Urban logistics: the importance of urban hubs in last-mile delivery and reverse logistics

Last-mile delivery is now a major supply chain issue. The boom in online shopping and the widespread use of home delivery for everyday consumer goods are leading to a sharp increase in demand, which is coming up against major constraints: environmental issues, road traffic, multiple delivery sites, high costs, difficult access to urban areas, etc. However, this final stage of the delivery process should not be neglected.

However, this last stage of the delivery process is not to be neglected: it is the key point in assessing the customer experience, which means that you need to adapt your distribution processes in order to offer a satisfactory service, while limiting the explosion in flows and additional costs.

The Supply Chain favours 4 approaches to urban logistics:

• Direct transfer of orders from a production site to the customer, in B2B, B2C or B2X activity,
• The transfer of orders to warehouses to consolidate orders before delivery,
• Consignment (transfer of stock directly to the customer),
• The creation of urban hubs to place stock as close as possible to customers.

It is this last approach that we are going to examine in detail, looking at the major constraints it faces.

The challenge of last-mile delivery

The environmental impact

Road traffic in major cities is the first challenge to be met. Today, 1 in 5 vehicles is a delivery vehicle. They release a third of total greenhouse gas emissions.

It is therefore necessary to rethink delivery methods in urban areas in order to avoid road congestion, while at the same time confronting environmental policies that are proving to be increasingly structuring for transport companies.

The unit cost of parcels

The closer the order is to the end customer, the higher the cost of parcel delivery.

We are moving from mass parcel transport to a single logistics centre to transporting smaller quantities, with parcels grouped together in rounds. They are then distributed individually to customers.

Although there are grouped delivery methods such as delivery to a relay point, this should not be made an exclusive delivery method, because to satisfy your customers, you need to give them a choice as to the type of delivery they want.

The problem of the absent customer

The final difficulty lies in the availability of your customers to receive their order.

In most cases, the recipient must be present at the time of delivery. However, as these deliveries take place during the day, it is not uncommon for the recipient to be absent, forcing delivery personnel to reschedule their deliveries, thereby extending the delivery time and increasing costs.

Optimising your last-mile delivery

The location of your warehouse

If you decide to set up an e-commerce business, for example, the location of your warehouse is a key factor in the success of your deliveries.

Not only will you need to choose your location on the basis of the financial cost involved, but you will also need to optimise your delivery routes by locating as close as possible to your customers. You'll also need to choose the type of warehouse, adapting to urban constraints: transforming a sales outlet into dark stores, creating urban hubs, etc.

Last-mile delivery is also costly in terms of energy: having a warehouse as close as possible to the city, ideally in the city centre, will enable you to offer your customers "green" delivery methods. These modes of transport have reduced range and loading capacity, and locating as close as possible to the destination of your products will enable you to make the last mile using cargo bikes, electric cars, etc. If you nevertheless make the delivery in a "conventional" vehicle, the transport time remains limited, reducing _CO2 emissions.

Reduce your lead times

Once your warehouse is properly set up, your first objective will be to reduce your lead times, i.e. the time between placing an order and its delivery. A reduced lead time ensures customer satisfaction, but also reduces the various costs generated by this order (storage, preparation, transport, etc.).

💡 To help you reduce lead times throughout the preparation chain and control your Supply Chain, the best choice remains to equip yourself with WMS (Warehouse Management System) and TMS (Transport Management System) warehouse/hub management software. This software helps you not only to manage your warehouses, but also to prepare orders (picking routes, location management, etc.). It also enables you to manage click&collect in warehouses, as well as flows passing through urban hubs. This makes it easier to handle parcels, speeds up order processing (thanks to smoother loading) and gives you better data control, with full supervision.

You'll get total traceability for your products - especially food products - so you can keep control of all your chains and operations, such as food repacking, for totally secure stock management.

Measure and analyse your KPIs

The next step is to keep control of your activities at all times. Measuring and analysing your KPIs (Key Performance Indicators) such as the percentage of deliveries made on time, or the fuel consumption rate, will enable you to identify areas for improvement.

To analyse your KPIs correctly, you need to have an overall view of your Supply Chain, whether your processes are carried out in-house or outsourced to service providers: preparation, transport to urban hubs, reception, re-preparation, loading, etc. To achieve this, it is essential to be equipped with collaborative, mobile software that enables you to manage your entire supply chain in real time.el, your entire supply chain, while being precise and adapting to the operational processes of the entire home delivery chain. This gives you complete traceability of all your orders, from stock receipt to stock release, and a personalised control tower for the various success criteria for your deliveries.

