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Postal sector will be changed forever by AI

Brody Buhler (left), global managing director, post and parcel industry group, Accenture, talks to PPTI about the company’s latest research and the impact artificial intelligence will have on the postal sector.

This is the 10th Achieving High Performance in the Post and Parcel Industry report Accenture has researched and published, what’s different about this one?
Our methodology has changed. We used to collect the financial data, rank the organizations from 1-30, and then look at the top performers and what they are doing different.

We’re not doing any ranking now and the methodology is much more like a stock market analyst would use, so we can get more insight. Also, there’s so much information, we’ve decided to release a series of reports each focused on a different area. The first will be about digital, the next about the parcel market, and so on.

Any conclusions on where the postal market is heading?
We did a comparison of current value against the predicted future value of the stock prices of the publically traded companies. We found that parcel delivery companies have a positive future level, they had added value. But for all of the postal organizations there was a negative future value. The market is pricing stock with the assumption that posts will have less turnover than they have today and that’s scary.

I think the market analysts struggle with these companies, and the organizations themselves often don’t understand the right levers to pull in the market. It also shows that parcels is the growth engine.

But what is problematic is the highly competitive environment around last mile. There are the incumbents and the large retailers doing their own deliveries and then disruptive startups in last mile. The startups are almost always asset light and data rich. These companies aren’t buying trucks, they’re buying servers and using the data in different ways in crowdsourced and sharing economy capabilities. Their business models can be very profitable with low costs. That battleground is tough and posts are going to have to adapt and do last mile in very different ways in the future.

How do you think last-mile deliveries will change?
There’s a combination of trends in the market. Retailers are putting their goods closer to the market, and there are a number of rich, reliable data sources available, things like the Waze traffic app. As retailers get more data, they will get better at predicting who will buy what, and when. Then there is the availability of crowdsourced labor and consumers that want deliveries in the evenings and weekends.

Mix those together and you can begin to see a different last-mile delivery model. Instead of items coming into the network in the morning and trucks going out at 8am full of hundreds of parcels, a driver is notified when they are needed, they go to a pick-up point, pick up a dozen parcels from, for example, a shopping center, then while en-route pick up some more, then while delivering those pick up some more, and so on. It’s a continuous, dynamic local delivery process, and it’s cheaper and faster. And at the center of it sits an AI (artificial intelligence) orchestrating it all.

Are post and parcel companies embracing digital fast enough?
Surprisingly, no. Everyone understands data analytics, but for things like artificial intelligence, most people aren’t getting it or don’t believe in the potential.

A good example is customer service. For most parcel delivery organizations, 60-80% of their customer service calls are ‘Where’s my package?’. They are highly repeatable and solvable calls, and 80% of them could be automated with a virtual assistant. It’s a no-brainer. But most companies aren’t past pilot trials with this technology, despite the clear evidence that there is value there.

There is a tremendous amount of cost that can be taken out of operations with digitization. Post and parcel companies also need to use digital to evolve their relationships with consumers, because the bar is being raised there by retailers, who expect you to have a good relationship with their customers.

Then in last-mile and new delivery models, posts are going to have to look at how digital technologies have the potential to change last mile, and have a strategy to take advantage of that.

How would you describe the role technology plays in the postal and parcel sector at the moment?
There’s more potential and opportunity than there has ever been before. The pace of change is so fast, and driven by venture capital, new models and experiments, and retailers and consumers that want new capabilities. But I don’t know if we’re seeing organizations keep up with the pace of change. Organizations have to figure out not just innovation, but how to become digital organizations. It’s a new way of thinking and a culture change – a new way of doing things, of being agile and dynamic.

Deutsche Post is one of the furthest along with institutionalizing these kinds of digital capabilities. They’ve been working consistently on culture and have an ecosystem to take advantage of the startup community and are launching their own experiments. They doing a great job.

Are there any technologies you don’t think are getting enough attention?
The most transformative and influential technology by a long way will be AI. For the amount of impact it will have, it is getting a remarkably low level of attention. It’s the one to watch and you’ve got to get going on it.

We’re also watching an interesting experiment that USPS (United States Postal Service) is doing with digital that is doing well, and that has the potential to grow mail volumes.

October 16, 2017

 

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