In the past five years, the final mile of the international supply chain has been transformed by technology, and you can now get products delivered to your door the same day.
Paradoxically, the exact same product that arrived at your door the same day likely took around four months to get to the center that shipped it to you.
Why the difference?
Unlike the final mile, the first mile has not gone through a transformation. It is almost entirely analog and very opaque.
The lengthy, complicated, disconnected international supply chain is likely the largest system not yet disrupted by technology. This is incredible, considering we purchase $2.1 trillion of imported products in the U.S. alone annually.
Back in time
If a connected digital first mile supply network is the foundation for an efficient, ethical supply chain, then why hasn’t it changed?
For the same reason the final mile was slow to change. It wasn’t until a new player named Amazon changed the game by radically shifting the focus to the delivery of goods at speed—that the other players weren’t doing and couldn’t keep up with—that the other players had to change as well.
For the first mile, it’s not a company driving the change—it’s market forces, including the pandemic, trade wars, tariffs, sourcing shifts and supply chain bottlenecks. For example, traveling 8,000 miles crammed in an airplane with dozens of other people to visit your suppliers is not quite as appealing as it was in 2019.
The pandemic has forced suppliers and brands to identify the gaps hindering the first mile. If a brand issues a purchase order and the supplier doesn’t have an automated customer relationship management (CRM) system to input that order, both parties are forced into a slow, manual communication process. Since these products aren’t automatically connected to any import system once manufactured, brands have less insight into the production process and a harder time adapting their orders to demand.
But despite the challenges, consumers still expect to know who made their products and how. Shareholders expect to know the supply chain is transparent, efficient and resilient. Companies need to know that their process provides the optimal outcome.
So how will this be done?
It’s the final mile. The next-gen final mile will be one that is connected to and empowered by the first mile supply network. If you’re going to start selling faster, your production levels and product quality must catch up to that speed. Products made in the first mile are sales in the final mile. Companies must invest in sophisticated digital systems that integrate their supply networks all along the chain in real time.
It’s the new norm. No one wants to use the equivalent of paper fold-up maps or landlines anymore. They expect things to function easily, at a digital scale.
It’s the costs. Trade tensions have caused sourcing shifts that are difficult and expensive. Ocean bottlenecks have caused transportation costs to skyrocket. Make every penny count.
It’s the competition. Just as Amazon gained the edge by digitizing the final mile, the first mile is the next big opportunity to gain competitive advantage.
It’s McDonald’s. Visit any of their 38,965 franchises around the world and you will find their quality, price and convenience nearly identical to one another. They digitally connect your order to every facet of their operation so that they can deliver on time, every time. You could say they’re even one of the most efficiently run supply chains in the world.
So, farewell to the outdated supply chain—we’ll miss you (not!). Hello to the 2020s and all that it promises. If it’s nostalgia you’re after, you’ll find it in the international supply chain—but soak it in now because it’s all about to change.
Robert Garrison is the CEO and co-founder of Mercado Labs, an international trading platform solving the myriad challenges of the massive global trade industry through innovative technology, unique solutions and a comprehensive education curriculum.
Learn more about Mercado Labs here.