As digital marketplaces continue to grow, e-commerce shows no signs of slowing. But increasing demand has highlighted major issues with last-mile delivery – it’s inefficient, slow and expensive.
In this blog, we look at some of the major challenges businesses face in providing efficient, cost-effective last-mile delivery services.
What is last-mile delivery?
Last-mile delivery refers to the final part of the supply chain – the stage during which a product is moved from the warehouse shelf, packaged, and delivered to the customer’s doorstep.
The last-mile delivery problem
With consumers increasingly expecting both fast free delivery and sustainable packaging, it is incumbent on businesses to live up to these expectations – or face the consequences.
Implementing efficient last-mile delivery processes allows e-commerce brands to differentiate themselves from the competition and positions them as better able to adapt to changing customer demands.
But research into online shopping cart abandonment shows almost 70% of potential orders are abandoned at this point without any purchase being completed. Why is this? Well, one reason could be the cost of or estimated time taken to ship that item.
In a world where free same or next-day delivery is king (thanks Amazon Prime!), customers are less and less willing to pay a delivery fee, forcing retailers to shoulder the cost. They also don’t want to wait any longer than they have to.
The problem is that last-mile delivery is time-consuming and expensive. Let’s look at why that is…
Last-mile delivery challenges
#1 Delays
In rural areas, delivery drops on a particular driver’s route could be several miles apart, with only one or two packages from an entire van load dropped off at each stop. In cities, delivery stops may be physically closer in proximity to one another, but there is traffic congestion to contend with. Either way, there is potential for delays, particularly in bad weather. Late deliveries harm a brand’s reputation and, in today’s ultra-competitive e-commerce environment, may make those customers less likely to buy from a particular business again in future. Sticking to predetermined timelines is easier if these timelines have built in contingency for traffic, bad weather and other unforeseen circumstances, but sometimes things happen that are outside of your control…
#2 Unforeseen events
Unexpected events like vehicle issues or extreme disruptions can quickly turn a late delivery into a failed delivery. In any logistics operation, there is the potential for unforeseen complications that are outside of your control. As well as increasing operational costs, these unforeseen events can negatively affect your company’s reputation if not handled correctly. Creating contingency plans and a contingency fund to deal with any unforeseen events that arise will help ensure your teams are prepared to switch quickly to an alternative plan of action, and that communications with customers about any changes are made in a timely fashion. Even the most demanding customers understand that sometimes things happen that are outside of a business’s control, but they expect transparency and timely updates to let them know what is happening and when they can expect their delivery.
Which brings us to…
#3 Real-time visibility
Sending customers a tracking code so they can see their package’s progress through the major stages of order processing, dispatch and delivery is no longer sufficient. Today’s buyers expect complete visibility of their package in transit. In an age where technology rules every aspect of our lives, they want real-time information on their package’s location and when it will reach them, rather than a simple message that their package is ‘out for delivery’. Modern last-mile logistics leverages technology to integrate automated location updates of delivery packages at every touchpoint of the delivery process. These updates may then be sent as notifications and messages to customers via email or text message.
Unfortunately, this isn’t always possible, due to:
#4 Outdated technology
Research shows nearly half of global transportation and logistics companies use outdated technology for last-mile delivery, with many still relying on Google Maps and paper lists. Modernisation efforts are often focused on warehouse optimisation or global transportation rather than on investing in improving last-mile delivery. But even the most minor improvements in last-mile delivery can yield impressive results. Installing GPS tracking in delivery vehicles, coupled with the use of IoT (internet of things) technology, enables businesses to centrally monitor and manage the entire last-mile journey, predicting any potential problems and devising proactive strategies for dealing with them, including re-routing drivers where necessary.
