While all stages of the supply chain are important, the last, or last, delivery can be one of the most critical. This is how the process affects the supply chain and the logistics industry, and there are many ways to make it more efficient.
What is Last-Mile Delivery?
Many products travel a long way to the customer's door. It starts with the manufacturer and can take many twists and turns before the consumer gets their hands on the product. But last mile delivery refers to the final stage of the journey, where the product is moved from the warehouse shelf to the customer's door.
Shipping is one of the most important parts of the online store sales process. Consumers get some satisfaction from ordering online. However, the transaction is not complete until the product is delivered on time, as described and undamaged.
How Last-Mile Delivery in Logistics Works
The last mile delivery process can vary depending on the nature of your supply chain and the product involved. Some of the common steps in the last mile delivery process include:
1. The customer places an online order for the product.
2. The order is processed, which requires picking and packing at a remote warehouse or distribution center.
3. The order is sent for delivery.
4. Some orders may travel part of the way through a major carrier such as UPS or FedEx.
5. Last mile delivery refers to a service that delivers the order locally to the customer's door, which may or may not be the same carrier. If the customer is not satisfied with their order, they can request an exchange or refund using the same last mile service.
Challenges With Last-Mile Delivery
Last mile delivery is an ongoing problem that many logistics providers are still trying to solve. Here are some of the most common challenges companies face in this part of the order fulfillment process.
Last mile delivery costs are one of the largest logistics and supply chain costs. Last mile delivery currently accounts for an average of 53% of total delivery costs, according to delivery management platform FarEye.
The reason these costs are so high is because of the increased popularity of e-commerce and the increasing expectations of customers about delivery times. Last mile delivery costs include packaging, delivery, vehicle, fuel, labor and other costs.
If the product needs to reach a specific address, such as the customer's home, it requires complex route planning. Depending on whether the goods are going to a rural or metro area, the destinations can be far or close to each other. These factors can lead to various inefficiencies.
Thanks to online platforms like Amazon, consumer expectations of online retailers are high. While most don't expect same-day delivery, a recent report found that 62% of online shoppers expect orders to arrive within three business days — for free. Consumers also appreciate value-added services such as real-time order tracking.
Returns are common in e-commerce sales, with about a third of online purchases being returned to the seller for one reason or another. If your company pays for them to be returned, it can make a big difference to the bottom line.
The hidden challenge of last mile delivery is that it is not a sustainable process, ie. it is not environmentally friendly. Many different vehicles drive day after day, often stop, and idling on curbs is not a sustainable practice. Companies that claim to care about the environment must take this action into account.
Solutions for efficient last mile delivery in the logistics industry
Since last-minute delivery presents many challenges for companies, it is important that we have a strategy to improve these processes, save costs and improve the customer experience. Here are several solutions for more efficient last mile delivery in the logistics industry.
A central warehouse can be convenient for your business. But it can also be expensive for last mile delivery. Using multiple storage locations can reduce delivery times, simplify routes and provide a better customer experience.
Optimized route planning
Many delivery delays are caused by indirect and inefficient routing. Using solutions such as artificial intelligence (AI) and route management software, logistics companies can optimize their delivery routes to take into account factors such as traffic patterns, weather and other factors to improve efficiency and save costs.
Real-time order tracking
The use of solutions such as RFID tags allows real-time tracking of orders. This not only improves the customer experience, but it also gives companies the insights they need to make the necessary changes to their processes.
Buy online, collect in store (BOPIS) allows customers to place orders online that they can pick up at their local store. This type of hybrid shopping experience has grown in popularity during COVID-19. The ability to store or send part of a shipment to a local store reduces many of the challenges associated with last mile delivery.
Local delivery services
Carriers such as UPS and FedEx offer packages nationwide. However, these services can be incredibly expensive for last mile delivery. One cost-effective option is to have a local delivery service handle the last part of the journey.
Focusing on last mile delivery can give your business the ultimate advantage in a competitive market. When your company implements the right solutions to improve last mile delivery, it will achieve faster delivery times, greater flexibility, lower costs and higher customer satisfaction. When integrated with a robust inventory management system, it also improves visibility across the supply chain to improve overall efficiency and business results.