Home » SCMAP Perspective » In the Last Mile, Gaps Remain

Judging from the record attendance at our recently-concluded General Membership Meeting last week, many in supply chain are paying attention to the rise of the last mile. And they should be: beyond it being the new frontier in supply chain, it is changing not just how we serve our customers, but how customers perceive businesses. The last mile does not just fill the final gap between a business and the customer, but it positions the customer explicitly across the supply chain.

 

In the Philippines, efforts to strengthen the last mile has taken many forms. Logistics service providers have invested in expanding their fleets, as well as in technologies that increase efficiency and transparency. E-commerce sites have gone one step further, organizing their own order fulfillment systems rather than outsourcing most of these functions to other companies. Brands are spending more time enhancing their presence online and in smartphones, from better websites to apps. Cashless payment systems such as GCash and PayMaya are aggressively wooing businesses to join their networks. Consider also that we’re behind the curve in the last mile, now that there’s talk of automated delivery vehicles and mobile fulfillment centers to further shrink the gap.

 

Yet, there’s this lingering feeling that only major players—the multinationals, the conglomerates, the new titans—are able to position themselves as the last mile takes hold in the country. How about smaller logistics service providers —the cargo forwarders, the distributors, the transporters, the warehouse operators? They cannot be completely out of the equation when it comes to the last mile, especially in an archipelago like the Philippines, especially when it comes to local knowledge and expertise that national players don’t necessarily have the best grasp of.

 

But it’s these players that have difficulty upping their capacity and capabilities, partly because of the high levels of investment needed. They have difficulty plugging in the gaps of major e-commerce operations, who still face a lack of capacity during peak periods, and thus resort to managing customer expectations—“we know we say our delivery time is between one to three days, but there’s just a lot of demand right now, so please bear with us!” The uneven development of last mile capabilities in the country means an industry that’s best positioned to equalize the playing field ends up leaving many players behind.

 

So, how can we bolster our last mile capabilities? There are many opportunities across the board for improvement and innovation. There are the obvious suspects: inadequate infrastructure, both physical and network; inaccurate information, particularly in the case of our road networks; rider management, ensuring that those collecting payments on behalf of retailers do not run away with the money. There are internal issues: the system of payment remittances, especially in a world where cash-on-delivery reigns supreme; the question of minimum order quantity versus minimum order volume. And then there are issues of capacity, particularly during peak season, as it strains both in-house fleets and outsourced ones to the limit, affecting service levels and customers’ patience. These solutions will not just come from one sector, but rather, through multiple segments, ideally in collaboration with each other, with a better understanding of concerns from a logistical, marketing and sales point of view.

 

“How can we support the last mile?” is a question I’ve often fielded from several government representatives over the past few weeks. My answer remains the same: the public sector is best positioned to support enhanced capacity and capabilities. Apart from the obvious road infrastructure, maybe we can focus on how smaller logistics players can help fill the gaps that even the bigger players can’t? Maybe, say, incentives or support schemes to help facilitate investment in new vehicles, or new warehouses, or new warehouse systems? Programs to increase supply chain awareness not just for MSMEs, but also for logistics players, to be able to benchmark with bigger players and allow them to offer unique solutions, perhaps as local consolidators? To go further down the line, why can’t, say, the Department of Trade and Industry use e-commerce and the last mile to bolster local products, perhaps the ones under its One Town One Product program?

 

Supply chain can level the playing field for all stakeholders; the last mile, more so. But we’ll have to really work on it if we’re to realize its full potential and make our country’s businesses more competitive.

 

Upcoming events: This year’s Supply Chain Immersion will be on May 17-19, and this time around we will be visiting the Clark/Subic corridor, seeing and learning firsthand how the region is emerging as a new business and logistics hub for the Philippines, and how its locators have made their Philippine facilities an important part of their global value chains. Registration is now open, with packages starting at PHP 17,000 for SCMAP members.

 

Also, save the date for this year’s SCMAP Supply Chain Conference: it is happening on October 2-3, once again at the EDSA Shangri-la in Mandaluyong. More details on all our events on our website, scmap.org.

 

Henrik Batallones is the marketing and communications executive of SCMAP. A former board director, he is also editor-in-chief of the organization’s official publication, Supply Chain Philippines. More information about SCMAP is available at scmap.org.

 

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