Last Mile Logistics: 5 steps To Optimize It

The term "last mile logistics" describes the last stage of the delivery process from a distribution centre to the end customer. Learn more.


From the 80% of eCommerce customers who expect real-time delivery tracking to the 45% who expect a two-hour delivery window or less, it's clear that customers have high expectations. The words "last mile delivery" and "final mile delivery" are commonly used interchangeably in the freight transportation industry. To expedite final acceptance by the customer, last-mile service providers will often include services such as assembly, installation, and haul-away in addition to the delivery itself. Furthermore, it is becoming expected practice to incorporate closed-loop feedback mechanisms for consumers to provide insight into their deliveries as part of the final delivery process, especially with in-home delivery.

What Is Last Mile Logistics?

When we say "last mile delivery," we mean the last step in the delivery process. It comes from a distribution center or warehouse and is taken to the end-user, who could be anywhere (even though the name says "last mile," it could be a few blocks away or a very long way away). Most of the time, last-mile logistics involves using small parcels or package carriers to get products to consumers. This is a complicated process involving many players and providers who need to work together.

Whether it's for a single person or a retail store, the supply chain's last part must be done at lightning speed to make more sales and meet customer demand. Considering how much it costs to run a "last mile" operation, one of the most important things to do is to ensure that resources are used in the best way possible so that customers have a good experience.

Importance of Last Mile Delivery

Last-mile logistics affects how quickly and economically shippers can get goods to consumers. Customers have become more thoughtful and pickier in an eCommerce-driven world, making these worries more crucial than ever. In fact, research shows that customers are willing to pay more for better final mile delivery services (like same-day or instant delivery services).

Consumers have come to expect that their packages will arrive quickly and that they will be able to track them at every step. Companies like Amazon are changing consumers' overall expectations, and other retailers are also offering deliver-from-store last-mile logistics, which makes it much faster for them to get the products they want. As e-commerce sales grow and reach trillions of dollars, the need for more advanced last-mile logistics options will increase. Some retail giants, like Amazon, have almost mastered last-mile logistics, but small and medium-sized businesses still have a lot of room to grow in this growing sector.

Challenges of Last Mile Logistics

1. Management of Multiple Fleets

A unique set of challenges must be fixed for companies that use fleets outside of their own. This is significant since third-party delivery workers interact with clients in the last stages of the delivery process. To ensure that their branding and service quality requirements are satisfied, companies using various and/or crowdsourced fleets must develop ways to maintain complete control over the delivery process. Keeping everything under control is the only way to guarantee punctual delivery and happy consumers.

2. Gaining Visibility

This vital part of any delivery operation generally requires up-to-date data on a wide range of factors, including but not limited to: the number of open orders from every ecommerce site, the status of related internal processes, the availability of internal or external fleets to make the deliveries; and more. Businesses can get insights critical to understanding and optimizing delivery operations if they have access to data on the delivery flow and consumer data. After implementing these changes, companies can provide the expected levels of speed, adaptability, and convenience.

3. Outdated Technology

You might be unaware of how many logistics companies still use old technology. Even when firms pursue modernization, they frequently overlook the final mile of distribution. Most of the time, the changes are made to optimize warehouses or transport worldwide. However, even minor adjustments to the final mile of delivery can have a major effect. When you think about how shipping and transportation have changed and how many modern options you have, there is no reason not to. Even giving your drivers GPS devices and tracking software can help you track their deliveries and ensure they are done in the best way possible in real-time.

4. High Costs

Even though the last mile is the shortest part of the delivery process, it is also the most expensive for both the person receiving the item and the business that sent it. Adding new infrastructure to handle larger requests can also be costly. On top of that, there could be extra costs during delivery, such as if there are delays or the order is canceled. Putting these costs on the customer might not be a good idea, though. Customers are likely to leave their shopping carts if there are extra costs they didn't expect. So, the best thing to do would be to keep these costs to a minimum and pay for them elsewhere.

5. Delays

Deliveries late or not meeting deadlines can quickly become very expensive. Most delays in international shipping are easier to predict, but they also cost more to deal with. But when it comes to the last mile of delivery, it is best to plan carefully and use a distributed delivery network and real-time communication to avoid delays. In the worst cases, late deliveries can cause orders to be lost. If you know a delivery order won't go through; it's probably best to cancel it immediately. This can save you from having to deal with a hard-to-understand returns process. But you will still have to deal with customer needs and penalties for being late.

5 Steps To Optimize Last Mile Logistics

1. Data Collection

As everyone knows, companies now see collecting data as a good thing. Data helps the brand figure out its current customers, who it wants to reach, and how to compete with other brands. For logistic businesses, data is more critical because customer ratings and trust are the most important things. Data and analytics have given the end user a lot of room to understand how customers behave, improve delivery, and cut costs. Here are a few reasons why data is essential when optimizing the last mile of delivery.

