What Is Last-Mile Delivery?

The difficulty of last-mile delivery remains a significant challenge for businesses. Speedy fulfillment and distribution are no longer a "nice to have" for customers who are increasingly turning to e-commerce for all their buying requirements; instead, it is now an expectation of every online shopping experience.

In addition, fast delivery times need to be prioritized if supply chain companies and the retailers they work with want a fighting chance against the ever-present danger posed by Amazon Prime.

As a consequence, businesses have started competing with one another to develop innovative technologies and test out new models for supply chains to boost package volume, accelerate delivery times, and provide customer satisfaction while simultaneously attempting to reduce costs.

Unfortunately, one of their major obstacles and expenses is same-day last-mile delivery.

What Is Last-Mile Delivery?

Last-mile delivery refers to the final stage of a product's trip from a warehouse shelf to a client's doorstep. This step is the point at which the package ultimately arrives at the buyer's door.

Last-mile delivery is not only essential to maintaining positive relationships with customers, but it also represents the most time- and a resource-intensive component of the shipping process.

Key Steps in the Last-Mile Delivery Process

To grasp the value of last-mile delivery, it is helpful to understand the steps involved:

Step 1

Orders are entered into a centralized system via digital means. At this stage, the sender and the final recipient are responsible for keeping an eye on the order, usually via a tracking number.

Step 2

The orders arrive at the transportation hub, waiting to be transported to the final recipient.

The final leg of the delivery process, known as the last mile, starts here when companies are tasked with ensuring that their orders are delivered to their customers as rapidly as they can after leaving the distribution hub.

Step 3

Delivery personnel receives orders to deliver based on their routes and the destination addresses. Making your last-mile logistics solution cost-effective requires sorting the packages strategically and designating them for delivery.

Step 4

Before being put into delivery vans, orders are scanned to ensure accuracy.

This process keeps the sender informed about the current state of the order and allows the final recipient to trace the package. Additionally, it lessens the likelihood that any packaged products may go missing along the route.

Step 5

The final recipients of the orders are successfully contacted, and evidence of delivery is gathered.

At this point, the package has arrived at its final destination. Afterward, the delivery staff verifies and confirms that the delivery has been accomplished by updating the relevant tracking information to reflect the new information.

What Is the Last Mile Problem?

If you've ever tracked a parcel in real-time online and seen it "out for delivery" for what seemed like an eternity, then you already know that the problem with the last mile is inefficiency.

This issue is because the final leg of cargo will often comprise several stops with relatively small drop sizes. Delivery stations in rural areas might be separated by several miles, with only one or two packages being dropped off at each.

Unfortunately, the situation is not significantly improved in metropolitan regions; what cities have going for them in terms of the proximity of stops is quickly nullified by the near continual delays caused by traffic congestion.

The continuous growth of e-commerce in terms of retail sales in the United States has contributed to an increase in the costs and inefficiencies associated with the last mile problem.

E-commerce pressures have also dramatically increased the number of parcels delivered each day and raised customer expectations to include quick delivery and delivery that is provided at no cost.

Other factors that compound the last mile problem include:

The complexity of the order

The complexity of the order is a major hurdle to overcome in last-mile delivery. Shippers need to rethink how they can assure that the end product is an exact representation of what was sold because large items might need to be assembled and unpacked by someone with experience upon delivery.

While hundreds of companies provide last-mile delivery services, not all offer assembly alternatives, which may be considered an additional service. Other products might need to be installed by trained professionals because they are more complicated.

However, increasingly bulky commodities are shifting from traditional retail to consumer-direct shipping models, and customers desire speed and visibility throughout the process.

Executing same-day delivery

Research has shown that more than 80 percent of customers in today's market are willing to pay more for faster delivery, and meeting this expectation in and of itself is the most challenging aspect of last-mile delivery.

It is exceedingly difficult to reduce the delivery turn-around time because of inefficient routing techniques, manual dependencies concerning allocating tasks, and inadequate management of third-party logistics providers. These issues put the entire shipping process at risk.

Another problem is ensuring that each vehicle's total capacity is utilized. Because same-day delivery typically involves the shipment of small products, there is a decreased likelihood of using a truck's full capacity.

This failure reduces the substantial cost savings realized by the logistics provider.

Businesses do not have the luxury of waiting until sufficient orders are placed to ensure their capacity is utilized to their fullest potential since they do not have enough time. Additionally, this creates financial difficulties.

Traditional routing models

It is difficult, if not impossible, to assure timely and cost-effective execution of last-mile deliveries without having highly efficient routing tools and procedures.

Because traditional routing models rely heavily on human processes, it can be challenging to consider all of the variables that play a role in creating highly productive routes.

