As of September 2022, the supply chain disrupting, Quick commerce industry processes ~10 Lakh Grocery, Essentials and FMCG orders from customers at blitzing speed from their dark stores (distribution centres). The dark store receives these materials from their fulfilment centres placed outside the city at varied shifts, and such intense planning relies upon the mid-mile of their supply chain.
A Business model would only be as strong as it is on paper if its distribution centres can achieve the expected outcomes. Mid-mile logistics play a crucial role in helping businesses achieve the best out of their distribution centre by ensuring the materials supply at the right time and cost. Mid-mile logistics operations are the replenishment of materials from a fulfilment centre to a distribution centre, from where the material is delivered to the customers in the supply chain.
The fulfilment centres in the mid-mile operation can make or break the whole supply chain as bottlenecks at this critical link can lead to a contagion effect on the further links of the supply chain. The core of mid-mile operations is reliant on pillars of cost saving, adaptability, and competitive advantage.
Mid-mile operations have been a crucial supply chain differentiator since the late 2010s because of the boom in retail and eCommerce. It’s Bizarre that many industries are still figuring out the significance of this crucial supply chain while some are moving towards much more complex networks like omnichannel and D2C models, which require a much more intense and robust supply chain.
The efficiency of these operations has become a key differentiator between two competitors in the industry. In quick commerce, organizations are setting up their distribution centres in one of two ways based on risk aversions. These organizations either set up a high density of small distribution centres or a few extensive facilities based on diversified or concentrated risk aversion. Every organization has to control the KPIs of these operations to ace and have the upper hand in the industry. Some important KPIs of mid-mile logistics are Total planned routes, Total stops, Time window, Vehicle utilization, POD management and Distance travelled.
In a Mckinsey survey from July 2022 on operational trends expected to impact the supply chain in 2022, the observed trend considers inflation of logistics cost a crucial element, which tends to act negatively on the KPI achievements of operations. To attain these KPIs, organizations must shift towards tech disruptions.