As many as 57% companies in America say that the last mile is the most inefficient in their entire supply chain, according to a latest Retail Insider report. With 2020 creating disruptions not just in our everyday lives and the sudden sense of increased importance of e-commerce, last-mile challenges became more acute than ever before. Here is a look at the top 7 challenges in last-mile delivery.
7 Last Mile Delivery Challenges Businesses Need To Address
1. Cost of Last-mile Deliveries
With as much as 86% customers ready to pay for expedited deliveries, it still is a challenge for most enterprises to execute it in a lossless manner. With penalties for delays in deliveries, adhering to guaranteed ETAs is another challenge in itself. To add to it, the volatility in demand makes it incredibly challenging to take decisions on how much inventory to keep, managing temporary staff and several such factors contributing to overheads.
2. Delivery Allocation & Address Location
According to a study, 65% of retailers agree that failed deliveries, owing to poor address quality significantly impacts delivery profitability. The average cost of a failed delivery can go up to $16.58. This not only impacts delivery operations but makes last-mile carrier management difficult.
Hence, it’s not surprising that in many cases, destination grouping/management is a serious issue. Many brands allocate jobs manually and that leaves ample scope for human error. Invariably, shipments get misalotted or missed out on a particular route.
In addition, there is also the challenge of bad address quality, incorrect addresses, lack of proper signage. These are enough reasons to let the delivery professional go on a never-ending, tediously long and complex maze.
3. Achieving Routing Efficiency & Route Optimization
Route planning is a necessary evil. It’s mentally taxing, utterly confusing, and is dependent on multiple variable factors from fuel efficiency to environmental regulations. But nonetheless, it needs to be done. A key to successful delivery, one that’s cost-effective and delights customers, is accurate route planning. With growing pressures of sustainability and managing fuel costs, routing efficiency is a key component of success in last mile deliveries.
Not just the cost component, it also greatly impacts the delivery experience because it has a direct impact on ETA adherence. A routing delay or an inefficient routing mechanism can lead to missed deliveries or slipped SLAs which can greatly hamper customer experience. While there are several ways to achieve routing efficiency, identifying which is the best fit for the needs of each organization is a challenge in itself. With increasing emphasis on same-day deliveries, routing efficiency becomes the bedrock of fulfilment and this is easier said than done.
4. Managing Last Mile Delivery Density
In New York City more than 1.5 million packages are delivered daily. Thanks to same day delivery expectations, the required number of deliveries that a brand needs to complete in a given day has simply ballooned. But it’s becoming increasingly challenging for brands to juggle delivery volumes with their existing delivery processes.
There is capacity on one side and then there is capability on the other side. To achieve a fine balance between managing the number of deliveries in a day within a particular area is a common challenge you would find in the last mile delivery scenario. This boils down to the following 4 use cases.
- Low-Density Short Distances
- Low-Density Long Distances
- High-Density Short Distances
- High-Density Long Distances
This is not taking into account the size of shipments, which adds another variable to the mix as to what is the mode of delivery in each of these cases. Thus, the delivery density problem quadruples in magnitude with these permutations and combinations and variables in the picture.
5. Unpredictability in Transit
It's not easy to overcome this last-mile logistics challenge. Whether it is an act of God or act of man, if there is one thing you should predict, it is unpredictability. Especially when there is a shipment transit or a delivery in progress, the proverbial Murphy’s Law will point and laugh at you, merely seeking acknowledgement. This is beyond control and invariably happens 2/10 times. The least brands can do is to have a communications plan in place so that the delays are communicated to the respective stakeholders in a proactive manner.
6. Availability of Customer
Taking customers for granted is a mistake brands love making. It’s time to learn. A major last-mile delivery challenge happens to be first attempt delivery failures owing to customer unavailability.
Let's say that after crossing the seven mountains and seven seas, the delivery agent reaches the place of delivery. The last thing he wants to greet is a locked door or a guard who wouldn’t accept the package and get into all kinds of trouble. Customers are demanding and they generally feel entitled. After all your efforts, if the delivery timeline is missed due to unavailability of a customer, it would still lead to a less-than-delightful experience for the customer and thus mitigate the effect of all your effort in this direction. So, it is essential that you have necessary checks and balances in place to ensure seamless collaboration and communication channels between your agents and customers.
7. Meeting Fulfillment Timelines
The biggest battle that brands face is adherence to timelines. If the timeline is missed, it could then prove very expensive for brands in both the short and long term. In the case of food deliveries, some companies cannot charge customers for the delivery if the guaranteed timeline is missed. Not just that, it also causes damage in terms of reputation for the brand. Hence, the process of delivery needs to be as robust as possible to help them fulfill orders in a timely manner. This calls for a lot of flexibility and agility in the context of delivery management as a process. There are platforms that can help in this direction solving this specific challenge which essentially manifests itself in several other forms as mentioned in this post.
The Bottom Line
These challenges in last-mile delivery need to be solved at the earliest because the delivery landscape is changing rapidly with advancements such as drone deliveries, delivery robots and driverless vehicles in the picture. These would become part of the mainstream in the blink of an eye and pose an entirely new set of challenges that will be several times more complex than the current ones. It is now the right time to look for technologically feasible, affordable last-mile solutions to the current challenges of last-mile delivery before this game becomes a catch-up games as these are core challenges affecting both operational efficiency and profitability. Talk to our experts if you are facing any of these challenges and we could help you transform your delivery logistics center from being a cost center to a profit center.