The future of logistics
In the beginning, there was the Post Office. Well, actually, that wasn’t quite the beginning. The Roman Emperor Augustus introduced a basic courier system that allowed mail – in the shape of letters and packages – to be sent and delivered to every corner of the empire. The modern post office, as we know it, started much later in the 16th century. The basic shape of its services remained much the same for the following few centuries. Deliveries were often unreliable, and poor innocent postmen were often the target of unusually aggressive dogs. Small wonder the mail didn’t always get through.
Now, however, what we call the market in “last mile logistics” – courier services, same day delivery and so on - has transformed the way companies and their customers do business together. The global e-commerce market is currently expected to reach a value of £2.4 trillion by 2022. In emerging markets the growth is spectacular – countries such as India are looking at an annual growth rate of up to 300 per cent, according to McKinsey.
As the sector has mushroomed, so too has the demand for speedy and efficient services. Many customers insist on same-day deliveries, unheard of just a few years ago. And with that demand, revenue has soured. But there is a problem – not all businesses have managed to contain or reduce the spiralling delivery and fulfillment costs. As a result, they are not satisfying the customer, who has come to expect one-hour delivery slots - they want their goods and they want them now. Those goods are often trapped in the system – at vast expense. Based on a McKinsey study and Honeywell analysis, the transportation cost in the first/last mile parcel delivery amounts to £66 billions of trapped capital. With such huge sums at stake, even a modest improvement in logistics will have a significant impact on businesses’ bottom line.
And that is where Secondmind come in. Thanks to our unique probabilistic modelling and reinforcement learning techniques, we have unlocked efficiencies in the collection and delivery of parcels; if our models are widely adopted, they will transform the business of delivery for both companies and customers alike.
Last mile delivery is so important now that customers – at every level – are becoming increasingly demanding. Not so long ago, it was unheard of for businesses to offer, let alone be able to provide, same-day delivery. My background in logistics and engineering has given me a particular insight into the needs and requirements of customers when it comes to that all-important “last-mile” - and it is the last mile that is going to be the battlefield over the coming years.
Logistics and the movement of stock within warehouses is an “easy-win” – based on established protocols set up originally by the Japanese car industry. Most firms have such internal movements under control – the challenge is in last-mile delivery, where all those billions are locked up. We have seen the rapid rise of last mile delivery in recent years, with giants such as Amazon improving their offer and companies such as Deliveroo and Uber Eats making an impact in a space that was previously unoccupied. These companies say that they are making use of Artificial Intelligence but I am not so sure.
At Secondmind we have much more flexible systems for use in last mile logistics – through dynamic route optimisation, and algorithm-based machine learning tools that can accurately predict the fastest and most efficient route. We can promise a fast and efficient journey along that all-important last mile. Your customers will be happy, your products will arrive on time. The only problem we can’t deal with is those out- of-control aggressive dogs – and believe me, we’re working on that.