"The last mile." It's a term we hear day in and day out. It refers, of course, to the final leg of a product's journey through the supply chain—meaning delivery to the customer—rather than a literal distance. As for why it's getting so much attention, it's all about the need for speed in the new world of order fulfillment. Suppliers' ability to meet customers' demands for rapid delivery is highly dependent on that final leg. It's not too much to say that the last mile is where sales are lost or won.
Nowhere is that pressure more acute than in retail—and e-commerce, in particular. The consumers of 2017 expect next-day delivery. The consumers of 2018 and beyond will likely expect same-day service, especially in urban areas.
That's where "last-mile distribution centers" come in. Sometimes called "last touch" centers, they often are the final stop for e-commerce goods before they arrive on customers' doorsteps. These DCs have been "popping up in close proximity to major U.S. cities ... creating a foundation for rapid-delivery service that didn't exist on this scale as recently as a few years ago," according to the recent report "Last-Mile: Concept or Measurement?" issued by the real estate services firm CBRE.
By "close proximity," the researchers mean less than 10 miles. CBRE's analysis of last-mile distribution facilities that opened within the past two years in the 15 largest U.S. population centers showed that they are positioned, on average, between six and nine miles from the center of the population areas they serve.
Among other findings, the study revealed a correlation between population concentration and the length of the "last mile." Denser cities tend to have shorter average distances, such as the six-mile average in San Francisco, while cities that are more spread out have longer averages, such as 8.5 miles in Phoenix and nine miles in Southern California's Inland Empire.
The report left no doubt as to what's driving the trend. "The close proximity of the last-mile facilities to huge populations of customers facilitates online shoppers' growing expectations of nearly instantaneous delivery of their orders," it noted. Also notable is the speed with which this scenario has played out. Last-mile fulfillment centers have proliferated within the past two years. "This is an entirely new link in most supply chains that delivers on the promise of fast, super-high performance delivery," said David Egan, CBRE's global head of industrial and logistics research, in a press release.
Indications are the trend has yet to run its course. "Development of last-mile strategies still is in the early stages, so the average distances in many metros [are] likely to shrink a bit more in the coming years," Egan said in the release. If his prediction pans out, then "the last mile" may not be a figurative expression much longer.