How to Optimise Last Mile Deliveries

Written by Mark Delaney, VP, Retail Industry Strategy for FourKites.

Last-mile delivery is hard to get right. Home deliveries are labour and fuel-intensive, and they’re difficult to predict. But this final stage in the delivery process significantly impacts customer satisfaction and customer loyalty. Such is the interest in this space that Crunchbase currently lists more than 400 organisations trying to address the issues that come with leaving a package on consumers’ doorsteps.

The last-mile logistics pie is growing rapidly. But it poses one of the more challenging logistics puzzles to solve. Why is last-mile delivery so challenging? Well, it can cost… a lot! As the number of final-mile deliveries grows, shippers’ expenses will balloon. According to Capgemini, the last mile accounts for 41% of total supply chain costs. Scaling your fleet of drivers and equipment – not to mention skyrocketing gas prices – creates high fixed costs that can erode profitability. Route and labour optimisation become paramount for a cost-effective last-mile delivery strategy.

According to a report from UPS Capital, “69% – the vast majority of shoppers – are willing to pay for the ability to personalise, control and up-level their shipping experience. They are looking for new services from merchants including guaranteed delivery timelines, real-time tracking, replacement of lost/stolen/damaged packages, and pre-order or special deal opportunities.” In other words, shoppers want to know with certainty what they’re getting, when they’re getting it and how it’s getting there. For shippers and supply chain leaders, these expectations are in direct conflict with the shipper’s other desire for flexibility: the ability to put the package on a different truck or deliver at a different time of day if conditions have changed and it’s more efficient to do so.

How Can You Improve Last-Mile Deliveries Today?

So, where can shippers start? How can they overcome the challenges of the final mile? While a handful of the 400+ last-mile companies show promise of solving these problems, it’s not sufficient to simply outsource the solution. Here are some practical steps that can be taken today to tackle the final mile.

Assess Your Network

The pendulum is shifting back in favour of shippers. With more available capacity, rationalising your network to work with the providers that make the right impact is wise. Commodity-specific providers can help make a difference in your last-mile delivery customer experience, especially with white glove and “deluxe” capabilities. Developing a universal provider scorecard that considers the cost-to-quality ratio can help you fine-tune your delivery experience, reduce costs and improve customer retention. Identifying how your network will handle your plans for micro-fulfilment and omni-channel distribution is also critical.

The pandemic forced the industry to adopt truly revolutionary channels for fulfilment. Now, with more retail space available for localised fulfilment models, there’s a precedent for moving inventory deeper into population centres, reducing your time to consumer and improving your ability to compete with last-mile delivery juggernauts.

Improve Collaboration Across Your Supply Chain

Collaboration – both within and among supply chain organisations – can help companies make significant strides in eliminating waste, maximising profits and promoting sustainability. Poor communication is often one of the biggest hurdles to effective supply chain collaboration.

The logistics industry has a long history of decentralisation – proprietary workflows, processes and systems that are largely unknown or unintelligible to those outside an organisation or department. Believe it or not, many companies still operate out of spreadsheets and emails to manage their supply chain. These workflow chokepoints can be overcome by implementing dedicated, shared systems that enable efficient communication with supply chain networks, partners and outside stakeholders.

Data is critical to any effective supply chain collaboration. For organisations of all shapes and sizes, good data is the foundation of strong decision-making. It facilitates efficient performance not only among individual team members, but across entire organisations. Without good data, the best anyone can do is make an educated guess – and for shippers under constant pressure to succeed, that’s simply not good enough. Start improving collaboration across your supply chain to optimise your entire delivery process.

Implement Real-Time Visibility

Optimising last-mile delivery and improving your supply chain starts with better data, collaboration and network enablement. Supply chain visibility platforms are a good place to start to improve across the board. The last mile is hard and expensive to perfect. Retailers and logistics service providers (LSPs) who gain efficiencies elsewhere in their supply chain – like optimising labour, inventory, and transportation – can make the investments necessary to conquer the final mile.

What can real-time visibility do? Imagine empowering employees to be more productive by eliminating manual processes and leveraging real-time ETAs to ensure people are in the right place at the right time. Or having more accurate cycle time calculations and tighter inbound shipping tolerances that enable you to operate with less excess safety stock. Or gaining the power to quickly adapt to rapidly changing consumer demand by knowing where popular products are in their journey from plant to warehouse.

This supply chain agility requires real-time visibility across all modes, including inbound visibility into vendor-managed shipments and the ability to facilitate handoffs between modes and legs. But visibility is not a one-size-fits-all approach; each shipper or LSP has unique operating processes, suppliers and carrier networks. An interoperable real-time visibility platform is key.

Real-Time Visibility and Optimising Last-Mile Deliveries

It’s a tough journey to reach a consumer’s doorstep efficiently, but leveraging real-time supply chain visibility to optimise your network, collaborate and proactively communicate can make the ride much smoother and more cost-effective. Plus, a real-time visibility solution that integrates with last-mile software gives shippers and customers visibility across the supply chain – from the manufacturer to the front door.

Managing the increasing expectations and demands of shoppers can create all sorts of chaos for last-mile delivery. A bad delivery experience can cause customers to jump ship. Perfecting the delivery experience can seem like an impossible task, but shippers who can master last-mile delivery and meet consumers’ increasingly complex demands – expectations like deliveries arriving in two days or less – will satisfy and win loyal customers. In short, optimising last-mile delivery empowers shippers to enhance their delivery experience, delight their customers and retain a base of loyal customers.