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Breaking down the ‘Last Mile Delivery’: Meaning, Challenges and Solutions

By Arsh Singh 12th October 2016

It is a truism in the on-demand industry today that in the entirety of the supply-chain, it is the very last step that is the most crucial, as well as the most problematic of them all. Owing to its place in the fag-end of the chain, it is often referred to as the ‘Last-Mile Delivery’.

Why is Last-Mile Delivery so important? Well, to begin with, it refers to the final transportation of goods from the hub (fulfillment center) to the final destination (that is, the customer!). In other words, it is literally the face of one’s business, as far as the customer is concerned. The efficiency of the last-mile and the experience of the customer at this stage go a long way in determining the common perception of the business, which flutters about the market in the form of reviews, gossip and even competition.

While the importance of the last mile in ensuring success is undeniable, the challenges in making it optimally efficient are many. Despite being the most important, it is the most inefficient leg of the chain. Just the last mile of the entire supply-chain adds up to about 30% of the cost!

last mile delivery

This combination of indispensability and challenge make it a tough cookie to crack. It is no surprise then that even giants like Amazon are still tweaking around with different strategies to manage the last mile. It seems no one has quite figured it out. That is why, it is also called ‘The Moment That Matters’ in common parlance.

To ensure efficiency of transportation operations and ensure a benign experience for customers, the hindrances to optimal Last-Mile Delivery have to be weeded-out.

Breaking Down the Last Mile Delivery Challenges: Any company involved in managing supply-chain logistics understands that cracking the inefficient last-mile delivery is quite a complex task. Here I’ve attempted to break down some of the most commonly found challenges: 

 Poor Infrastructure: Especially in developing countries, poor transportation infrastructure inevitably means long journeys, inefficient routes, inefficient transportation technology, etc. All of these compound and translate into woeful costs and time lags, which may be otherwise circumscribed.  

B2B vs B2C Deliveries: Now if you’re transporting a huge B2B delivery, the extra costs and wasted time may still be worth it. However, as is often the case in urban areas, especially with B2C deliveries, the costs of fuel and time wastage must be borne for just one package.

 Types of Goods: Occasionally, even the type of goods can make add to the challenges of last mile delivery. For instance, toxic, fragile, perishable or flammable items call for more planning.

Customer Nuances: Perhaps the biggest challenge to the last-mile are customer nuances – phenomena like incorrect address, remote locations, cramped locations, absence of the customer to receive the package, whimsical cancellations of orders, returning orders, etc. These nuances ensure that the factors affecting potential costs of the last-mile cannot be accurately anticipated. In the ultra-competitive e-commerce industry, this can compound into THE critical difference.

Why Does It All Matter?
The crux of the matter is this: the on-demand industry has grown, and continues to grow at an unprecedented rate. The giants of the on-demand model (like Uber) have made the premium features of yesterday, like real-time tracking, an industry standard. Thus, the on-line consumer expects nothing less.

The on-line consumer today does not like waiting. He/she has come to believe that everything is just a click away. This need for ‘instant gratification’ is a hallmark of the digital age and it seems unlikely to change anytime soon. At the same time, the convenience of the on-demand experience for the customer is in stark contrast to the planning and effort that businesses have to make to make instant gratification possible.  

The last-mile delivery is the most crucial step in the journey to the customer. At the same time, owing to all the costs, complications and unpredictable variations, it is admittedly the least fun part of your business too.

 last mile delivery service

Solving the Last Mile Delivery Challenge

After studying the complications of the last-mile, coming up with solutions is the need of the hour. Here are a few:

Customer Proximity: Increasing the number and the spatial spread of distribution centers can establish closer proximity to the customer. Traditional logistical networks tend to concentrate their fulfillment centers in few places.  By focussing on areas of highest concentration, both delivery and return times are reduced and the costs of fuel are minimized.

Customer Expectations: Creating a happy customer base is all about providing them with the instant gratification that they have come to expect from the on-demand economy. Timely and streamlined deliveries to the customer take precedence over all else in synthesizing a healthy image. Unhappy customers often leave negative reviews, which have a detrimental effect on the sales of online e-commerce businesses.

Customer Communication: Keeping the customer in the loop with timely notifications throughout the delivery process ensures customer satisfaction. Notifications on dispatch, in transit and on delivery of their order also ensures that the customer is available at the time and place of delivery.

Real-time Visibility: The quintessential on-demand experience is created by incorporating latest technologies for optimization. Real-Time tracking has become of the standard technological breakthroughs that various platforms have made use of. With real-time tracking, customers remain cognizant of the status of their deliveries and thus, do not feel the need to complain.

Optimization Techniques: Inefficient routes are the cause of poorly managed time and fuel costs for the business and avoidable delays for the customer. Route Optimization bypasses this obstacle by factoring in a host of variables. Algorithms ensure that drivers complete most deliveries in the least amount of time and burning the least amount of fuel by computing variables like: driver availability, location proximity, delivery windows, traffic conditions, local regulations, minimum and maximum order load, weight capacity, etc.

Convenient Lockers: Another way of bypassing the problem of costly single-package B2C deliveries is appointing company lockers in accessible places like malls, post offices, etc. By providing a special key or a barcode scanner, the customer can receive deliveries in a safe and secure manner.

Autonomous Vehicles: Now this one is truly pushing the limit of what is possible in the on-demand economy. Though authorities have yet to work through concerns about their usage in urban spaces, Drones might just be the future of deliveries very soon! Drones will save up on fuel costs, take the shortest routes possible and will simply fly over and above the city traffic!

The e-commerce industry is growing without cessation and does not show any signs of stopping as developing countries jump on the bandwagon. In fact, the true potential of the industry lies in the developing countries, which are quickly becoming the beacons of technological innovation and growth.

At the same time, the last-mile delivery will continue to be the most complicated step of the logistical process. Grappling with it through various strategies will ensure newer and better solutions. So, while there is no straight forward solution to the last mile right now, ingenious innovation and rapidly-evolving technology are paving the way for companies to optimize their supply chains. The greater the degree of optimization, the more cost-effective is one’s business and the happier is one’s customer base! Moving into the future, the spirit of the industry is all about solutions!

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