3PL Last Mile Delivery: A Guide to Solve 3PL Last Mile Challenges

The face of last-mile delivery has changed rapidly. This has impacted 3PLs like more than ever before. The e-Commerce boom and the supply chain disruptions of the new-age are key factors impacting the landscape of 3PLS. The constant need for speed, changing service levels and cost pressures are key considerations that necessitate upgrading processes, how they are run and the need for a new approach to manage them.

The last leg of the delivery process is one of the most challenging, complicated and costly aspects of eCommerce fulfillment. Due to this, it is pivotal to identify the challenges in this stage to handle them in the most economical and efficient way possible.

Rising delivery costs, increasing consumer expectations, missed or failed deliveries, lack of real-time visibility, navigating traffic in congested urban localities and unpredictable accidents are some of the challenges faced by 3PL companies in last mile delivery.

A. Customer Expectations and the Impact on the Supply Chain

E-commerce giants like Amazon have set new benchmarks in customer expectations, resulting in modern customers who are impatient and expect instant gratification. Given below are some of the basic expectations consumers have for all brands.While shippers need to worry about the pressure of customer expectations, it translates into SLAs for 3PLs and carrier partners.

1. Speedy Delivery: The bare minimum expectation consumers have of brands is on-time delivery. Consumers are used to shorter delivery times, and same day deliveries have become a norm. Even a single delayed delivery significantly sours customer experience, and may be all it takes for them to switch brands.
2. Real-time Tracking of Orders: One cannot control what they cannot see. If operational improvements are to be made, gaps need to be identified. A traditional approach to managing 3PL operations often results in visibility blackbox. This is not helpful for 3PLs or customers and leads to inefficiencies in processes.
3. Multiple Types of Services: 3PLs need to offer differentiated services in an environment of tight competition. They also need to be agile enough to launch new service types and offerings faster than ever. This is the only way to achieve and retain a competitive edge. The constant pressure to evolve and differentiate is a box they need to check constantly.

B. Role of Last-Mile Delivery in Customer Satisfaction and Loyalty

Last mile delivery is the last leg of the shipping process where the customer interfaces with the brand. This stage is where customers obtain the gratification of a successful purchase/getting their products, and plays a dominant role in the customers’ perception of the brand. Providing the customer with choice and control in this stage, and meeting SLAs despite the significant challenges involved go a long way in ensuring a good customer experience, thereby retaining frequent buyers and converting nascent customers into repeat customers. Conversely, a single bad customer experience leads to loss of business, with the customers turning to the competition to meet their product needs in the future.

C. Competitive Advantages of Efficient Last-Mile Delivery for 3PL Companies

1. Decrease in Operating Costs: Last Mile Delivery often constitutes a significant portion of overall shipping costs. This high cost is incurred due to the complexity involved in delivering products to their final destination, especially in urban localities with dense populations.

   However, through strategic planning, optimized route planning and delivery scheduling, delivery options can be made more affordable. The integration of advanced technology can not only increase efficiency, but also reduce excessive manpower needs, further cutting costs, and providing 3PLs a competitive edge through cost-efficient logistics.

2. Enhanced Customer Experience: In today’s digital age, transparency, convenience and communication are some of the basic expectations customers have from brands. By providing real-time updates, notifications, and flexible delivery options, last mile delivery solutions cater to these expectations and make customers feel valued, resulting in repeat customers and increased business growth.

3. Accurate Deliveries: By providing customers with the flexibility to choose delivery timings and locations, and by ensuring real-time visibility of orders through notifications and proactive status updates, more accurate deliveries are possible and the risk of first-failed delivery are significantly reduced. This leads to a reduction in returns and rescheduling deliveries, which also reduces delivery costs.

4. Reputation: Improved efficiency in last mile delivery and a well executed last mile process can positively impact a business’s reputation and reliability, fostering brand loyalty and ensuring repeat purchases.