A study by Precedence Research found that the final mile delivery market is growing at a compound annual growth rate (CAGR) of 10–20% and is likely to reach US$424.3 billion by 2030. That means the business is about to face many customers with detailed information. So, only the ones with more data analytics and data management could stay in business. This can be used to understand what the customer needs. Data includes the customer's need for delivery, the estimated time and the average time for each delivery, customer reviews and complaints, traffic conditions, vehicle load capacity, and accessible routes.

When done right, data analytics can also help e-commerce sellers improve their inventory forecasting, cut down on spoilage, reduce returns by giving more accurate information about their products, improve customer service, and bring in more money by making marketing more efficient. It can help turn a dissatisfied customer into a happy one. To understand and meet your customers' needs, you need to collect and store this information and use it to grow your business.

2. Plan And Execute

Optimizing the last mile of delivery is hard for businesses to do well. Planning is a strategic way to cut costs, boost efficiency, improve the customer experience, and improve overall performance. At every step of last-mile delivery optimization, planners must consider each customer's needs and preferences. Based on this customer segmentation, they must find the most popular routes and time slots for the last mile of product delivery. For these plans to work, customers should be able to see more about their orders from when they are placed until when they are delivered. You can do this with the assistance of trackers that tell them where their orders are and when they will get there in real time.

3. Technological Implementation

Traditional last-mile delivery methods have many problems, like not being able to talk to each other in rural areas or places without a network. This can make the delivery take longer or, in some cases, cause packages to be sent back to the warehouse. Customers want their packages to arrive as quickly as possible, but major logistics companies don't have a way to speed up deliveries. Sometimes deliveries are late because of bad weather or many people on the road. This is not the logistics company's fault. But it can be avoided now with tools like Google Maps, high-tech tracking systems, and route optimization.

Using data analytics to optimize delivery routes is an excellent way to do it, and it also helps cut down on fuel costs and carbon footprints. This technology will soon replace GPS systems because it will make delivery routes between places more efficient. Route Optimization Predictive analysis is used by software like Upper Route Planner to find the best routes for delivery professionals. It will look at what happened in the past and determine many routes based on combinations like traffic, weather, and vehicle capacity.

4. Warehouse Management

The choice of warehouses is another way to get things to the last mile. As your business grows, you'll need more space to store items. But many companies don't plan their warehouse space well enough for their needs, so they run into problems at the end of the delivery process. To avoid this, you should spend money on a good warehouse and different warehouse tools that will help you fill orders quickly.

Use your old customer information to figure out where your main business is. It will help you find the closest place to set up your warehouse, saving you time and lowering the costs of running your vehicles. Also, make sure your warehouse has a Warehouse Management System (WMS), which will make the process easier and improve the efficiency of your last-mile delivery. A good Warehouse Management System helps you store products in the best way possible so that they are easy to find when you need them. It uses advanced technologies like RFID, robotics, sorting and scanning devices, and inventory management software to reduce physical labor and boost productivity.

The Modern Warehouse Management System connects all your business systems to a single platform. This makes it easier, faster, and more accurate to process data. It lets you see how much inventory you have at any given time, so you can plan your routes accordingly. It also helps coordinate shipments coming into and out of the warehouse, which speeds up order fulfillment and makes customers happier. So, if you start getting more orders, make sure you have enough space to store them to package and ship them.

5. Delivery Proof

Proof of Delivery is the last and most important step in last-mile delivery. Proof of delivery (POD) is what the customer gets when the driver or courier hands them the package. It is also used to prove to the shipper that the package was delivered, sometimes so that the shipper will pay. A POD can be a physical document with a paper trail or an electronic file. It can be used as proof if there is a disagreement because it has important information like the name of the recipient, the delivery address, and the day and time of delivery. This proof shows that the goods were sent on time and as expected, which is suitable for both the seller and the buyer.

Regarding the Proof of Delivery feature, the Upper Route planner can't be beaten. It is more than just a standard proof of delivery software because it has many great features. Using Upper Route Planner, drivers can take a picture of the package they delivered to show that they did so on time. By using a digital proof of delivery system, it gets rid of the need for paper paperwork. It tells you about successful deliveries in real-time.

Final Words

Several companies have started using their shared trucks for in-house delivery services to save money on the last mile of delivery. Some of these businesses have even started sharing transportation assets and saving money by working with competitors or other companies in their area. The answer to rising last-mile delivery costs for online businesses or third-party logistics providers may be a mix of new technologies. No matter what your fulfilment method is, it's clear that you need to optimize your last-mile delivery. So, in your last-mile delivery process, ensure you know and use the latest techniques.

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