From the Last Mile to the Last Meter – VDC’s Vision for Augmented Reality in Logistics

At VDC, we are fascinated by the “last mile delivery” conundrum confronting logistics service providers today. A boom in ecommerce sales coupled with the retail omnichannel challenge make for interesting times. In our previous blog, we discussed the issues parcel delivery organizations face during the final stages of the delivery process, the only step in the supply chain where they directly interact with the end consumer. Inefficiencies in packing procedures, less-than-optimized delivery routes, and problems in locating a package’s final destination among others, all contribute to disproportionately high costs and frustration for shippers, which are then passed on to irate customers. While traditional barcode scanners, RFID readers, and connected mobile devices are already used as part of the broader logistics automation solution, VDC believes service providers will continue to seek new technologies that enhance operational efficiencies at every point along the last mile. In particular, augmented reality devices such as Google Glass have the potential to revolutionize this last step in the logistics supply chain.

We recently came across this fascinating new report published by DHL outlining the role that augmented reality will play in logistics, with a focus on the warehouse environment. By using wearable devices such as Google Glass warehouse workers will be able to more efficiently locate products that need to be shipped, while reducing the possibility of errors. These devices will also allow warehouse workers to more efficiently stack goods on pallets and organize pallets in delivery vehicles to help prevent damages and reduce wasted time. Having warehouse “pickers” utilize wearable technologies rather than handheld devices would also allow them to more easily perform tasks using both arms. At the core of these new technologies are camera-based solutions which enable a wide variety of tasks detailed later in this blog. In addition to their high tech capabilities these solutions could also replace traditional handheld barcode scanners, providing a truly all-in-one solution.

This report also explores the possibility of augmented reality enhancing the delivery process and boosting efficiency at the “Last Meter”, after the truck driver has the correct package in hand and is on his way to the recipient’s doorstep. If a driver is unfamiliar with the area, simply finding the correct building or house number could be a challenge and result in wasted time. Wearable augmented reality devices would allow delivery personnel to have access to maps and directions right in front of their eyes, all without the added hassle of handheld/portable GPS devices.

My conversations with the systems integrator community at MODEX earlier this year indicate that one of the more pressing issues for logistics service providers during the last mile of the delivery process is the liability associated with damaged packages. This is relevant today more so than ever because of the explosion in the sheer number of parcels that these organizations ship and transport every single day across the globe (running into the billions). Many times, it becomes hard to determine who to indemnify for damages incurred, especially given the many stages in the order fulfillment process before the item gets to its final destination. VDC believes this can also potentially be addressed with solutions leveraging camera technology, such as these all-in-one wearable devices. Here’s how that would work – the parcel delivery company captures an image of the package at every stage in the shipment route, which can help determine when damages occurred, thereby easing the liability and claims process for the retailer, shipper(s), and consumer. Recent advancements in software application development for Google Glass-type devices could well enable them to support a broad range of functions such as order picking, navigation (both within the warehouse and outside), traceability and identification, and image capture.

It will be some time before augmented reality solutions materially impact data capture technology sales, but VDC believes products such as Google Glass can make traditional last mile processes obsolete. Cameras will be integral to these wearable devices, facilitating both barcode scanning as well as image capture applications. From VDC’s viewpoint, this represents a tremendous opportunity for third party hardware vendors, such as those for barcode imagers and machine vision solutions, looking to supply the logistics industry with the future of efficient last mile technology.

(With significant contribution from Michael Sack, Research Assistant)

Data Capture and the Race to Shorten the Last Mile

With an ever-growing volume of e-commerce sales consumers, retailers, and parcel service providers have all come to realize the glaring inefficiencies in the so-called “last mile”, the last leg of a package’s journey from the distribution hub to the customer. Hermes Europe, a multinational group providing full-service supply chain management solutions headquartered in Germany, published an article on last mile delivery in the first issue of their company magazine, Hermes Wing, which piqued our interest. According to the article, at least 50% of a parcel service provider’s total costs occur during this part of the delivery process. The article reveals that the main reason for these high costs is that only about half of all packages shipped reach the recipient’s residence on the first attempted delivery. Not only do these inefficiencies lead to unnecessary shipping costs, but the wasted time and increased consumer frustration reflects poorly on sellers. Shifting global population trends will only magnify the inadequacies of traditional delivery processes. With 60% of the world’s population expected to be living in urban areas by 2030 new methods are being developed and employed to more efficiently serve these large population centers.

The article cites examples of logistics projects in various cities in Europe that seek to enhance operational efficiencies and optimize the delivery process. In the Netherlands, for instance, a new method is being used where retail purchases are delivered to central distribution warehouses in eleven city centers across the country. In Paris, Hermes has begun using tricycles capable of carrying 180 kilograms of cargo, while in Austria over 5000 “pick-up” boxes belonging to the Austrian post office are being used to ensure that packages are not sent back to distribution hubs. These new methods of shortening the last mile will require significant upfront investments in infrastructure and equipment, and there will certainly be a rise in demand for and deployments of data capture devices to facilitate tracking. It is also important to recognize that the vast majority of consumers are not looking for “same day delivery” and a sharp increase in the overall speed of the delivery process. In fact only 1.6% of consumers surveyed by ECC Cologne and the EHI Retail Institute cared about same-day delivery. However, 75% of those surveyed wanted to be able to track their packages live.

While data capture technologies are already well-entrenched in the supply chain, and widely used to allow consumers to check on the status of their package at a series of check-points during the delivery process, it would be an added bonus to enable package tracking in real time. AutoID solutions, including barcode scanners, RFID readers, and mobile devices, are already able to capture information when packages are transferred from trucks to distribution hubs and vice-versa. In lieu of taking on the cost of tagging individual packages with real-time location sensors, retailers and their logistics partners will benefit from enabling customers to track delivery vehicles carrying their packages, especially after they have left the final distribution center. Allowing consumers to know the exact arrival time of their package would effectively shorten the last mile, thereby reducing costs and frustration for sellers, service providers, and consumers.

Over the past couple of years, we have seen retailers embrace the omnichannel retailing paradigm, making their brand and product available to the target consumer base across a wide range of avenues – both online and offline. We have also seen how retailers that cannot or are unwilling to support and facilitate customer engagement through more than one medium are at a significant disadvantage compared to the competition. Tackling the potential logistical nightmare of “last mile delivery”, particularly in peak shopping seasons, via enhanced customer interaction during the delivery process – facilitated by data capture solutions – could well usher a new age of retailing and overall customer contentment.

(With significant contribution from Michael Sack, Research Assistant)