To put it bluntly, a modern customer wants their order to arrive fast, free, and on time. Considering the B2C e-commerce market is poised to grow by 3.59 trillion USD from 2023 through 2030, it may be increasingly difficult for businesses to deliver on their shipping promises. Staying competitive in logistics will require pursuing new methods of cutting costs and increasing operational efficiency.
A lot of these efforts will come down to making improvements in that final stretch of the supply chain. With how the growth forecasts are looking, it may be a good time to discuss last mile delivery software and how it can help you tackle some of those logistics challenges you face towards the end of the shipping journey.
Last mile delivery is the part of the process that the customer cares about the most. Other stages may not even exist in their mind. To keep them happy and ideally returning, while not going overboard with your own costs, you have to optimize the final leg of the journey.
The thing is it’s not that easy, since final mile delivery costs can account for over half of the total cost of shipping. That’s a lot, but the good news is it also gives you plenty of wiggle room to get more efficient. The bottom line is you need to start thinking about how to improve final mile logistics if you haven’t already.
What is final mile delivery?
Final mile delivery is the ultimate stage of the shipping process, where a package is delivered from a local hub to its intended destination – a private customer or a business like a retail store or a restaurant.
It’s both crucial and challenging from the commercial standpoint, as customers’ expectations of a seamless experience in this area are only rising. Logistics companies on their end want to get the job done quickly and efficiently, while minimizing the costs they incur.
Perhaps worth mentioning is that the idea of the last mile originally comes from the telecom industry. Essentially, connecting a somewhat removed end user’s home or a business to the existing network posed a challenge, as the cable that had to be brought over was used only by a single customer. Thus, the installation and maintenance cost had to be transferred to just one subscriber, unlike in places closer to the main trunk of the network.
This notion applied to supply chain management still makes sense in that moving goods in bulk using ships or trains between major hubs is relatively cheaper and easier than getting singular parcels or items into end customers’ hands.
With that being said, how exactly is last mile logistics demanding for carriers?
4 key last mile delivery challenges
Final mile delivery is the difficult part in the supply chain. With the ever-expanding e-commerce sector, this becomes an increasingly studied area of logistics. While all the customer wants to know is “when will my package arrive?”, shipping companies are facing a slew of challenges that go beyond simple package delivery, such as rising fuel costs, supply chain disruptions, labor shortages, and the need to implement new technologies to remain competitive.
Challenge #1: Time
One of the most significant challenges is that last mile delivery requires a relatively large amount of time. Unlike the previous stages of the supply chain, where goods are moved in bulk, final mile often involves handling and delivering individual packages to a customer's doorstep, which can be time-consuming, especially with varying accessibility of the premises.
Challenge #2: Cost
Another major challenge is that last mile delivery is pricey. The cost of getting separate packages to their destinations can be considerably higher than delivering products en masse, particularly for businesses that operate on tight margins. Moreover, as previously mentioned, customers widely expect free shipping, which puts extra pressure on logistics companies to keep their operations profitable.
Challenge #3: Routes
Next up among the last mile delivery challenges is the issue of building routes properly. Itineraries have to be designed in a way that minimizes the distance traveled between pickup and drop off points while maximizing the number of deliveries made. That said, there are many variables to consider, such as traffic, road closures, and weather, which can make route planning a tough task.
UPS, for instance, avoids turning left and ALWAYS turns right when delivering goods.
Challenge #4: Failed deliveries
Finally and unfortunately, we also have failed deliveries which are a big issue for logistics companies during the final mile. These occur when a package can't be delivered to the customer for various reasons including them not being home or an incorrect address. Failed deliveries can be costly, as they require additional resources to be redeployed and may negatively impact customer satisfaction.
So much so that even Amazon sells unclaimed packages in bulk to avoid dealing with the crippling costs involved.
Benefits of last mile delivery logistics
Building on the previous section, it’s worth mentioning that in a 2018 survey by Convey, a whopping 98% of responders signaled that the shipping experience impacts their brand loyalty, and for 84% of them just a single negative incident makes the return unlikely. That’s huge.
At a glance, this data and the standards set by giants like Amazon may discourage you but why not try to take advantage of the last mile delivery opportunities instead of just focusing on challenges it presents?
The final mile of the delivery journey is the most important one for customers. It's the last impression that they’ll have of your company, and it can either make or break the customer experience. By investing in last mile delivery logistics, you can ensure that your customers receive their packages on time, with accurate and transparent tracking information, and in excellent condition. This can help you improve your delivery happiness score, which is a measure of how satisfied your clients are with the service. Higher delivery happiness scores can lead to increased customer loyalty, positive reviews, and more sales.
