In 2020, the ever-complicated last mile delivery got more chaotic owing to the ongoing pandemic. At a time when businesses were struggling to cope up with the changing customer needs like faster and same-day delivery, in came challenges like contactless delivery, zero cash payments, health updates and more. Savvy customers want end-to-end transparency of fulfilment progress. They want to know where their order is, who is bringing it and when they will receive it. It does not stop there; customers want brands to ensure flexible delivery. Modern consumers are more loyal to brands that ensure a flexible online buying experience and make allowances for customer convenience.
To deliver on these expectations, supply chain leaders need to revisit their last mile delivery strategy. Conventional hub and spoke logistics models will not be enough to balance customer experience and profitability. Digitalization of core retail last mile delivery processes will be key in shaping the future of retailers, eCommerce providers, grocery chains, restaurants and manufacturing companies.
What is last mile delivery?
Last mile delivery refers to the last leg of supply chain operations. A product’s journey from a warehouse to the doorstep of the end-customer. This last step of the delivery process is most critical and should be well managed for speedy shipping.
Increasing consumer demand has led to businesses strategizing this critical step for a quick and efficient shipment. Be it personal residence or retail store, the final destination of the supply chain should be covered at lightning fast speed, in order to churn out more and more delighted customers. Final mile also happens to be the most expensive leg of the journey from the transportation hub to its ultimate destination, thereby need of resource optimization should be the key focus area.
What is the last mile delivery process and steps involved in it?
Once a customer places an order online her web browser or mobile application directly communicates with the retailer or eCommerce provider's server. The order is sent to a centralized order management system confirms stock availability and provides the customer with an option to pay online. It then sends a request to the warehouse hosting the stock to dispatch the products to the end customer. It is here when the last mile mainly commences. The shipper sends an agent to pick up the customer's item from the warehouse.
The agent then loads the parcel in his vehicle and delivers it to a predetermined hub. Then from
the hub an agent picks up the parcel and delivers it to the customer's doorstep. All these might appear to be simple but in reality it is not. There are multiple moving parts in the last mile ecosystem and the quality of execution depends a lot on internal and external factors. To ensure a seamless execution of all these disparate processes, businesses are embracing modern logistics solutions.
In simpler terms here are 6 key steps involved here
- The sender’s requested orders are digitally recorded into the carrier’s system
- The said order arrives at the transportation hub
- The order is assigned to the delivery personnel with the relevant information (like a recommended route and recipient’s locations)
- Orders are scanned for the purposes of record-keeping and then loaded on the trucks
- The item is then delivered to the intended recipient
- The personnel then records and updates the delivery status
Why is last mile delivery important?
There are multiple reasons why it is important. Today, logistics is actually the only touchpoint between a customer and a brand, hence making the last mile extremely critical. It impacts customer's last mile experience, profitability.
What are the problems in last mile delivery?
There are a plethora of challenges that weigh down overall supply chain and last mile delivery operations, thereby making it most expensive. The rapidly growing need to drive same-day delivery, legacy IT architecture, poor logistics visibility and, COVID-19 regulations and more pose serious problems when executing it. Optimizing last mile delivery will obviously cut down shipment’s total cost, but that will only happen when we thoroughly understand the problem areas and address them accordingly. Let’s quickly glance through these challenges.
1. Executing Same Day Delivery
According to research, more than 80% of customers today are willing to pay more for faster delivery, and keeping up with this expectation itself is the biggest challenge with last mile deliveries. Inefficient routing practices, manual dependencies with regards to allocating tasks and poor management of third-party logistics providers make it extremely difficult to shrink delivery turn-around-time and pose a threat to the entire shipping process. Another challenge here is ensuring optimum utilization of vehicle capacity. Since same-day delivery mostly includes small packages, the chances of fully utilizing vehicle capacity become a problem, causing a dent in logistics company’s significant savings. Businesses do not have the luxury of time to wait for sufficient orders to be placed so as to ensure 100% capacity utilization. This poses financial challenges too.
2. Traditional Routing Models
Without having highly efficient routing tools and strategies it is difficult if not impossible to ensure timely and cost-effective execution of last mile deliveries. Traditional routing models are highly dependent on manual processes making it challenging to consider all the factors that influence chalking out highly productive routes. For instance, with manual routing processes in place, it's a mammoth problem to change a route based on real-time factors like weather, traffic congestions, sudden road closures, accidental diversions and more, thereby delaying the delivery process.
3. Poor Logistics Visibility
Legacy supply chain architecture and traditional delivery processes with poor system interoperability are major reasons behind poor visibility of logistics operations that converts it into a time-consuming process. Take this case in point. If an order management system is not in sync with a last mile 3PL provider's system, it will be very difficult for a logistics manager to track and trace the exact location of a vehicle at any given point in time. This triggers a plethora of inefficiencies. Poor visibility results in delays, inaccurate ETAs, route diversions, vehicle idling, extra fuel consumption and makes deliveries opaque to customers, which further adds up to the last mile delivery problem.
