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Last-mile logistics is a vital part of logistical functions in the supply chain. Read on for a deeper look at this part of the logistics process.
The final step of the delivery process in the supply chain is called Last-Mile Logistics. It is the final mile of delivery to the consumer from a facility or a distribution center. Despite the name ‘last-mile’, the distance can range from a couple of blocks to 50 or 100 miles and quite often utilizes small package or parcel carriers for product delivery. Most shippers and e-commerce companies involved in transportation and freight of all sizes have indeed claimed that last-mile logistics is the cornerstone of a company’s profitability and eventual growth.
Is Last-Mile Logistics Integral to Modern E-commerce and the Omnichannel Supply Chains?
Last-mile logistics is a significant part of modern e-commerce and also omnichannel supply chains because it helps shippers deliver products to the end-users quicker. It additionally helps companies save a lot of money because of its cost-effectiveness. Customers also tend to pay premiums to avail of better last-mile delivery services, like instant delivery or same-day delivery as well.
Logistics management in e-commerce is expected to grow with many e-commerce giants, such as Amazon, already perfecting it. There is also scope for small-scale or medium-sized shippers to grab this opportunity in the growing market.
What are the Technology Solutions for Improving Last-Mile Logistics?
There has been an exponential growth in last-mile logistics over the years with many e-commerce giants already having availed and mastered it. Some of the recent trends in last-mile logistics are listed below.
- Automated Parcel Lockers: The trend has revolutionized last-mile logistics. Parcel lockers have considerably grown in popularity and are slowly becoming a necessity. An automatic parcel locker is one of the safest solutions to last-mile delivery. They can be made available nearly everywhere and can be customized as per the storage of various products.
Once a package is delivered, users can pick up the package at any desired time. Delivery can be set up both indoors and outdoors without worrying about a parcel misplacement or pilfering. Parcels can be delivered safely in the parcel locker by any agent who will be given a unique access code which the customer will also be notified of. - Electric two-wheeler deliveries: Time is an intrinsic part of last-mile logistics that companies must abide by. Deliveries can meet with unnecessary delays due to overwhelming traffic or narrow roads. In these cases, companies can opt for electric scooters with enough payload capacity to navigate easily on congested roads. Carbon emissions of electric scooters are also nearly zero and as a matter of fact several companies have successfully implemented this in their last-mile deliveries.
- Drone or droid deliveries: Drones and droids have made major breakthroughs in several fields, including last-mile logistics. They are automated air vehicles programmed to deliver packages to their destinations and involve less to no human intervention. It negates nearly every major hurdle that a conventional logistics company faces. Not only does it reduce the delivery time, but it also has the least amount of carbon emissions. It is still relatively new, and a lot of research and development is being implemented on it.
What Challenges Do Last-Mile Logistics Face?
Last-mile logistics aims to provide customers with the most efficient and quickest delivery service. However, it comes with growing pains that serve to be a major issue in the delivery process. They are as follows:-
Navigation
This is one of the major causes of delays in last-mile delivery. Navigating through urban areas has proven to be difficult due to heavy traffic, strict parking regulations, congested areas, narrow roads, etc. All this can potentially increase the costs of last-mile logistics.
Complexity
Another challenge that last-mile carriers potentially face is the complexity related to the handling of certain products. Larger products usually require skilled hands and proper assembly before unpacking after delivery. Because of this last-mile delivery companies need to make sure that the final product being sent to the consumer is as accurate as what was initially sold to them.
Many last-mile carriers do not offer assembly options, where some categorize it as an additional service. Some products may even require the assistance of skilled technicians for installation. Despite the hurdles of shipping bulkier products to consumers through direct shipping models via traditional retail, consumers still expect a speedy delivery as well as last-mile carrier tracking and visibility at every step.
Capacity
This is another issue faced in last-mile delivery. last-mile carriers are bound to face a capacity problem as well as other major problems like driver shortage, and the like. These are inevitable and shippers need to have a proper strategy to overcome such challenges in last-mile delivery to be at the top of their game in this competitive market.
Some of the best ways to overcome these challenges:
- Delivery lockers: These could keep products on hold for consumers who want to pick up their products at particular locations, like a storefront pickup location.
- Drone and robots: As mentioned before, automated robots can easily help in last-mile delivery. Thorough study and research is still being done as they are not yet ready for prime time.
- Efficient route optimization: As a matter of fact, route optimization technologies have indeed revolutionized last-mile delivery and helped reduce the problems faced in last-mile capacity and, in the process, cut last-mile costs.