A. Cost Pressures

Last mile delivery costs are high, contributing up to 41% of the total supply chain costs and accounting for almost half i.e. 53% of the total cost of shipping. This is because there are several expenses like fuel, inventory, manpower etc. involved in the entire process. There are also additional unexpected expenses that arise due to delays or order cancellations, which can sometimes double delivery cost and result in severe losses. Lack of quality last mile delivery software can exacerbate the complexities of the last mile delivery process, and the rising costs make sustaining a delivery business a significant challenge.

B. Traffic and Congestion Issues

Urban localities with dense populations are susceptible to severe traffic congestion due to the high vehicle density and poor road infrastructure. Other factors such as weather, road repairs, and political or social events also lead to road blockages. This results in a decline in delivery effectiveness and rise in operational expenses, due to delayed or missed deliveries, increased idle time, increase in field consumption and decreased driver productivity.

C. Inadequate Visibility & Tracking

Visibility into the delivery process is one of the most important prerequisites for ensuring customer loyalty. Buyers want complete knowledge of the location of their package and when it will reach them. Many last-mile delivery companies still use obsolete technologies like scanning codes and tracking numbers, which only give information like whether their package is in transit or out for delivery, resulting in a poor customer experience.

Real-time visibility of orders is also essential for dispatchers to intervene in the case of unexpected emergencies such as vehicle breakdowns or accidents, preventing them from turning into significant issues and ensuring on-time deliveries despite them. These real-time visibility demands introduce an additional layer of logistical and technical complexity and put a tremendous amount of pressure on 3PL companies.

D. Capacity Planning

Seasonality of demand and mapping it with the available fleet capacity can be daunting given the degree of demand fluctuations. Having overcapacity or under capacity can both turn out unfavorable for 3PLs and impact the operational costs. To a certain extent, this can be tackled with effective demand forecasting and also the ability to crowdsource fleet.

A. Overview of FarEye as a Leading Provider of Last-Mile Delivery Solutions

With 150+ customers across 30 countries and five offices globally, FarEye is an industry leader in the field of customizable SaaS solutions for last mile delivery management. FarEye’s Delivery Management platform, as an end-to-end logistics solution with business process management at its very core, simplifies complex last-mile delivery logistics through its unique combination of orchestration, real-time visibility, and branded customer experiences. FarEye’s industry-leading technology, tools and expertise ensure that every delivery reaches its destination accurately, efficiently, and sustainably, on-time, every time, thereby enabling enterprises to turn their deliveries into a competitive advantage.

B. Key Features and Functionalities

While FarEye is capable of helping 3PLs in a variety of ways, a set of highlights to solve the challenges highlighted above are:

• Flexible Workflows: FarEye helps 3PLs build and execute new processes with ease. This is possible through no-code workflows that give it the flexibility to adapt quickly. Whether it is process enhancements or launch of new processes, it can be done seamlessly and rolled out at scale. This is essential to maintain agility.
• Automation: It offers an effective way to transition from manual dispatching to automated dispatching. This not just reduces time needed for planning but also enables drivers to be more efficient allowing them to get onto the field faster.
• Driver Crowdsourcing: Given the rise of gig-economy drivers, having effective crowdsourcing mechanisms and quick onboarding can help in a great way. This is highly effective to handle peak demand volumes and also saves 3PLs from having overcapacity and associated expenditure. FarEye also has an easy-to-use driver app that can help them get trained faster and facilitates smooth onboarding.
• Route Planning & Optimization: FarEye’s route planning and optimization can help address cost concerns associated with deliveries. It also supports routing of green fleets. This is not just cost-effective but also a key enabler of sustainable deliveries. With a section of brands prioritizing carbon neutrality, this can be a huge differentiator.
• Proof of Delivery: This is essential for any 3PL as it marks the completion of successful deliveries. FarEye’s app also supports special use-cases such as OTP verification, uploading of age proofs etc. This is also highly effective in handling reconciliation and minimizes the chance for discrepancies.