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

Last-mile delivery is a major Supply Chain issue today. The rise of online shopping and widespread home delivery of everyday consumer goods has led to a sharp increase in demand, which has come up against major constraints: environmental, road traffic, multiplicity of delivery sites, high costs, difficult access to urban areas, and so on.

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

Supply Chain favors 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 massify 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.

We'll be taking a closer look at this last approach, and at the major constraints it faces.

The challenge of last-mile delivery

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 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 center to smaller quantities, with parcels grouped together in rounds. They are then distributed individually to customers.

Although grouped delivery methods such as relay point delivery do exist, you mustn't make them an exclusive mode of delivery. 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 your customers' availability to receive their order.

In most cases, the presence of the recipient is required at the time of delivery. But since these deliveries take place during the day, it's not uncommon for the recipient to be absent, forcing delivery drivers to reschedule their deliveries, thereby extending delivery times and increasing costs.

Optimizing last-mile delivery

Warehouse location

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

You'll need to choose your location not only on the basis of the financial cost involved, but also with a view to optimizing delivery routes, by locating as close as possible to your customers. You'll also need to choose the right type of warehouse, adapting to urban constraints: transforming a retail outlet into dark stores, creating urban hubs, etc.

Last-mile delivery is also costly from an energy point of view: having a warehouse as close to the city as possible, ideally in the city center, will enable you to offer your customers "green" delivery methods. These modes of transport have reduced autonomy and loading capacity, and locating as close as possible to the destination of your products will enable you to carry out the last kilometer using cargo bikes, electric cars, etc. If you nevertheless deliver by "conventional" vehicle, 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 elapsing between placing an order and its delivery. A reduced lead time not only ensures customer satisfaction, but also reduces the various costs generated by this order (storage, preparation, transport, etc.).

💡 To help you reduce lead times across the entire 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 supports you not only in managing your warehouses, but also in order picking (picking routes, location management, etc.). It also enables you to manage click&collect in warehouses, as well as flows passing through urban hubs. This means easier parcel handling, faster order processing (thanks to smoother loading) and better data control, with complete supervision.

This gives you total traceability of your products - especially food products - enabling you to keep control of all your chains and operations, such as food repacking, for safe inventory management.

Measure and analyze your KPIs

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

To correctly analyze your KPIs, 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, receptions, re-repairs, loading, and so on. 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 of your entire supply chain, while remaining precise and adapting to the operational processes of the entire home delivery chain. This gives you complete traceability of all your orders, from in-stock to out-of-stock, and a personalized control tower over the various success criteria of 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 products can be returned to a nearby mass delivery route, or cancelled and the customer reimbursed, enabling you to considerably improve your service rate.

The urban hub solution

Long absent from the urban environment due to land difficulties, logistics activities are now increasingly present in 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 delivery options and optimize 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 and sustainable development. You can bring together loading and unloading bays, storage areas, order preparation areas and office space.

These hubs enable you to carry out mass logistics operations, such as receiving products, unpacking and repacking them, changing handling units and managing consignments.

How to manage urban hubs?

Managing omnichannel processes

In urban hubs, omnichannel processes present a number of management challenges.

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

☝️ Beware, however, of the typology of your products: while a strategy of multiplying and specializing hubs may make sense in a large city such as Paris, the best strategy for intermediate-sized cities may be different.

Pooling warehouses

The pooling of logistics platforms and deliveries means that orders to be delivered to the same sector, together with those of another distributor, can be grouped together in the same warehouse and delivered by the same vehicle.

This increases truck fill rates, which currently stand at just 67% in France, a consequence of the great success of one-day deliveries, which forces carriers to send out partially-filled trucks on their rounds.

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

Multimodal transport

To facilitate access to major cities, often made impossible for large vehicles by 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, then distribute the parcels in smaller, less polluting vehicles (véYou can then distribute the parcels in smaller, less polluting vehicles (cars, light electric vehicles), in order to comply with regulations aimed at limiting the use of conventional modes of transport, which are increasingly present in cities.

Managing deliveries

As the final stage in the urban logistics process, delivery and the return of deposits are key success factors.

Delivery is the point of contact with your customers, so it's essential that it's perfectly orchestrated, and properly managed in the event of conflicts. A transfer of product responsibility must be established between the various players your product will encounter.

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 correct delivery.

These transfers of responsibility will enable you, in the event of a dispute (theft, loss or damaged parcel), not only to present solid proof to your customers, but also to identify 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 deposit returns, in order to limit logistical costs and the environmental impact of using non-reusable packaging.

With deposits, packaging is 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, moving towards the implementation of 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, and so avoid any loss of reusable packaging.

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