Mercado Labs | Why the first mile is well, first

Why the first mile is well, first

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Why the first mile is well, first

October 21st, 2021
Throughout our years of experience working in the world of importing – from leading logistics operations for major retailers in the Fortune 500, to working with major global shippers to execute lean retail supply chains – we’ve seen the power of the first mile in creating resilience for the global supply chain. The reality, however, has been it was simply never seen as an exciting area of focus.

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Mercado | Team - Kayleigh Hansen
Author
   Kayleigh Hansen
   Marketing Manager, Mercado Labs
To understand why, it’s important to look back at where importers have focused for the past decade – and how their success has, in fact, exacerbated problems.

The rise and rise of the final mile

It’s easy to see the first mile has been historically overshadowed in terms of relevance by its cousin: the final mile. Covering the final stages of the supply chain – from the point of consumer purchase to the arrival of products at their doorstep – the final mile has received billions of dollars of investment. And most of it has been down to a household name we’re all familiar with.

In 2009, before the world had been fully introduced to the idea of express delivery, Amazon announced that they would start a “next day delivery system.” The idea was simple: improve the way products could be ordered and delivered to customers, and gain a larger market share through high levels of consumer satisfaction leading to repeat purchase. The result was beyond even their expectations; setting a near-global standard as to how companies should meet customer demand and creating a huge expectation from consumers that other companies would have to compete with – else lose their seat at the table.

As a result, most leading brands have focused their efforts and attention on their own final mile operations, looking to constantly improve their customer service and delivery times in order to compete with the likes of Amazon and other market leaders.

And this isn’t inherently a bad thing. Heck, we love that we can order and receive products to our door in a matter of days. A generation ago, that idea was impossible. Today, it’s the standard.

But the cost of such heavy investment – and the shunning of other crucial elements of the supply chain – has caused a chasm to widen between the way retailers plan, buy, and move their products to their stores as well as the logistical operation to get them into consumers’ hands.

Fast forward to spring 2020 and the world virtually ground to a halt. Having pulled orders at the last minute just weeks earlier, importers in the West suddenly couldn’t meet the swell of consumer demand from house-bound consumers looking to fill their time with DIY, exercise equipment, and fast-fashion. In turn, suppliers couldn’t meet the shock orders they were being asked to fulfil, resulting in mass shortages of raw materials, a back-log of orders, and steadily emptying shelves.

For the first time in its history, the supply chain world woke up to the fact that even the best final mile operations couldn’t function if there were no goods to sell. “Resilience” has since become one of the hottest boardroom buzzwords, with brands suddenly switching focus to put strategies in place to better mitigate against future disasters of supply chain shocks. And these all revolve around the first mile – multi-vendor sourcing, supplier vetting, and production visibility among them.

New roles for a new focus

What’s more, companies are now creating purposefully designed roles to back their pledges to re-address the supply chain imbalance. Below are just a few we’ve seen in recent weeks.

Nike’s Jeff Ross has changed his title from “Director of Global Supply Chain,” to “Director of First Mile Transportation North America.” Under this new position, Jeff will be responsible for all inbound transportation for Nike America, ensuring that the global sports brand doesn’t fall foul of supply-side issues that could hit profits and lead to disgruntled shareholders and loyal fans.

In similar moves, Nordstrom is looking to fill a “Director of Global and Domestic First Mile/Inbound Transportation” vacancy, while supply chain visibility leader FourKites has advised Target that the first mile should be their No. 1 priority for 2022.

Whether you’re a recent convert to the reality of the first mile’s importance, or have been a staunch believer for years, a monumental (but crucial) shift is happening in our industry to rebalance the supply chain equation. The question is: will you be part of it?

The Mercado perspective

The first mile accounts for around 80% of the global supply chain, so it’s not rocket science that nailing down your first mile operations is crucial to business success. With the industry turning a blind eye to upstream operations for years, the impact of this neglect has been harsh and firm. It’s time for importers to reconsider their priorities and bring order to their imports.

New to the concept of the first mile or just want to learn more about how to get started? We have a wealth of resources and further reading available for anyone at any level of expertise. Head over our resources page at mercadolabs.com/resources to find out more.
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