Implementing middle-mile delivery strategies translates to efficient chain supply operations. Competitive pricing and widened profit margins are achieved. When a supply chain is tightened, retail industries can pass the savings onto consumers.
Middle-mile delivery is a supply chain strategy that involves mostly large and established companies who own their distribution center or warehouse as well as a retail store or brick and mortar facility. This enables them to take control of the chain supply at both ends.
What is Middle-Mile Delivery Meaning?
Adaptability is a key benefit of engaging in middle-mile logistics. They help in obtaining control over unexpected variables in a most timely fashion. The more a company contracts out to partner companies, the less direct control they have over monitoring the supply chain quickly and easily. Unless processes at every stage can be visible, the chances of redirecting negative outcomes increases.
Adding middle-mile delivery to your supply chain increases the likelihood of reducing a margin of error leading to high percentages of customer satisfaction. When a company employs middle-mile strategies, they are empowered to adopt strategies to stay on top in the competitive market. In short, consolidation leads to optimization.
Implementing Middle-Mile Logistics Lead to Drive Tighter Operations
When a company utilizes middle-mile logistics, processes are easier to manage and automate. Retailers who own both the warehouse and the retail location where customers purchase goods can access greater capabilities to minimize the range of their transport routes. They can get the most mileage out of gas, cut payroll for drivers, and save money on maintenance for vehicles, greatly cutting overall operational costs. Additionally, automation may be applied to streamline repetitive routes.
Middle-mile logistics methods are extremely successful in their adaptability capabilities. Services are consolidated and optimized, and clearer and more realistic expectations are achieved with business partners.
Examples of Successful Middle-Mile Operations
Amazon established its freight brokerage operation and is using it throughout almost the entire US. They have increased their profit margin, especially during peak shipping seasons. They adapted successfully and gained a superior position among similar digital brokerage firms. Amazon has demonstrated a high level of control over the supply chain by decreasing its reliance on leasing tractor-trailers as part of third-party contracts. Walmart has met the huge challenge of consumer demands for affordable goods delivered promptly.
Walmart started using unmanned vehicles to transport products, referred to as “milk runs.” Milk runs take place along repetitive, predictable routes, increasing affordability for their customers and substantially increasing overall sales. The outcome from using these unmanned vehicles is that their middle-mile operations costs are about half of what their competitors incur.
The most successful middle mile operations cut down on salary costs and use robots and drones whenever possible. The labor force is subject to unpredictable variables such as not showing up to work a shift.
Middle-Mile Transportation Options
On-demand middle-mile service providers deploy locally owned and operated transport vehicles. They accomplish this at a significantly quicker rate than has ever been seen. They increase the overall efficiency of the supply chain, aided by advanced networking capabilities. They commonly use smaller vehicles as part of middle-mile transportation services such as box trucks and cargo vans. Additionally, they employ a large number of freelancers, avoiding the need to cover the high costs of insurance typically required by law for standard employees.
Third-party logistics services are acquired by industries that contact a service provider to manage their middle mile delivery services. Examples of these providers include DHL Supply Chain and Global Forwarding, Kuehne and Nagel, Nippon Express, XPO Logistics, and C. H. Robinson.
A company’s use of third-party transport services relates to various aspects of warehousing, fulfillment, and distribution services. This middle-mile transportation option integrates transportation and warehousing services along the supply chain. They monitor conditions in the overall marketplace to make choices that lead to fulfilling customer needs most effectively. It is a wise logistical choice to employ third-party services during off-peak times to decrease spending related to overall fulfillment services.
Middle-Mile Delivery Challenges Old Norms
Middle-mile delivery leads to greater savings opportunities than going directly from first-mile to last-mile delivery. The first to last-mile delivery model leaves more room for error. The variables in the process are more difficult to track; mistakes can’t be detected early enough to avoid causing customer dissatisfaction.
Companies who make use of the middle mile delivery model have less of a chance of outcomes that detract from profit such as mislabeled and damaged packages that cause delayed deliveries. Greater control over the supply chain is established.
Transportation and logistics companies that fail to utilize updated technology related to delivery will lose clients. Their business growth will come to a halt as competition increases. The demands in this era of transportation and logistics have exponentially increased through rapid growth. Prioritize updating technology to stay ahead of the curve.
Middle Mile Vs. Last-Mile Delivery
Last-mile delivery operations manage the flow of products from a fulfillment center to a retail location. Middle-mile delivery service providers deliver goods from a point-of-origin location (location to which the freight has arrived by air or sea) to a fulfillment center. The middle-mile logistics process connects shippers with transportation services while last-mile delivery’s last step terminates upon delivery by the customer.
Digital data processing is achieved by utilizing advanced algorithms (loop optimization) to make decisions that conserve time, money, and resources while carefully routing product deliveries through automatic scheduling and task allocation software. Electronic proof of delivery is another example of applying technology. This collects data relating to delivery speed that can be analyzed later. Customer feedback is crucial in improving best quality practices.
The complexities of coordinating first and last-mile delivery may detract attention from middle-mile delivery operations, but if a company has a large enough operating budget to integrate middle-mile delivery into their supply chain process, they should. The financial benefits will begin to accumulate in a short time and will likely become sustainable over time.
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