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From Warehouse to Doorstep: How Real-Time Data Transforms Peak Season Deliveries
12/11/2024
Warehouses, shipping containers, freight trucks and delivery vans—on the surface, holiday deliveries appear much the same. However, behind the scenes, a rapidly growing network of technology, data and innovation is driving operations with greater speed, efficiency, agility and sustainability.
The journey from warehouse to doorstep during the holiday peak season is one of the most critical and complex links in retail. As online shopping continues to expand, delivery has become an increasingly significant factor in shaping a brand’s perceived value among consumers. According to NRF surveys (1), over half of U.S. holiday shoppers this year plan to have gifts shipped directly to family and friends, and more than 50% of U.S. retailers currently offer or are planning to implement ship-from-store services.
Orders that fail to arrive on time and in perfect condition can damage future interactions between customers and the brand or retailer. By addressing these operational shortcomings, AI technology in logistics enables customer service teams to respond faster, reduce errors, and ensure smoother, more cost-effective performance.
The Order-Delivery Chain
Real-time tracking systems (2) give logistics operators full visibility into the supply chain as events unfold. By accurately forecasting product demand and managing inventory levels, AI helps businesses streamline order fulfillment by enabling faster picking and packing, identifying bottlenecks and optimizing delivery routes.
A recent McKinsey (3) report highlights the advantages of adopting AI-driven supply chain management, with businesses achieving a 15% reduction in costs, a 35% decrease in inventory levels and a 65% improvement in service levels.
For instance, in 2018, Coca-Cola (4) implemented a real-time data analytics system to monitor and optimize its supply chain, ensuring the right products were delivered to the right locations at the right time. Within the first year, the company achieved an impressive 20% reduction in inventory costs.
Real-time tracking also enables logistics providers to communicate more effectively with customers, sending timely updates via text messages or social media about delivery options and schedules. As eCommerce and delivery volumes continue to grow, efficient operations are becoming increasingly essential for delivering exceptional customer service.
Route Optimization
AI-driven route optimization tools (5) are revolutionizing logistics operations. This technology provides real-time visibility into the location and status of shipments across all modes of transport, allowing companies to take corrective action as needed to maximize fleet efficiency and minimize delays. AI makes it possible to optimize delivery routes in real time based on data concerning sector constraints and traffic conditions, in particular using Operational Research algorithms (6).
Efficient Supply Chain Management
The connected network (7) technology driving these savings includes everything from sensors attached to containers to advanced algorithms embedded in planning and execution platforms. As a result, shippers can forecast inventory needs with greater accuracy, carriers can optimize fleet utilization and routing, and logistics providers can proactively allocate resources. This connected network serves as a force multiplier, empowering all partners to operate with greater agility, efficiency and responsiveness during the most critical time of the year—making the difference between a successful peak season and a disappointing one.
According to Meticulous Research (8), the demand for AI technology in supply chain management is expected to grow at an annual rate of 40% from 2024 to 2031, reaching an estimated market size of nearly $60 billion by 2031.
Final Delivery: The Last Mile
Even when the initial stages of the delivery process are well-managed, the final segment—where the product leaves the shelf and is transported via truck, van, bicycle, scooter, drone or even by foot—is both the most expensive and the most demanding. According to McKinsey, the cost of global last-mile parcel delivery (9), excluding pickup, line-haul, and sorting, is approximately $74 billion, with China (10), Germany and the U.S. accounting for over 40% of this market.
This is where logistics companies face significant competitive pressure. According to a recent study by DocShipper (11), 67% of surveyed companies identified meeting customer expectations for fast delivery as a key factor in shaping their supply chain strategies.
High shipping costs play a significant role, as the last-mile segment lacks economies of scale. Delivering numerous individual packages to a variety of addresses rather than thousands of packages to a single destination requires more time and involves greater complexity. Additionally, rural areas pose unique challenges, such as long distances between stops, poorly maintained roads and only a few deliveries over an extended route. In urban areas, delays often stem from traffic congestion and the difficulty of finding scarce parking spots.
Costs are a key reason the future of last-mile delivery (12) is expected to incorporate a high level of automation such as autonomous vehicles (13) and drones. According to Transport Geography, leveraging AI for local last-mile deliveries can result in efficiency gains of up to 30%.
AI is rapidly becoming an indispensable tool in logistics. With customer expectations for fast order fulfillment and delivery continuing to rise, especially during the holiday season, on-time delivery is essential for ensuring customer satisfaction and securing new and repeat business. Real-time, AI-powered data is critical for achieving these objectives, not only during the peak holiday season but well beyond.