#5 Inefficient route planning
A lack of technological investment leads to inefficiencies across the board, but may be particularly impactful when it comes to route planning. Paying careful attention to route planning can help last-mile delivery operations to reduce delays and build in contingencies that lessen the impact of unforeseen events. Unfortunately, many businesses still rely on manual route planning, which doesn’t allow for real-time changes to be made to account for traffic and improve vehicle efficiency. Route optimisation software can quickly determine the most optimised and shortest path to achieve maximum deliveries in minimal time, and dispatch that information to different drivers within just a few clicks. Optimised deliveries not only make for faster deliveries (which make for happier customers), but also minimise fuel costs and allow operators to deliver more items in a day, reducing operating costs.
#6 Cost
Anything businesses can do to reduce the cost of last-mile delivery will directly benefit their bottom line, because – although it is the shortest – it is the most expensive part of the entire supply chain. In fact, estimates suggest last-mile delivery accounts for more than half of the total cost of shipping. The infrastructure required to support timely deliveries is costly to establish and maintain, with driver salaries to pay and fleet vehicles to manage. These costs are doubled in the event of a failed first delivery that has to be rescheduled. The purchase of technology for optimised efficiency may provide good return on investment, but is out of financial reach for those who cannot shoulder the cost without passing it on to the end consumer, to whom any delivery fee is a barrier to purchasing from that business.
Technological Innovations
In the rapidly evolving world of last-mile delivery, cutting-edge technologies are making waves. Here’s how:
- Drone Delivery: Imagine drones flying overhead, delivering packages directly to your doorstep.
- Autonomous Vehicles: Self-driving vans navigating through streets, making deliveries more efficient and safe.
- AI-based Route Optimisation: Smart algorithms calculating the quickest, most efficient delivery paths in real-time.
These innovations promise to revolutionise last-mile delivery, making it faster, more reliable, and ready for the future.
Environmental Impact
Last-mile delivery has a tangible impact on our environment. Here’s what we’re doing about it:
- Reducing Carbon Emissions: Integrating electric delivery vehicles to decrease our carbon footprint.
- Eco-friendly Packaging: Exploring sustainable packaging options to minimise waste.
- Green Practices: Implementing strategies that align efficiency with environmental stewardship.
Our commitment is to not only deliver efficiently but also sustainably, for a greener tomorrow.
Customer Experience and Expectations
Delivering a package is just part of the story. Here’s how we enhance customer experience:
- Transparent Communication: Keeping customers informed at every step of the delivery process.
- Real-Time Updates: Providing up-to-the-minute information on package location and delivery times.
- Seamless Delivery Experience: Ensuring each delivery is smooth, reliable, and exceeds customer expectations.
We’re not just moving packages; we’re delivering satisfaction and building trust with every delivery.
Global Perspectives
Exploring the world of last-mile delivery, it’s clear that challenges and solutions vary dramatically across different countries and regions. In densely populated urban areas in Europe, for instance, narrow streets and stringent environmental regulations demand innovative delivery methods. Contrast this with vast regions in the US or Australia, where distances play a significant role in delivery strategies. In emerging markets, like parts of Africa and Asia, infrastructural limitations and evolving consumer habits shape unique delivery models. Understanding these global nuances is key to tailoring effective last-mile strategies that resonate with local needs and norms.
Regulatory and Policy Considerations
Government regulations and policies play a pivotal role in shaping last-mile delivery practices. In the UK and EU, urban delivery restrictions aim to reduce congestion and pollution, driving the adoption of eco-friendly vehicles and delivery methods. Emission standards are getting stricter, compelling companies to rethink their delivery fleets. Furthermore, evolving labour laws across regions influence how companies manage their delivery personnel. Keeping abreast of these regulatory landscapes is crucial for businesses to not only comply but also to innovate in their last-mile delivery approaches.
Cost Analysis and Management
The cost of last-mile delivery is arguably the most significant part of the supply chain’s total expense. In the UK, for example, the high cost of urban deliveries, fuelled by factors like traffic and parking restrictions, escalates the overall expenditure. However, there are strategies for cost management and reduction. These include investing in route optimisation software, exploring partnerships for shared delivery services, and adopting new technologies like electric vehicles to reduce fuel costs. A strategic approach to managing these costs can substantially improve a company’s bottom line.
