Last mile logistics remains a confusing part of the modern supply chain. While initially perceived as relatively simple, last mile logistics are much more critical than many shippers realize. The last mile delivery is the actual point of interaction between a given shipper and the customer. Combined with the substantial growth of e-commerce, last mile logistics are also growing in terms of costs.
As reported by Business Insider, “as a share of the total cost of shipping, last mile delivery costs are substantial — comprising 53% overall. With the growing ubiquitousness of “free shipping,” customers are less willing to foot a delivery fee, forcing retailers and logistics partners to shoulder the cost. It’s become the first place they’re looking to implement new technologies and drive process improvements.” That’s an astonishing fact, given that last mile costs were usually kept around the 30% mark in recent years. Regardless, the high costs of last mile logistics also make this particular aspect of transportation ripe for optimization.
Let’s take a closer look at what your organization needs to know about last mile visibility to enable true supply chain resiliency and thrive through 2021 and beyond.
First Things First: What Does Last Mile Logistics Mean
Last mile has many names, including final mile delivery, last mile delivery, and more. Some organizations may even describe it based on the type of delivery, such as white glove services or just-leave-on-porch (JLOP) delivery. The actual last mile delivery is not necessarily the final mile as a type of measurement. In other words, the final mile is the final movement. It could occur within a city block or across a 50-mile span in rural areas.
Speaking of e-commerce, the modern world is connected. There was a time when offering omnichannel experiences was a real competitive advantage. However, recent supply chain disruptions have taught industry leaders an inescapable truth. The modern supply chain must be an omnichannel network. There is no happy medium anymore. Without omnichannel capabilities and visibility into all legs of transportation, any shipper doesn’t stand a chance when a significant disruption, such as a lockdown, occurs. Because it’s in this area where using a storefront as a distribution center can make a difference.
Steve Banker of Forbes further explained how a survey of customers in mid-2020 found a continued expectation for same-day delivery (22%), with one-third of which expecting two-hour delivery, consumers' expectation for one-day delivery (39%) and two-day delivery (29%). 36% of retailers “frequently” used storefronts for e-commerce fulfillment when a DC was out of stock for a given item. The only way to know how to approach it all is to think about the last mile to the dock and the last mile to the end-user.
That is why increased visibility and capabilities to manage last mile logistics and its challenges remotely are growing in value.
Last Mile Is Also Complicated, Requiring More Advanced Functionality to Remain Efficient
Last mile delivery experiences several unique challenges, depending on location. Urban delivery may require multiple deliveries to a single building and up numerous flights of stairs. Some urban retail locations may lack docks, and other deliveries may require assembly, unpacking or installation. Not all companies can offer this level of service and specificity for transportation management. Meanwhile, 70% of supply chain leaders noted in a recent survey that they had experienced difficulty in finding transportation service providers for final mile service. Again, it all depends on what that final step of delivery entails.
Depending on the type of last mile delivery, such as large appliances during the bulk goods peak season of early spring, can also include the complications of white glove logistics.
Shippers may also experience trouble finding capacity, especially relating to parcel management and delivery. As an example, both major parcel carriers implemented effective embargoes against certain shippers during the height of the pandemic. The volume limits implemented at the point of pickup also translate into last mile delivery effects as carriers have limited resources. Shippers have had to get creative, deploying additional steps via the enhanced capabilities of a transportation management system (TMS) as follows:
- Consolidating parcel into less than truckload (LTL), LTL into full truckload and vice versa during deconsolidation. That helps by reducing the total number of pickups and deliveries where possible and easing the burden of last mile costs, while still diversifying your last mile strategy to keep spend under control.
- Load optimization reduces the risk of empty miles for carriers. It effectively promotes increased preference for a given shipper’s freight and maximizes efficiency, which keeps last mile costs down across the board.
- Taking advantage of new services, including delivery lockers or even in-trunk delivery, reduces the risks associated with unsigned, unattended package drop-offs that are inherent in JLOP. Together, shippers can use these new last mile capabilities provided the TMS allows for integration with new carrier services or offerings.
- Increased use of big data analytics to continuously optimize routes, account for changing factors, such as traffic, delays at the distribution center, problems entering a yard, or weather. It all goes back to leveraging a control tower view, promoting end-to-end transportation visibility, to reduce risks along the way.
- Improvements to the driver experience, including amenities, and sign-on-glass functionality to take advantage of eBOL and ePOD. Such functionalities enable a contactless, safe experience, all of which reduces the risk of claims too.
- Automated, integrated invoice consolidation ensures your organization only pays for what it actually uses in last mile. In tandem, that degree of automated accounting services keep your costs at their lowest possible price.
Shippers Need a Competitive Advantage to Thrive in Last Mile Delivery and Beyond
The importance of last mile delivery is absolute and unchanging. While the world grapples with the new normal—increased demand for fast, free shipping, despite the increased volume and risks in today’s age—shippers can struggle to keep their costs under control. Shippers large and small need people-powered logistics partners, a wider network and the right tech stack to retake control of last mile and enable end-to-end transportation optimization.
The distinction of success in last mile delivery and managing all it entails depends on the efficacy of your overarching transportation management strategy and how well your organization can intervene when necessary, see what’s happening in real-time, and optimize. Request a GlobalTranz consultation now to explore how people and technology can make a big difference in your network strategy.