Today’s consumers’ buying behavior is different from what it was a few years ago (especially when it comes to buying online). They expect low-cost or free and fast delivery. Therefore, companies are trying to find ways to cut costs and boost efficiency to support shipping logistics and stay competitive. Quick fulfillment isn’t just nice to have but an expectation of every online shopping experience.
A decade ago, the promise of free or fast delivery was only an aspiration. Today, it has become a customer expectation. Many companies have begun competing to develop experimental supply chain models and new technologies to expedite deliveries, increase parcel volume, and delight their customers. However, one of the biggest challenges and expenses is the same-day, final mile delivery service. For a company to survive in this market, they need to improve efficiency in that area.
What is the final mile delivery? This article explains how it works, its challenges and presents the best practices to improve it.
What is Last Mile Delivery?
In its journey from the warehouse to the customer’s door, the final mile service (also called the last mile service) delivery is the very last step of the process. It is the point at which the shipment arrives at the customer’s door or retail store. It’s also the most critical, time-consuming, and expensive part of the entire shipping process. That’s why companies want to ensure it is as efficient and quick as possible to stay on track with the ever-increasing demand for fast shipping (especially in retail, food, and eCommerce industries).
When it comes to the final mile delivery costs, they take a substantial share of the total shipping cost – about 53%. With the growing popularity and omnipresence of free shipping, shoppers are less willing to pay for a residential delivery service fee, forcing companies and logistics partners to carry the cost. This makes final mile logistics the first area where companies try to drive process improvements and implement new technologies.
The Final Mile Delivery Process
We can break down the final mile delivery process into five essential steps.
- Orders are entered into a centralized system. In this step, customer requests and orders are monitored both by the end recipient and the sender. Thanks to the order tracking number, the end recipient knows the location and status of the delivery.
- Orders arrive at the warehouse/transportation hub. There, the orders await delivery to the customer’s doorstep, and it’s the place where the last mile delivery process really begins. Companies need to ensure that the order gets from the warehouse or transportation hub to the final delivery destination as fast as possible.
- Orders get strategically designated to the delivery staff. This is done based on recipient addresses and routes. Strategically sorting orders and designating parcels for delivery service is crucial to having a cost-effective and optimized final mile logistics solution. This can significantly boost customer satisfaction in the delivery process, a critical factor for supply chain and logistics managers.
- Scanning orders before loading them onto a delivery vehicle. Once scanned, the order status gets updated for the sender and end recipient. It allows them to track the shipment and reduces the risk of shipments getting lost in transport.
- Orders reach their end recipients. At this stage, the shipment reaches the end recipient, and proof of delivery is obtained. The delivery staff updates the tracking information to confirm and verify that the shipment has been delivered.
The Problem of Final Mile Delivery
On the one hand, an efficient and quick last mile delivery process is critical to keeping your customers happy. On the other hand, it’s the most time-consuming and expensive part of the process, while customers want fast and free shipping. And since it’s so easy for them to find another place to buy products, you cannot afford to disappoint. If you have ever tracked an order and saw that it was Out for Delivery, but it took forever to reach you, you understand why inefficiency is the final mile delivery service problem. This final stage of shipment often involves multiple stops with low drop sizes.
We mentioned that freight services like the final mile take about 53% of the total shipping cost, but with unaddressed supply chain inefficiencies, the percentage can easily go even higher. Delivery points along a certain route in rural areas could be a few miles apart, while the delivery staff has only two or three packages dropped off at each point. In urban areas, there is stop proximity, but there are many delays due to traffic congestion.
The inefficiencies and costs of the final mile problem have only grown more significant because of the rise of eCommerce in retail sales. It has significantly increased the number of orders delivered each day and customer expectations to include both free and fast delivery. Optimizing your final mile delivery process can help you save a lot of money, especially as your number of shipments continues to rise.