- Better incentives: last-mile companies can also provide better incentives to truckers who are looking for good opportunities and also offer positions with lesser regulations and rules.
What are the Steps for Optimizing Last-Mile Logistics?
Properly optimized last-mile logistics leads to loyal customers who repeat business. Here are some steps for optimizing last-mile services:
- Strategize the delivery speed: Fast delivery is an integral part of last-mile service, but it is also essential to keep customers in the loop about when the order will get delivered.
- Provide order tracking info: Giving customers the tracking info improves customer service. They need to be made aware of when they will receive their order when it has been shipped and the delivery time.
- Provide flexible options of delivery: Offering delivery choices depending on delivery method, location, and time is also another method of retaining customers.
- Improve visibility: Collecting delivery data and creating a collaborative network that connects all parties is a great way to handle problems like traffic jams and more.
- Attach conveyors to trucks directly in the loading area: Conveyors help speed up the loading of trucks leading to quicker deliveries.
- Use real stores as fulfillment centers: Using brick and mortar storefronts that are located closer to the end customer helps bring down costs and delivery time.
- Negate mispicks in order picking operations: To achieve this, you need to optimize your warehouse layout and invest in equipment for materials handling to boost productivity.
- Train customer service representatives: Ensure that you have a team of professional customer service representatives who can efficiently handle any issues that arise with customers.
- Share expectations for the delivery: Train your third-party providers on your policies if you are outsourcing them. Make sure they notify you of any discrepancies and problems to avoid angering customers.
Does Last-Mile Logistics Get Quicker Fulfillment?
Because of the Amazon Effect, most consumers demand product deliveries within two-days, at least. last-mile companies are required to fulfill an overwhelming number of orders at an ever-increasing pace. Shipments previously requiring days to process are forced to process within an hourly time frame.
With better innovations, research and technology being invested in making last-mile delivery more efficient and foolproof, it is increasingly moving towards faster fulfillment. In the coming future, an order placed through an e-commerce website will be readily processed and ready to ship, meeting the narrow window of time that consumers keep expecting. Companies are slowly moving towards this model in this competitive market to make better offers to consumers.
Every last-mile delivery service provider should aim to shorten the time window of the last-mile delivery. Many companies have partnered with 3PL providers with advanced management systems of warehouses and inventory, allowing them to optimize and monitor all areas of the fulfillment process.
How Do Supply Chain Disruptors Make an Impact on Last-Mile Logistics?
Supply chain disruptors, like venture capitalist startups, are making a great impact on last-mile logistics. Nearly 84 percent of the worldwide freight spent on trucking and transportation costs, which includes labor, fuel, asset tracking and technology, has amounted to more than 800 USD in the industry.
One prime example, as per Business Insider, is Amazon. It is already halfway there, creating and managing trucking via an Uber-like tracking app. One unfortunate drawback to note is that the tech landscape is overwhelmed with numerous failures related to supply chain disruptors. However, extensive research is being conducted to prevent the same along with developing an efficient risk-free solution.
How is Last-Mile Logistics Improved?
Some of the best strategies that organizations can adopt for improving their last-mile delivery process in order to fulfill customer demands are as follows:-
Centralization of logistics data
A software displaying multiple last-mile logistics data in a single dashboard can significantly improve last-mile delivery operations by keeping a track of said data and avoid unnecessary delays, costs and even promote safety. The operational efficiency of such a software can improve customer experience and also provide insight faster.
Give customers real-time driver tracking
Offering customers real-time tracking leads to happier customers, reducing the workloads of customer service representatives. When consumers in real time can easily track their deliveries, customer service calls always decrease.
Automate changes in the delivery status
Automating changes in the delivery status notifies customers about delayed delivery time as soon as possible. Through this, a consumer can be kept in the loop in order to meet their delivery expectations. Delivery of a package should ideally not be late, but what’s worse is not notifying the customer about it. If an organization fails to provide the updated delivery window, the customer may return to make a purchase again.
Improve communication with drivers
Drivers ought to be kept updated about any potential delays due to traffic conditions or route changes. Drivers unaware of any traffic congestion are bound to be late in delivering, leading to a poor customer experience. Poor driver communication additionally affects employee retention as unhappy drivers may look for another job.
Keep track of driver performance
Companies should always monitor driver performance and their driving to improve last-mile delivery. Unsafe drivers can make a negative impact on the company expenses and may even endanger other drivers and pedestrians. They are also more likely to cause damage to the delivery vehicle and increase fuel consumption due to rash driving which affects overall costs.
