In a global report titled The Last Mile Sprint: State of Mobility in Transportation and Logistics, last-mile delivery is the most inefficient process of the entire supply chain, according to 59% of T&L companies in the U.S.1 And although this step is the biggest cost driver in a package’s journey, 45% of consumers are still dissatisfied with retailers’ delivery service.
While last-mile shipping is the most critical in the process, and should actually be the most efficient, it consumes an estimated 53% of a shipment’s total cost, with approximately 25% of that cost being absorbed by the shipper.2 Unfortunately, this number increases as costs continue rising. Businesses always face many challenges in the final leg of shipment, but during the pandemic, they are inflated and even more problematic. In addition to delivery inefficiencies, high costs and customer demands for faster and free delivery, shippers must now contend with a sharp increase in residential single-package volume due to the surge in working from home and limited access to goods. Prior to COVID-19, Carriers were able to make many deliveries to one location that housed several business offices.
Last Mile Challenges
Amazon has set a high benchmark for last-mile delivery. With massive distribution warehouses within short distances of every major population center, they are able to offer fast delivery, seemingly perfecting the last-mile delivery process.
The last-mile delivery process can be broken down into the following five steps:
- Entering orders into a centralized system
- Receiving orders at a transportation hub
- Designating the delivery of orders to personnel
- Scanning orders before loading onto delivery vehicles
- Successfully delivering orders with proof of delivery obtained
With online sales booming, online retailers should rethink their last-mile strategy. Whether it’s improving efficiencies to lower cost or improving customer satisfaction to ensure they continue with future purchases, retailers can demand more from the Carriers. Changes to delivery services can include reduced rates for two-day and next-day delivery; better visibility into the delivery process; and even the option for same-day delivery.
It is essential for retailers to not only look at process efficiencies but also at what customers actually want and need. Consumers are relying on online shopping more than ever to avoid crowded stores, and they are looking for the fastest way to receive products. To increase cost-effectiveness, the success rate for deliveries needs to improve in order to accommodate the unique needs we’re facing during the pandemic. This can include providing customers with options to select preferred delivery times, followed by providing narrow delivery timeslots to customers to ensure that the customer is home at the time of delivery. Retailers can also offer customers the option of picking-up packages at a designated location or at package lockers which are becoming increasingly popular.
There’s no one-size-fits-all solution for a successful last-mile approach. As businesses continue to evolve their supply chain strategies, it’s critical to understand and identify each step in the current process and assess all practices, systems, and workforce before implementing a new strategy. In obtaining this holistic view, there are tools that provide visibility across the network and allow for putting a plan in place that ensures a cost-effective program that can be measured. Understanding the many variances that come into play in the delivery process, LJM Group offers the necessary tools to assist in achieving a last-mile strategy that’s customized to meet your businesses’ needs.