Last Mile Delivery In Supply Chain

What is Last mile delivery in Supply Chain?

Last mile delivery, also known as last mile logistics, is the transportation of goods from a distribution hub to the final delivery destination — the door of the customer. The goal of last mile delivery logistics is to deliver the packages as affordably, quickly and accurately as possible.

What is the last mile delivery process?

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 a delivery 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 last mile execution depends a lot on internal and external factors. To ensure a seamless execution of all these disparate processes, businesses are embracing modern last mile delivery logistics solutions.

In simpler terms here are 6 key steps involved in the entire last mile process.

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 delivery trucks

The item is then delivered to the intended recipient

The personnel then records and updates the delivery status

What are the problems in last mile delivery?

There are a plethora of challenges that weigh down overall supply chain and last mile operations. 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 last mile operations. Let’s quickly glance through these last mile delivery challenges.

1. Executing Same Day Delivery

According to research, more than 80% of customers today are willing to pay more for faster delivery. The challenge is it's not easy to deliver so fast. 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. 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. 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 delivery service. 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 delivery route based on real-time factors like weather, traffic congestions, sudden road closures, accidental diversions and more. 

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. Take this case in point. If an order management system is not in sync with a 3PL provider's system, it will be very difficult for a logistics manager to track and trace the exact location of a delivery 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.

4. Scaling Delivery Operations

With the increasing volumes of online buying and the pressure to shrink delivery time, businesses are revisiting how they execute last mile operations. Many businesses are struggling to find delivery executives during peak business days when their own resources are exhausted. This makes committing to same-day deliveries difficult. 

5. Rigid Logistics Processes

In a world driven by instant gratification and constantly changing market dynamics, there is little place for rigid delivery processes. Traditional last mile processes that are dependent on manual intervention fail to deliver in customer expectations. For instance, modern customers would prefer brands that allow them to change delivery location and time on the fly based on their convenience.

What businesses are affected by the last mile delivery problem?

By definition, last mile delivery is relevant for businesses that deliver products directly to their consumers.

These businesses include (but aren’t limited to):

Couriers

Third-party logistics companies

Direct-to-consumer retail companies

Food delivery companies

Supermarkets offering delivery

Department stores offering delivery

Florists

Restaurants offering delivery

Pharmacies offering delivery

Ecommerce

Drones in Last mile delivery 

Drones are a wonderful addition to the world of logistics for numerous reasons, they’re fast, cheap, and environmentally friendly alternatives to many forms of transportation. The future of last-mile deliveries revolves around introducing drones into the supply chain to save time, costs, and resources. Especially for small packages, it makes more sense to use a drone for delivery which automates the delivery process and minimizes the costs incurred by transporting goods over short distances. Paired with an efficient transportation automation system, last-mile delivery using drones could potentially benefit companies and their consumers alike.

In recent times, companies like Amazon Prime Air, Fehr & Peers, Zipline, and Wing have taken drone deliveries towards becoming the new normal. In fact, Drone delivery Canada is a leading company where the rules in Canada are ideal for furthering the pursuit of fast, unmanned deliveries to customers. With the easing of restrictions in various places, drones are slowly being introduced into the supply chain, where its military applications and camera angles are not the only concern.

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