Future Trends and Predictions
Looking ahead, the future of last-mile delivery is poised for transformative changes. We anticipate a surge in autonomous delivery vehicles and drones, reshaping how parcels reach consumers. The integration of AI and advanced analytics will further streamline operations and enhance efficiency. Additionally, we foresee a growing emphasis on sustainability, with more companies adopting green delivery methods. These advancements will not only address current challenges but also open new avenues for innovation in last-mile delivery.
Best Practices and Recommendations
To enhance last-mile delivery operations, businesses should consider adopting several best practices. Firstly, leverage technology for route optimisation and real-time tracking to improve efficiency and customer satisfaction. Secondly, consider the environmental impact – adopting sustainable practices can not only reduce costs but also appeal to eco-conscious consumers. Collaborations with local delivery services can offer flexibility and scalability. Finally, always keep the customer experience at the forefront – transparent communication and reliable service are key to building trust and loyalty.
If you’re navigating the complex landscape of last-mile delivery, facing challenges in warehouse management, or seeking sustainable solutions in your logistics operations, Pallite Group is here to help. Our innovative products are designed to revolutionise your logistics and packaging needs, driving efficiencies and boosting your return on investment. Don’t let the challenges of today impede your business growth. Contact us at Pallite Group to discover how we can tailor solutions to your unique needs and propel your business towards a more efficient, sustainable future. Let’s collaborate to enhance your logistics operations. Reach out to us at enquiries@pallitegroup.com or call us at +44 (0)1933 283920. Together, let’s redefine efficiency in logistics.
FAQ
- How do I overcome last-mile delivery challenges? Overcoming last-mile delivery challenges involves a multi-faceted approach. Firstly, investing in technology such as route optimisation software and real-time tracking systems can greatly enhance efficiency. Secondly, considering alternative delivery methods such as local pick-up points, or using environmentally friendly vehicles for urban areas can also help. Additionally, developing a robust contingency plan for unforeseen events and providing excellent customer communication can mitigate the impact of delays and maintain customer satisfaction.
- How can last-mile delivery be improved? Improving last-mile delivery can be achieved by:
- Implementing advanced route optimisation tools to find the most efficient paths.
- Utilising data analytics to predict and manage delivery times more accurately.
- Exploring partnerships with local delivery networks to expand reach and reduce costs.
- Incorporating customer feedback into the delivery process to enhance the overall experience.
- Investing in sustainable and innovative delivery methods, like electric vehicles or drones.
- How can I reduce my last-mile delivery costs? Reducing last-mile delivery costs can be approached by:
- Optimising routes to minimise travel distance and time.
- Using local warehouses or distribution centres to decrease the distance to the final delivery point.
- Employing a mix of transportation modes to find the most cost-effective solution for each area.
- Implementing scalable solutions like crowd-sourced delivery during peak demand times to avoid fixed overheads.
- Regularly reviewing and negotiating carrier contracts and exploring bulk shipping discounts.
- What is the last-mile delivery scheme? The last-mile delivery scheme refers to the strategies and systems put in place to manage the final leg of the delivery process – the point at which the goods reach their final destination from the warehouse or distribution centre. This scheme typically involves detailed planning, route optimisation, and the use of technology to ensure timely and cost-effective delivery, while also considering factors such as customer satisfaction and environmental impact.
- What is the biggest challenge with last-mile deliveries? The biggest challenge with last-mile deliveries is balancing speed and cost. Last-mile delivery is often the most time-consuming and expensive part of the shipping process. Factors like traffic congestion, delivery location accessibility, customer availability, and rising expectations for rapid delivery further complicate this stage. Additionally, maintaining a sustainable and environmentally friendly delivery process adds another layer of complexity to the already challenging last-mile delivery landscape.