Working on improving last mile delivery logistics can also help you optimize your operations in general. By streamlining the shipping process at its every stage, you can reduce the time and resources needed to deliver packages, leading to improved operational efficiency. This can help you cut costs, increase productivity, and ultimately, improve your bottom line.
Real-time visibility into the delivery process is critical for both businesses and clients. With advanced final mile delivery logistics, you can provide accurate and transparent tracking information to your customers, enabling them to follow their packages in real-time. This will contribute to building trust with your customers and getting their confidence in your delivery service up.
The productivity of couriers is another important factor in the success of your last mile delivery operations. By providing them with the right tools, such as optimized delivery routes, real-time tracking info, and efficient package handling, you can increase their productivity and get more packages into people's hands in less time, which will translate to higher job satisfaction, better courier retention, and an overall greater delivery performance.
How can you lower final mile delivery costs?
Final mile logistics are an intricate game, with many factors coming into play in this closing stage of transporting packages from a shipping hub to their destinations.
You may have your expenditures worked out, for the time being, but this is a very dynamic environment which can rapidly change in unpredictable ways, usually leading to a spike in costs.
One of the ways to be prepared for and mitigate these risks is through the implementation of last mile delivery technology which can assists you in areas such as:
Building routes with the possibility of re-routing
The option to lay out optimized routes and adjust them on the fly, based on traffic or unforeseen circumstances, can help drivers avoid delays and always deliver on time. According to the survey, 70% of shoppers expect some sort of change in delivery point to be possible, so re-routing is pretty much to be expected.
Drilling into the data from delivery operations can help you pinpoint inefficiencies and provide insights for improvement.
Electronic proof of delivery
Going for paperless proof of delivery can reduce errors, save time, and lower costs associated with physical documentation.
Keeping an open, real-time communication line between drivers and dispatchers can help resolve problems and provide updates as they come.
Live chat functionality
A chat feature built into the last mile delivery software can help resolve any emerging issues quickly, improving customer satisfaction and employee efficiency.
Fleet management and detailed analytics
Monitoring fleet performance and driver behavior can deliver insights for reducing fuel costs, improving vehicle utilization, and optimizing delivery routes.
Efficient parking space search
Incorporating live data on available parking spaces can lead to reduced delivery times and fuel costs when trying to reach the destination.
Automated notifications can provide real-time updates to customers, reducing the need for contact via other means of communication and improving customer satisfaction.
Most recent last mile delivery trends
Besides the fundamentals I’ve just discussed, you can also go a step forward in an attempt to cut costs and consider experimenting with some of the latest trends in final mile delivery which include:
Many customers expect same-day delivery which strains logistics and fulfillment more than ever. To meet this demand, you’ll need the latest and perhaps custom tech solution that can keep up.
Knowing where the package is and making sure it doesn’t get lost is crucial for both parties involved. Tracking info and proof of delivery are mostly the standard now, so you may want to add features like precise GPS tracking, letting customers see exactly where their package is on a map.
In-house delivery service
Following the lead of companies like Amazon, it may be worth investing in your own fleet of vehicles and drivers to get the orders directly into customers hands. This can help you further improve the experience and control the costs more tightly.
Building an extensive network of lower-volume but more localized warehouse space can be a way to significantly reduce the delivery time.
A pretty innovative way of applying the popular online ecommerce technique of recommending similar products a customer may be interested in in the real world, where the courier offers additional items upon delivery.
Novel technological solutions for both storage and delivery are needed for the ever-growing range of products available for purchase online, now also including items like food, plants, or pet fish.
It seems like this is an unavoidable direction and drones will eventually be involved in shipping and delivery to a large degree. They have the potential to be a huge game changer, as it’s widely understood in the industry that the labor cost makes up around 50-60% of all the delivery costs, according to multiple surveys.
How to improve last mile delivery: find a reliable IT partner
Last mile delivery is a critical stage of the supply chain that presents a number of challenges.
In this post, we covered some obstacles but more importantly highlighted the opportunities and introduced ways to cut down costs. Now, how can you put all this together into practice?
Well, the answer is last mile delivery software.
Since we’re actually pretty decent at all sorts of location-based services, we’d be stoked to help you implement a digital platform for improving final mile logistics at your company.
Our team can help you analyze your current last mile delivery process, identify areas for improvement, and develop a customized solution that meets your unique needs. Don't let last mile delivery challenges hold your business back. Contact us today at email@example.com to inquire about how our software can transform your final mile logistics and help your company grow.