4. Curbing the Impact of COVID-19
The ongoing COVID-19 pandemic disrupted existing logistics models and had an impact on the last mile shipping. Social distancing regulations have changed the way parcels are picked up, delivered and received. Contactless delivery has become an elementary expectation and why not, it ensures greater adherence to social distancing compliance. Well, contactless deliveries might come across as a simple process where an executive just keeps an item outside a customer’s doorstep, but actually, it's not. Businesses need to ensure customers know about delivery completion without having to open the door. Eliminating cash and card payments is also necessary to ensure zero-contact. Also, brands need to inform customers about the latest body temperature of a person and store staff along with a timestamp to ensure high levels of safety standards.
5. Scaling Delivery Operations
With the increasing volumes of online buying and a surge in the number of shipments, the pressure to shrink delivery time, businesses are revisiting how they execute last mile delivery operations. Many businesses are struggling to find executives during peak business days when their own resources are exhausted. This makes committing to same-day deliveries difficult and make customers happy.
6. Rigid Logistics Processes
In a world driven by instant gratification and constantly changing market dynamics, there is little place for rigid delivery processes, which is considered to be one of the major supply chain inefficiencies. Traditional processes that are dependent on manual intervention fail to deliver in customer expectations and skyrocket in customer dissatisfaction quotient. For instance, modern customers would prefer brands that allow them to change delivery location and time on the fly based on their convenience.
7. Increasing Carbon Emissions
Unfortunately, transportation accounts for more than 20% of the world’s carbon emissions. As environmentalism goes mainstream, more consumers are willing to pay extra for products that are organic in nature and packaged using recyclable materials. It will not be surprising to witness customers demanding carbon-neutral deliveries. According to research, 48% of consumers are in favour of their delivery to be carbon-neutral. Therefore businesses need to implement strategies and bring in last mile delivery best practices to reduce fuel consumption and miles travelled in the last stage.
6 Ways How Technology Can Solve the Biggest Last Mile Delivery Challenges
Last-mile delivery solutions empower retailers, eCommerce providers, 3PLs, and manufacturers among many others, to orchestrate, optimize and enhance end-to-end logistics operations to achieve on-time delivery.
Logistics companies that has excelled in perfect last mile utilizes their complete toolkit for its efficiency. Be it real-time driver tracking or communication or dispatch planning or effective fleet management tool, technology integrated with analytics can optimize your delivery process. Let’s now quickly glance through some of the key features of a last-mile solution.
1. Dynamic Routing to Reduce Delivery Time
For any driver, which route to follow for a specific location in a stipulated time is a huge challenge. The best last mile solution ensures fast deliveries, better margins and delightful experiences savvy businesses are leveraging modern dynamic routing tools. Dynamic routing enables logistics managers to track their executives and fleet in real-time. It would recommend efficient routes that delivers packages faster.
It immediately triggers alerts via SMS in real-time in case there are unnecessary diversions, prolonged stoppages and vehicle idling. It optimizes routes in real-time based on traffic congestion, weather conditions, one-way windows, urgency and more while keeping the drivers informed with real-time information. Dynamic routing also plans and optimizes routes. Based on route productivity, vehicle capacity and fuel consumption it automatically generates the most efficient route to reach a customer’s location. It can also forecast delivery time by optimizing route times.
2. Auto Dispatching reduces service time and saves on labour cost
The routing software is a boon to the logistics managers. It not only does efficient resource allocation, but keeps the final mile costs well in control. The software plan your routes, allocates number of tasks per driver, and even pinpoint driver location. It is instrumental in reducing inefficiencies, as it saves time and decreases the number of drivers. The dispatch automation feature eases the entire process, helping to reduce the mounting costs that drive up last mile delivery costs.
3. End-to-end Control of Delivery Operations
Visibility of ground-level delivery operations makes or breaks the last mile. Leveraging modern logistics technology can help businesses to gain 100% visibility of logistics operations right from the time a customer places an order. Logistics managers can track ground-level activities in real-time and quickly address inconsistencies as and when needed.
4. Proof of Delivery (PoD) for greater transparency and efficiency
Proof of delivery adds greater transparency to the entire system of last mile services. PoD is a brief documentation with signature from the recipient, date and time stamp, photo of the package and other details to confirm that the item has been delivered. Through this simple step the entire delivery process can be consumer friendly. The PoD is generally integrated with a mobile app that features functions like photo collection, signatures, barcode, and notes, which drivers can feed in while delivering the parcel.
Modern logistics solutions are powered by electronic proof of delivery that allows businesses to empower customers to sign receipts using mobile applications. This is critical now as leveraging ePoD, both customers and field executives can adhere to social distancing norms by eliminating physical contact. It also helps efficiently archive data, analyze customer feedback, makes audit processes easier and reduce manual errors.
5. Accurately Benchmark KPIs
Leveraging a modern logistics platform helps businesses accurately benchmark KPIs and improve SLA adherence. It provides logistics stakeholders with a single pane of glass to view critical delivery benchmarks like performance of executives, delayed deliveries, customer ratings, ETA adherence, pending deliveries, 3PL performance and more.
Through reporting it becomes easier to identify the gridlock in the system which could be timely addressed in order to avoid further escalation. Monitor key metrics such as success rates, on-time rates, service times, feedback scores, distance travelled et al through comprehensive reports and find out opportunities for improvement. Through this last mile supply chain can be made efficient and effective.
