last mile logistics is undergoing a fundamental change. What we have been discussing for a long time is becoming a reality. As the executives of DYNAMIC FUTURE say, food manufacturers in particular are starting to revise their distribution strategies. Above all, they thereby reduce their costs, but at the same time, they manage to moderate the impact on the environment, and also contribute to the calming of urban zones.

Regardless of the field or place of business, Czech companies demand more and more innovations in distribution strategies. No wonder. After all, even in the B2C segment, the logistics at the end of the processes have changed incredibly in a short period of time.

“Five years ago, if any of us had told anyone that he/she would be most happy to pick up packages at midnight somewhere at a petrol station, we would have doubted his sanity. Today, we have several such systems for receiving and sending shipments. No one wants to sit at home and watch for the postman,” states P. Jalůvka.

Jan Šlajer adds that the world is driven by interconnection and co-ordination – the elements of the fourth industrial revolution need to be combined into logical, functional units. And in an exaggeration similar to how packages are collected in one place where customers pick them up, manufacturers along with retail chains are starting to consolidate the order picking and shipping processes.

“The goal is to make picking, storage, and last but not least, the supply of destination points more efficient,” explains J. Šlajer.

In his opinion, supplier-customer chains can be divided into modern (large supermarkets, hypermarkets) and traditional (typically smaller stores in smaller towns). The existing practice, where each store is contracted by several manufacturers, is undergoing changes. The so-called fall is the construction of central warehouses, cross-docks, or distribution centres to which producers will transport their goods (or hire a company to do it). And this is where completely new solution possibilities open up.

“I would say that the chains will consolidate distribution in such a way that they bring in a distribution centre that will already take care of delivery. Therefore, eighteen vehicles from different manufacturers will not drive to the target store every day, but one vehicle filled with the products from all of the orders will arrive three times a week to replenish the goods,” explains Jan Šlajer.

 

Financial pressure solved what the administration did not have the power to do themselves

This is a concept that is not entirely new. Petr Jalůvka, for example, recalls a discussion he once participated in Ostrava. The city’s development strategy counted on a kind of hubs outside the borders of the Moravian-Silesian metropolis, to which suppliers would bring their goods, picking would be carried out in them, and products would leave the hubs en masse for stores.

“It was such a lofty topic, regarding the sense of logistics. But the cities had no power to enforce them. Today, the chains already understand that this is an interesting economic model that has the potential to save them the costs of distribution and planning of entire logistics chains,” says Petr Jalůvka.

Years later, things took off for a number of reasons. Thanks to close contact with manufacturers, DYNAMIC FUTURE records the first implementation of system changes and shipment logistics.

“Last year, for example, we reviewed the project for the Slovak COOP in Žilina, where a new distribution hall for meat products is already standing. Our customer, Masokombinát Krásno, supplies Slovakian COOP with its products, and until now, visited all its stores with its own vehicles. This is, of course, financially demanding, as well as complicated logistically, in terms of personnel and technology. Newly, all processes have been logically divided – the manufacturer produces, the distributor distributes and the seller sells. MK Krásno sends a truck to the Žilina distribution centre, and they take care of picking the goods there,” explains Jan Šlajer.

 

Meat and yogurt in one truck

The new distribution options open up the opportunity to supply stores from one place, with the entire assortment that they list, in the distribution centre. For example, it will be possible to combine meat products with dairy products, since they can “travel” in one vehicle. This is another step towards higher logistics efficiency.

“When setting a distribution strategy, you need to keep in mind which system is suitable for which store, especially taking into account its size or location. Then we have to take into account the city’s requirements for compliance with restrictions on vehicle traffic in pedestrian zones, and the like. This is where predictive simulations will play a significant role. Thanks to them, the chosen distribution model can be verified very well,’ states Petr Jalůvka, adding that the fourth industrial revolution is de facto the first logistics revolution.