Offer multiple choices and convenience
Creative delivery methods improve delivery times. Adopting new warehouses that serve both in-store and online customers is a good example. Many companies opt for standalone services of companies like Instacart, DoorDash and the like for faster delivery or have their own service.
Automating driver dispatch and route planning
An automated driver dispatch and route planning service potentially improves faster allocation of drivers and more efficient optimization of the delivery route. An automated route planning software helps in managing and tracking the location of every vehicle with the help of hardware units.
Managers need to add the drivers and their respective routes into the system, after which the software automatically optimizes every route, and sends real-time information about the vehicle to the manager’s dashboard. The software can also send information about the traffic or weather to calibrate more efficient driving routes to the driver. This could potentially prevent any mistakes in delivery and negate any room for human error or misconduct.
What Trends Affect Last-Mile Logistics?
There is an ever increasing demand for e-commerce that has put additional pressure on retailers to ensure faster delivery and cut costs at the same time. Some recent trends that have revolutionized the last-mile service are as follows:
- Smart tech for tracking: Every customer demands transparency and traceability of their orders. Therefore, keeping customers in the loop about their current order status as well as if the package is on route or out for delivery is integral. This has been made possible with smart technology such as GPS and RFID tags for tracking the movement of a shipment in real time. IoT-enabled sensors are also embedded in packages for monitoring their humidity, and temperature.
- The gig economy and crowdsourcing: Companies that have adopted a crowdsourced delivery model have helped reduce their out-of-pocket shipping costs exponentially. It has given customers the ability to schedule or reschedule deliveries as per their availability.
- Robotic delivery: Nearly 60% of costs spent by a last-mile delivery company is on labor. Despite its limitations related to availability and scheduling, it is still an integral part of delivery. Due to these reasons, a number of retail companies are experimenting with robotic delivery. Some of the best examples include self-driving vehicles, autonomous delivery robots and drones.
- Quick order fulfillment: Most e-commerce companies are expected to provide rapid order fulfillment, especially behemoths like Amazon. But most smaller-scale businesses do not have the means to afford any method promoting rapid order fulfillment.
However, it is imperative to leave no stone unturned to ensure that the last-mile delivery window is shortened as much as possible to meet the rising customer expectations. Partnering with a third-party logistics (3PL) provider is one great way to ensure this. - Urban warehouses: Rapid order fulfillment is an ever increasing demand. It has also promoted a shift in the approach to warehousing and most importantly urban warehousing. Fulfillment centers closer to the end consumer leads to reduced delivery time.
- Insourcing deliveries: Many retailers handle everything internally rather than outsourcing. They have their own fleet of vehicles or hybrid fleets for fulfilling orders. Some retailers choose to co-op with competitors to share assets and thus, reduce last-mile logistics costs. This has led to 3PL providers developing their own local delivery services as well to compete.
- Hybrid fleet management: Many retailers adopt hybrid fleet models. These models are a combination of the fleet of a trucking company, contractors, 3PLs as well as freelance drivers. This helps them manage the size of their fleet according to the demanding changes. A fleet model provides greater affordability and flexibility than traditional models.
How to Prepare for the Last-Mile Logistics Revolution?
E-commerce is ever-growing, especially in an age driven by digital technology where needs pertaining to logistics keep shifting according to new age requirements. To prepare for the last-mile logistics revolution, sellers and providers should always look for more efficient solutions to improve customer experience.
In recent years, it has become evident that last-mile delivery can only be simplified and streamlined by embracing technology at every step of the delivery process.
Conclusion
Last-mile logistics is an integral part of the order fulfillment process in the supply chain that aims to deliver packages within the shortest time frame to the right address. To maintain a happy customer base, companies need to optimize the process to mitigate risks. Many companies have already mastered the art of last-mile delivery to stay afloat in this competitive market.
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FAQs
Last-mile delivery is referred to as the last leg of supply chain operations that deals with the product’s journey from storage to the end-customer.
Last-mile delivery is the final step of delivery where a parcel is sent to its final destination from a transportation hub.
The last step of the delivery process is most important for speedy shipping.
A last-mile carrier is a provider who is responsible for a final leg of delivery of a package.
What are the challenges of last-mile delivery services?
As per research, unless last-mile delivery is constantly optimized, profits could decline by 26% in the next three years. Companies need to find newer ways for improving efficiency and reducing costs.
Many challenges are faced by last-mile delivery operations, which makes it the most expensive.