Something's broken: In an increasingly competitive market, logistics companies are spending millions optimising their delivery processes with the ultimate goal to operate as efficiently as possible, all the time using inaccurate addressing data for both pick ups and drop offs. The root cause: Insufficient addressing data leads to inaccurate location geocoding, something logistics companies have absolutely no control over.
This was something highlighted at the Home Delivery Conference in London last week. A frequent theme from operations teams across all logistics businesses is that they are struggling with poorly geocoded addresses. This is having a huge impact on delivery efficiency & customer service levels in the UK and Europe. Pins dropping in the middle of buildings, an inability to specify precise delivery locations, seemingly invisible new builds, drivers unable to find homes in rural areas, and there being no way to reference the location of a houseboat, caravan, festival or park. All of these are a barrier to industry growth & profitability.
Addressing, even in central London, is just not good enough:
If somewhere does indeed have a traditional address, geocoding with pinpoint accuracy isn't Google's priority and never will be given their business model. So searching for pick up and delivery addresses will frequently leave logistics companies [and their drivers] wandering around, finding out where exactly to go. There are many examples of traditional addressing not working for modern day logistics even in urban areas. To highlight, just google 'Google' in Google Maps, and the problem becomes clear.... and it's these locations which delivery drivers use to find out where to go:
So, we have to ask ourselves:
How much time are drivers wasting, solving the 'last 50 metres delivery problem'?
But is this really a problem?
Efficient logistics has always been about one thing - Optimisation:
“A reduction of one mile per driver per day translates to savings of up to $50 million a year.” - Jack Levis, Director of process management at UPS
UPS have famously optimised every possible part of the delivery journey. They were the first to introduce 'push-to-start' engines for all their delivery vans, whilst also removing their doors, all to save their drivers crucial minutes jumping in & out on their delivery route. They also introduced no left turns in their route optimisation to ensure vans weren't held up crossing traffic in the US.
Nothing has changed, but logistics companies need to innovate & optimise now more than ever as we look to an era of 'Last Mile Delivery Darwinism'. With a 10X increase in last mile VC investment (up to $2.6bn last year from $260m in 2015), on top of there being around 10,000 on-demand delivery businesses active globally, is poor addressing an element of the logistics process that businesses can continue to afford to ignore?
So in the meantime, while there is no collaborative solution, logistics platforms continue to operate inefficiently, propped up by a network of delivery drivers predominantly relying on experience to be efficient on their routes. The need for experience is the costly byproduct of poor addressing and an operational necessity, especially when delivering to rural areas where geocoding frequently leads drivers to the wrong place.
'The Knowledge' used to be a critical & monopolised factor in the smooth running of London's Black Taxi network. However, since 1994, satellite navigation has opened up the market, resulting in consumers being offered a more dynamic taxi market with more choice and subsequently, lower prices. This is a lesson to any industry which allows itself to rely on unsharable & learned knowledge in a process function. Anyone can now drive an Uber, in any city, at anytime. In the same thread, logistics companies' operational models should focus towards commoditising location, therefore allowing anyone to be able to deliver goods & services, anywhere, anytime, and do so efficiently.
This raises an interesting point regarding the pace of development in navigation. Put simply, there are 3 elements required to navigate from A to B:
- A map
- A navigation/routing system
- A pick up and delivery address
With mapping, we have all come to expect up-to-date, high resolution satellite imagery with the latest, detailed road networks. In navigation, realtime & crowdsourced traffic & incident information is reported, seamlessly updating our routing software allowing users to avoid congested areas mid trip. Addressing hasn't changed for decades. It's still based off a legacy system which is inaccurate and not optimised for modern day logistics.
Customers left wanting:
" 74% of new build residents face difficulties ordering goods & services"
Rural and urban difficulties aside, there is also the huge unaddressed market of new builds, whose residents and users are simply left without an address to reference where to receive services. The Royal Mail found that 74% of residents of new builds in the UK have to wait up to a year to receive a deliverable address and, with this Government's plan to build 1million new homes by the end of this parliament, the problem is set to escalate.
Additionally, customers still can't reference some really important locations:
With customer control being a major theme in delivery for 2017 and beyond, the ability for customers to be able to easily specify precise locations across multiple platforms has got to be an area the industry must focus on more. Consumers want something collaborative and holistic to help simplify the increasingly diverse options and services available in the e-commerce delivery space.
If traditional addressing is a barrier to scale for your business, please get in touch directly at alex@what3words.com to find out how what3words is providing the solution.
what3words is a global addressing system which allows anywhere and everywhere to now have a simple, memorable and sharable 3 word address. We help logistics companies lower operational costs and increase customer satisfaction:
