The Journey to a Local, Resilient, and Efficient Last-Mile Network

The case for change 

Best Buy Canada’s online demand was originally built on a network that relied on one national carrier and one third-party fulfillment provider for most of our shipments. For over a decade, our collaborative partnerships built on transparency, innovation, and collaboration allowed us to achieve significant growth.

By 2018, the fulfillment and delivery landscape were changing rapidly; fueled by growth, rising costs, carrier volatility, and capacity constraints, as well as the customers’ rising expectation of delivery speed.

With these changes in mind, we set a course to transform our network from a rigid national five-day network to a local, resilient, and efficient network.

How did this initiative start?

There were three key areas of focus: the first was to develop a smart set of “routing logic” rules, which would allow our fulfillment engine to send online orders to either a store or fulfillment location closest to the customers’ home. This strategy allowed us to utilize the stores as fulfillment locations and hubs.

Secondly, we worked with our fulfillment partner to move to a 24/7 operation in their facilities. This allowed us to pick, pack, and ship orders for Toronto, Vancouver, and Montreal customers (placed by 11:59 p.m.) for next-day delivery.

Lastly, we built out a localized carrier network in all major markets across Canada, by identifying and strategically partnering with regional and local carriers who offer late pick-up with next-day, seven-day-a-week delivery options.

Why is this an important initiative for Best Buy Canada? 

Our decisions always come back to a positive customer experience and building a network that offers speed, efficiency, and convenience helps us achieve that. The two-day national initiative not only makes us extremely competitive in the market, which consumers appreciate, but it also reduces delivery costs, helps reduce carrier network congestion, and reduces delivery delays. A bonus is this strategy is also better for the environment: by shipping products from a location closest to the customer, it avoids travel to and from large regional and national carrier processing plants.

Where are we today?

These changes allow us to ship more than 40 percent of our online orders from our stores and move away from relying solely on one major national carrier to utilizing seven regional and local carriers. We have also reduced the distance traveled, increased network capacity, reduced days to deliver to the customer, as well as help offset the rising costs that have plagued the industry, especially during the pandemic.

What is next?

We continue to improve the system logic, which allows us to further improve efficiency, improve forecasting and allocation systems to support the new network, and refine our next-day/same-day carrier network to maximize speed and resiliency.

What are the keys to success?

1. Start with clearly defined desired outcomes and build a strategy that involves all key stakeholders.

• Define your north star and ensure executive alignment so required resources and capital to fund and prioritize the initiative are obtained.

• Bring all key stakeholders along for the journey right from the start to make sure everyone is aligned and fully supports the initiative. 

2. Use data as a foundation to track, measure and make decisions.

• Build dashboards that show the current state and allow for real-time data to be shared to showcase progress; this also helps to quickly identify what areas should be prioritized or where course correction is required. 

• Accurate data sharing ensures everyone is on the same page and reduces non-data-based assumptions, which can quickly throw you off course or delay progress.

“Our decisions always come back to a positive customer experience and building a network that offers speed, efficiency, and convenience helps us achieve that.”

3. Be open, honest, and transparent with communication throughout the journey.

• It is critical that a timely reoccurring communication plan is created, not only to manage, but to keep everyone involved up to date on what is happening, both good and bad

• This can consist of daily or weekly updates to the executive level or planned daily team huddles to get the latest updates from key team members. This allows you to make real-time decisions, ask for support or communicate obstacles or risks that may need to be escalated. 

• Sharing progress through reliable data can inspire the team to keep going through adversity. 

4. Build relationships with partners who share a common goal, who are collaborative, operational-focused, data-driven, and will treat success and failure as if it were their own

• Ensure transparent communications on your strategy and what you are trying to achieve in both the short and long term

• Develop deep relationships with these partners through collaborative negotiations, strategic planning, and continuous improvement planning sessions

• Target outcomes where both organizations achieve wins through growth or efficiency.