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a well-managed in-house shopping and delivery service,” Maciuba says.

Role of Technology

Pieces of the Puzzle The challenge these innovations present is that they are pieces of a puzzle that have yet to come together for cohesive visibility. “One (innovative startup) might have a great mobile app, another might have the hardware to enable data collection or the link to chain of visibility. But there’s not a single provider to offer an entire chain of visibility,” Montgomery explains. That is why blockchain technology is exciting, she adds, because

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Another trend is using a centralized distribution facility model, although that only works in large, dense markets such as South Korea where 20 percent of consumers buy groceries online and in the United Kingdom and Japan where 7.5 percent grocery shop online. The U.K-based Ocado, for example, is a supermarket that doesn’t have any stores and delivers from its warehouses. Maciuba says the start-up costs to create a fully automated grocery-based fulfillment center are significant. But once established, a regional warehouse model will be more cost-effective as robots pick products rather than individuals pulling items off grocery store shelves. “But again, this solution will be restricted to large, dense markets in the U.S.,” he says. Technology plays, and will continue to play, a strategic role in online grocery shopping and lastmile delivery, Montgomery says. In her position with Kenco, she regularly meets with startups and sees many entrepreneurs designing technology for this space. Many are developing phone applications “because everyone wants something on their phone,” she says. Artificial intelligence-enabled technology on the information side of the shopping and last-mile delivery equation is also gaining traction. “This trend is driven by back-end enabled data collection. Innovations seek to gather data at every point in the supply chain,” she explains. And the trend is not only to provide consumers with data, but also to provide it to third parties. “A last-mile delivery partner would be able to determine if its driver is

moving along the delivery route as planned. Such innovations are driven by mobile and Internet of Things devices,” says Montgomery.

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it can connect all the puzzle pieces for greater visibility in the food industry supply chain—down to last-mile delivery. Blockchain, for example, also could provide better accuracy and timeliness during a food recall and be used to weed out counterfeit products in the food supply chain. “I’m not saying the technology is completely there yet, but it’s the technology that is trending. And it’s not just about convenience; it also opens the door to improvements in food safety and in tracking freshness.” Montgomery and Maciuba agree that at the end of the day the costs associated with online food ordering and last-mile delivery are one of the biggest hurdles companies will have to clear. “It’s difficult because there will be costs associated with putting

blockchain in to underlay your technology infrastructure,” Montgomery notes. “But a company will have to weigh that cost against the risk of not doing such improvements. In other words, looking at the costs they are avoiding.”

Figuring It Out Maciuba says Wall Street will be closely watching how the expansion of big box stores into grocery e-commerce and last-mile delivery affects margins and the bottom line. He expects most companies will “take a hit,” but on the other hand, if competitors are offering the service and they don’t, companies could lose market share in the long run. “Any company that enters into this is going to see a negative impact on profit margins at first,” he says. “But that is normal in business when a trend changes your business model and your competitors are embracing the trend.” Smart companies could “layer on” additional perks to add profit to online ordering and delivery such as offering prepared meals or ready-to-eat lunches as part of the service. And as the value proposition increases for customers, a fee structure can help to offset costs, he adds. Montgomery says the costs associated with new technology to enable food service e-commerce and last-mile delivery can be offset by using the data collected to improve the company’s overall digital strategy. She also suggests companies should look to their partners to help with pieces of the overall plan because every company in the supply chain has to do its part to meet customer demand. Maciuba adds: “These shifts in customer demands are real, and they are not going away. No one knows how quickly online grocery ordering and delivery will grow, but you can be sure the growth will be there.”

No one knows how quickly online grocery ordering and delivery will grow, but you can be sure the

growth will be there.”

Dean Maciuba, managing partner, North America, Last Mile Experts

MARCH 2019 | FOOD LOGISTICS

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Profile for Supply+Demand Chain/Food Logistics

Food Logistics March 2019  

Food Logistics is the only publication exclusively dedicated to covering the movement of product through the global food and beverage supply...

Food Logistics March 2019  

Food Logistics is the only publication exclusively dedicated to covering the movement of product through the global food and beverage supply...