If you have manual routing processes in place, changing a route to account for the weather, traffic congestion, unexpected road closures, accidental diversions, and other considerations can be a monumental challenge, which can cause the delivery process to be delayed.

Poor logistics visibility

Legacy supply chain architecture and old delivery processes with inadequate system interoperability cause poor visibility of logistics operations, which turns it into a time-consuming process.

It will be exceedingly difficult for a logistics manager to track and trace a vehicle's exact location at any given time if the system used for order management is not in sync with the system used by a third-party logistics (3PL) provider for the final mile.

This situation results in a wide variety of inefficiencies. Poor visibility causes delays, false ETAs, route diversions, vehicle idling, and additional fuel consumption. It also makes deliveries opaque to clients, which further adds to the difficulty of the last-mile delivery challenge.

What Are the Costs of Last-Mile Delivery?

The shipping costs of the final mile of delivery constitute a significant portion of the overall cost of shipping, accounting for 53 percent of the total cost.

And when the phrase "free shipping" becomes more commonplace, customers are less likely to be prepared to pay a delivery fee, which forces merchants and logistics partners to bear the expense of the service.

Consequently, last-minute delivery has evolved into the initial area where businesses look to integrate new technology and drive process improvements.

How Can You Lower Final Mile Delivery Costs?

Considering all of this, it's not hard to see why optimizing final mile delivery may frequently result in significant cost savings for retail and e-commerce companies.

It is essential to provide a satisfying delivery experience for clients and businesses through prompt and rapid delivery. Using a fleet or a delivery management solution is one way to optimize the last mile.

Last-mile solutions can do the enterprise's heavy lifting, freeing employees to focus more on other aspects of the company. Another way to optimize the final mile is by having multiple people work together.

The following is a list of some of how the appropriate technological solution can assist you in improving the efficiency of your final mile logistics:

Advanced route planning

Routes are given to every driver in your fleet. Drivers should be given simple courses that form a comfortable loop with delivery destinations close to one another.

Drop-off locations do, however, differ in practice.

As is typically the case for deliveries in rural areas, several delivery stations may be positioned many miles apart. The route will thus expend a significant amount of time and fuel for a small number of deliveries.

On the other hand, delivery addresses in urban areas, while they may be close together, may experience slow delivery times due to heavy traffic, one-way streets, and other barriers.

An intelligent route planner aids businesses in optimizing their final mile deliveries because the software automatically considers several aspects affecting delivery timeframes, such as truck capacity, location, traffic conditions, and weather conditions. This allows the software to plan the most efficient delivery routes.

It is best to have route planning software that can scale readily to design efficient routes. By doing this, you may make more daily deliveries while simultaneously reducing the amount of human labor required.

Data analysis

Executives and fleet managers should be able to use data from fleet management technology to identify operational flaws and bottlenecks.

In addition, your company should be able to monitor key performance indicators (KPIs), including on-time rates, success rates, customer feedback scores, service time, distance traveled, and others. You can then focus on the key areas that need improvement and attempt to come up with solutions.

Electronic proof of delivery

Ensuring delivery confirmation is crucial, especially when there are erroneous claims that supplies are missing or damaged.

Many businesses and delivery services obtain proof of delivery manually, such as having the consumer sign a piece of paper. Unfortunately, this receipt is prone to be misplaced or damaged.

Businesses should seek other ways to record proof of delivery, especially in light of coronavirus restrictions, which call for limiting physical and social contact. Finding a method that can record proof of delivery electronically and without human contact, such as by the recipient signing using their phone, is imperative.

Two-way communication

Insufficient communication between drivers and customers often causes unsuccessful or missing deliveries. If customers can receive updates from the delivery driver directly, they can provide additional instructions in case they can't receive their delivery in person.

Offering a mechanism to communicate with drivers minimizes customer service calls. Automating dispatcher-driver communications (using a driver mobile app) can minimize phone time and boost delivery agility.

The final mile of the logistics chain directly affects consumer satisfaction. As a result, businesses should strive to optimize final mile delivery, despite its expense. In this way, they can offer speedy, reliable shipping without breaking the bank.

What Does This Mean for the Consumer?

The optimization of the last mile delivery problem guarantees prompt delivery of goods. This result is crucial to customers who benefit by saving precious time and money.

Final Thoughts

Last-mile delivery logistics aims to deliver packages economically, swiftly, and accurately.

Although it's not simple, last-mile logistics are becoming a significant point of differentiation for many merchants. More than 53% of the shipping costs go toward the final mile of your product's arrival.

Inefficiencies can result in prohibitive costs if your process isn't optimized, increasing your overhead and reducing your company's profits.

Want to avoid the complexity of the last-mile problem and still get your items delivered swiftly? Contact A-1 Auto Transport for a free shipping estimate.