Assessing last-mile distribution resilience under demand disruptions

Area of Science:

• Operations Research
• Supply Chain Management
• E-commerce Logistics

Background:

• The COVID-19 pandemic severely disrupted traditional retail, increasing e-commerce demand for essential goods.
• This surge highlighted e-retailers' vulnerability to low-probability, high-severity market disruptions and the need for resilient operations.
• Ensuring service continuity in last-mile distribution is critical for e-retailers supplying essential items.

Purpose of the Study:

• To assess the resilience of last-mile distribution operations for e-retailers facing market disruptions.
• To develop and propose a novel, domain-agnostic framework for evaluating resilience in distribution.
• To analyze the effectiveness of various distribution and outsourcing strategies under disruptive scenarios.

Main Methods:

• Integration of a Continuous Approximation (CA) based last-mile distribution model.
• Application of the resilience triangle concept and the Robustness, Redundancy, Resourcefulness, and Rapidity (R4) resilience framework.
• Empirical analysis of different distribution strategies: crowdsourced fleets, collection-point pickup, and logistics service provider integration.

Main Results:

• The study highlights trade-offs between flexibility, capacity, and cost for different distribution strategies.
• Crowdsourced fleets offer flexibility but depend on driver availability; collection points rely on customer willingness.
• Logistics service providers ensure reliability but incur higher distribution costs.

Conclusions:

• E-retailers should develop platforms for reliable crowdsourced deliveries and strategically position collection points.
• Negotiating contracts with multiple logistics service providers is recommended for backup distribution capabilities.
• The R4 Last Mile Distribution Resilience Triangle Framework provides a performance-based approach to enhance operational resilience.