6. Flexible Deliveries
Rigid logistics processes are major roadblocks when it comes to ensuring wonderful customer experiences. Last mile delivery software provides customers with a self-service delivery model. It empowers them to change location and time on the go based on their convenience. Such a solution can accommodate such changes quickly by updating workflows based on customer needs.
7. Crowdsourcing Deliveries
With the growing demand for home deliveries, it’s becoming difficult for businesses to cost effectively scale delivery operations with their existing resources. An advanced logistics solution that is powered by crowdsourcing tools, empowers businesses across industries to effectively scale delivery operations. It can quickly onboard temporary or part-time executives by scanning the gig-economy. It onboards such executives based on costs, productivity, urgency, proximity and more.
8. Focus on Customer Experience
With cut-throat competition and every logistics company trying the grab a share of the pie, focusing on customer experience is the key to success. Keep the system as transparent as possible to your customers. Let all channels of customer communications be availed. One should look beyond those static tracking number. Empower them to be into real-time feedback loop and make them talk to the driver, if need be.
Strengthen your delivery service through SMS notifications. Take their feedback through occasional consumer surveys on your platform, so that they get more reasons to be satisfied. Do not only track their order but hear them out, understand their pain points. A delighted customer can only lift you to greater heights.
Last Mile Delivery Trends in 2022 and Beyond
The last mile has evolved over quickly in the last few years, especially in 2020; but then again, evolution is a continuous process. Here are some trends that organizations have chalked to make the best of their logistics operations and to achieve the ultimate goal of customer satisfaction. Optimizing on key resources coupled with technology can perfect the this process thereby fulfilling consumer demands and delighting them. These trends (along with others that evolve) will play an important role when it comes to planning and improving last mile delivery logistics.
1. Quick Order Fulfillment
We live in a world of instant gratification. If you want to speak to your friend even countries apart, it can be achieved at the tips of your finger. Hence, consumer behaviour, as a whole, has become rather impatient and everybody wants to have their orders delivered as soon as possible; in some cases on-demand or same-day. With increasing number of customers opting for same-day delivery, quick order fulfilment is the game changer.
In order to stay ahead of the curve, even the last mile carriers need to fulfil this expectation. This entire turn-around process of fulfilment becomes very easy and rapid with the implementation of technology.
2. Enabling Order Traceability
Tracking and traceability have become essential elements that assure a package is properly counted for. This is rather important because it avoids potential confusion around a lost package. Live-tracking through GPS further adds to the feasibility of monitoring the real-time location of a package and a fleet driver; all of it contributing to increased awareness on the carrier as well as the user end.
Traceability has also brought in transparency and enhanced customer experience. GPS functionality has further enabled us to track packages and keep a tab on how far the driver is from reaching their home.
3. Self-Sustaining Last Mile Logistics Ecosystem
A lot of medium and big players in the e-commerce industry have now shifted to an in-house delivery system. The biggest, obvious example here is Amazon. With in-house systems and resources, the retailer doesn’t have to depend on a third-party carrier to be able to effectively ship the product packages; they do it on their own. The company essentially builds its own fleet and hires drivers on their own payroll. This primarily reduces dependencies and cuts down a lot of costs in their retail last mile delivery. Their in-house resources are also reliant on the use of technology which might come across as a big first-time cost, but it is worth the money saved due to it in the long run.
4. Micro Warehousing: Renting of Additional Warehouse Spaces
Renting additional spaces and converting them into your company’s warehouse can further help in ensuring seamless order fulfillment. This is simply because, with more volume of orders, one obviously will need more space to be able to fulfill the increased orders. With more establishments dedicated to fulfilling orders, one can also segregate them on the basis of the kind of delivery they’d be used for. For example, one-day and no-rush delivery warehouses.
5. Deliveries Through Autonomous Vehicles and Drones
Last mile delivery and logistics solutions can be of immense aid with regards to enabling future-ready and disruptive technology. Savvy businesses have already started experimenting with autonomous vehicles by delivering food within a college campus. Then pizza makers are leveraging drone technology to deliver food to customers via their balcony and windows. It will not take too long for robot tests to be launched soon either.
As we have already established, human intervention is one of the biggest facets that cause delays in deliveries and makes the process complicated. You cannot control issues like unavailability of agent or their inability to work a particular shift, autonomous cars can mitigate the intensity of these problems. Besides, human involvement also means a lot of labor costs in the form of salaries. With the advent of robots and drones, that aspect will be easier to handle too.
What companies provide reliable last mile delivery solutions?
FarEye is a last mile delivery solutions company. It’s a SaaS platform trusted by over 150 enterprises all around the world inlcuding United Kingdom(UK), Europe, United States.etc. FarEye’s last mile delivery platform helps brands across industries gain efficiency when executing logistics operations while keeping costs under check and offering professional, technical help with a range of operations from delivery scheduling to allocation to routing to real-time tracking and tracing. FarEye's last-mile delivery software helps enterprises deliver the perfect last mile experience to customers at optimal efficiency.