This traceability enables you to track any damage that may occur to your parcels. Your customer service department will then be able to contact the recipient to inform them of the problem and present the various solutions available. This new approach means that the product can be returned to a nearby hub or cancelled and the customer refunded, enabling you to considerably improve your service rate.

The urban hub solution

Logistics activities have long been absent from urban environments because of land difficulties, but they are now increasingly present in towns and cities in the form of urban hubs. The main aim of these urban storage facilities is to bring stocks closer to consumers, so as to offer multiple means of delivery and optimise route management.

Urban hubs are sometimes veritable logistics hotels. They enable you to bring together several complementary logistics functions on the same site, with a view to pooling resources and promoting sustainable development. You can bring together loading and unloading bays, storage areas, order preparation areas and even offices.

These hubs can be used to carry out mass logistics operations, such as receiving products, unpacking and repackaging them, changing handling units and managing consignments.

How do you manage your urban hubs?

Managing omnichannel processes

In urban hubs, managing omnichannel processes poses a number of problems.

The multiplicity of sales channels results in a lack of traceability and overview of all operations. Managing several sales channels within a single warehouse can be tricky: to optimise this management, we advise you to centralise all activities in a Smart Supply solution. This will enable you to consolidate shipments and optimise home delivery rounds. This will give you complete traceability of your supply chain, standardising processes and limiting logistics costs.

☝️ Beware, however, of the type of products you supply: while a strategy of increasing the number and specialisation of hubs may make sense in a large city such as Paris, the best strategy for medium-sized cities may be different.

Pooling warehouses

Pooling logistics platforms and deliveries means that orders to be delivered to the same sector as those from another distributor can be grouped together in the same warehouse and delivered by the same vehicle.

In this way, you can increase the fill rate of lorries, which is currently only 67% in France, due to the great success of one-day deliveries, which forces transporters to send out partially filled lorries on their rounds.

This pooling will enable you to cut transport costs and storage costs, which will be shared with your partners, and also reduce the environmental impact of your deliveries.

Multimodal transport

To facilitate access to major cities, which is often impossible for large vehicles because of the urban architecture, you can opt for multimodal transport. This method involves using at least two different modes of transport (air, road, etc.) to deliver the parcel.

In this way, you can transport your products to urban hubs using conventional vehicles, and then distribute the parcels in smaller, less polluting vehicles (bicycles, light electric vehicles, etc.).You can then distribute the parcels in smaller, less polluting vehicles (vans, light electric vehicles) to comply with regulations aimed at limiting the use of conventional modes of transport, which are becoming increasingly common in towns and cities.

Managing deliveries

As the final stages in the urban logistics process, delivery and the return of consignments are major success factors.

Deliveries are the point of contact with your customers, so it's vital that they are perfectly orchestrated and properly managed in the event of conflicts. A transfer of responsibility for the products must therefore be put in place between the various players your product will come into contact with.

With a Smart Supply solution, you can set up a photo and/or signature system for each new intermediary in the product's journey. In this way, you can extend product traceability right up to the last moment, to ensure that your products are delivered correctly.

In the event of a dispute (theft, loss or damaged parcel), these transfers of responsibility will enable you to present solid evidence to your customers, as well as identifying the origin. This will enable you to deal with complaints more quickly, and limit the impact on your company's image.

Managing instructions

The use of returnable handling units implies good management of the return of deposits in order to limit logistical costs and the environmental impact of using non-reusable packaging.

With deposits, the packaging will be returned to you as soon as your customers no longer need it, so you can reuse it for other deliveries. In this way, you include an environmental issue in your return loop, and make progress towards sustainable practices within your company.

To ensure perfect management of deposits, it is essential to set up a signature system for each transfer of responsibility, to enable full traceability of the items returned, so that no reusable packaging is lost.

Now a major challenge for transport flows, urban logistics is a complex operation to carry out because of the many existing delivery points. Every stage of your supply chain needs to be optimised to limit delays and errors, while keeping customer satisfaction at the heart of the process. This logistical, financial and ecological challenge calls for a software solution to reconcile all the aspects involved.