How Technology Can Change Your Final Mile Delivery Problems
Providing on-time, speedy delivery is essential to providing the best possible customer experience. The place to start is finding ways to make your last mile delivery process efficient, and you can do it by leveraging the right technology. The tech can do all the heavy lifting for you, leaving you to focus on your customers. Here’s how logistics technology can help optimize your final mile delivery process.
- Shorten delivery times
Route planning tech can help you significantly cut delivery times. The delivery staff has routes to follow. In theory, their routes seem straightforward and easy to manage, with package drop-offs all along them. But in urbanized areas, traffic congestions can use much of their time and gas (despite the drop-offs being closer together). Similarly, there may be only a few drop-offs on a route in rural areas that’s several miles long, which also means a lot of gas and time spent. Route planning technology can help with delivery route optimization by automatically factoring delivery vehicle capacity, location, traffic, and time to recommend the most efficient route.
- Reduce labor costs and service time
The auto-dispatching feature can help you with this. With optimized last mile delivery routes that get updated in real-time, you will need fewer drivers to complete deliveries. But the auto-dispatch features provide another level of automation that enables efficient resource allocation, helps save time, and allows managers to deal with other areas of the delivery process.
- Accurate and centralized reporting
With accurate reporting, you can identify opportunities for improvement as well as weaknesses and bottlenecks before they grow into larger problems. With advanced reporting technology, you can monitor service times, on-time rates, distance traveled, feedback scores, success rates, and other key metrics. This data can also be filtered by day, week, drivers, teams, etc., and exported to produce custom reports. Monitoring these KPIs will allow you to track your company’s final mile delivery supply chain to determine what needs to be improved.
- Proof of delivery
Industry studies show that more than half of surveyed consumers want increased transparency in the delivery process. Proof of delivery is a document that verifies that the goods have been delivered to the final destination. The evidence can be a photo of the package left at the door (along with a timestamp and date) or a recipient’s signature. Delivery staff can complete the process via a handheld device or mobile app that supports barcode, signatures, notes, and photo collection.
Trends That Continue to Shape Final Mile Delivery
Some of the most important trends that are shaping last mile delivery and will continue to do it throughout 2021 include:
- Micro warehousing
Amazon has started the micro warehousing trend – they have more than 58 transportation hubs across the U.S. dedicated to their Prime Now service for shoppers who want same-day delivery. Organizations are picking up on it, and more of them are buying more or allocating existing warehouse space dedicated to these deliveries.
- Improved traceability
Added features like tracking information and proof of delivery help improve package traceability, which is essential for making sure packages don’t get lost or find them if they get lost. Confirmation of delivery reduces disputes between customers and carriers because it provides data on whether a package was delivered and signed for or when and where it was left if no one is home.
- Rapid order fulfillment
With increased expectations on same-day or on-demand delivery, more pressure is put on fulfillment and logistics. Some packages now need to go out within a few minutes, but they usually would’ve taken less than an hour. That poses more challenges in terms of planning, and technology helps with faster order turnaround.
- Smart technology
More and more consumers are entering the world of online shopping, and many of them started using it during the COVID-19 lockdown. Now, people are ordering frozen and fresh foods and even pet fish and plants. These products must maintain their wellbeing and integrity while in transport, which is why they must be shipped in certain conditions. That’s why many fulfillment centers have taken additional measures in warehouses to control air quality, humidity levels, temperature, and more. More factors are also considered during route planning. For example, variations in temperature may require additional packing materials.
In an increasingly competitive logistics business world where every other company offers a similar set of services, adding a white-glove touch could be your way of standing out from the competition. It can help you develop better customer relationships and build a stronger brand in the market. In 2021, mastering final mile delivery is a necessity for any delivery business or retailer.
Logistics Titans is a full-service third-party logistics company that can help you gain full transparency and control over your supply chain. If you want to know more about the final mile and white glove delivery service and whether it’s right for you, please contact us for additional advice and a free quote.