What is Last Mile Logistics? 7 Key Last Mile Logistics Challenges & How to Solve it

Over the decades last mile logistics have not only evolved but snowballed into a complex supply chain problem. With rapid evolution of technology now it’s possible to literally see the inefficiencies present in existing logistics models. Hence, we are seeing a rapid shift from logistics being a cost center to becoming not only a business enabler but also an engine that’s driving new revenue streams. It cannot be denied that in the age of virtual brand-customer relationships, last mile logistics is the only actual physical touch point between businesses and their customers. It drives modern day customer experience by ensuring scalability, agility and flexibility.

Last mile logistics is the most critical aspect of any delivery operation. It can be defined as the last leg of delivery that moves packages or parcels from a warehouse and a hub directly to an end-user or customer’s door-step. The reason why the last mile is so crucial is one, it establishes a direct contact between a brand and an end customer; two, it can pan out to be cost-intensive if not executed with precision; three, it impacts customer loyalty and four it’s a major competitive differentiator in the world of online and home deliveries.

It’s difficult to fathom the importance of last mile logistics in a few words. From business objectives, operational KPIs to customer experience and loyalty, last mile logistics impacts a massive part of supply chain operations. 

As much as 28% of shipping expenses can be attributed to last mile logistics. Although it’s extremely important to invest in last mile operations as it directly impacts customer experience, there is always a need to optimize costs, especially at a time when it’s becoming imperative to ensure free of cost and same-day deliveries.

The key challenges of Last-Mile Logistics are 

• Increasing Fuel Consumption and Vehicle Idling
• Dependency on Manual Intervention
• Poor First-Attempt Delivery Success Rates
• Mitigating Transportation Risks
• Poor Route Planning
• Increasing Carbon Emissions in Transportation
• Same-day Deliveries

Reducing the miles that a vehicle needs to travel while moving freight from different locations significantly reduces fuel consumption. Advanced final mile delivery tools leverage machine learning to determine the most fuel-efficient route to travel from point A to B to C. By optimizing delivery routes, businesses can make deliveries profitable by reducing miles per delivery. 

With regards to transportation, vehicle idling is another major reason behind increasing last mile delivery costs and excess fuel consumption. In the US idling burns through 3.8 million gallons of gas every single day, resulting in a daily waste of $7,980,000. This can be addressed to a great extent by embracing modern logistics technology to make transportation carbon neutral.

Traditional means of executing last mile delivery operations include heavy dependence on manual labor, and it cannot be denied that manual work is expensive and prone to errors. Advanced last mile delivery software can drastically reduce the need to keep human resources to execute last mile logistics operations in a supply chain. It automates tasks like route planning, task allocation, managing KPIs, in-pant operations and more. Automation also reduces investments made on paper consumption. 

According to a Post and Parcel report, in the US failed deliveries cost the country $216,171 a year. It is extremely important, especially for post and parcel companies, to ensure high volumes of first attempt delivery success to keep a check on final mile delivery expenses. Inaccurate address is one of the main culprits behind rising first attempt failures in the last mile.

Supply chain theft is estimated at $35-40 billion per year in the US. To address this problem businesses need to have granular-level visibility of logistics operations. Advanced last mile logistics tools can scan through historical data of previously traveled routes and generate critical insights on incidents of theft and pilferage. Such software has helped global businesses reduce incidents of theft and pilferage by more than 50%.

Planning routes can become a nightmare. But it’s a necessary evil and a lot depends on it. A key to successful delivery, one that’s cost-effective and delights customers, is accurate route planning. What makes the route planning complex is that it’s dependent on a lot of external factors like risks, fuel costs, government, and environmental regulations, driver shortages, among others.

Growing levels of carbon emissions are driving nations and global organizations to build stringent regulations around reducing the carbon footprint. For instance, the US’ Clean Air Act allows the government to levy fines of more than $30,000 if businesses do not follow environmental regulations. Then the US transportation industry suffers from $15-$30 billion worth of cargo theft each year. It’s important to avoid risk-prone areas. Lack of availability of drivers, especially for long haul transportation, makes it important for supply chain and logistics stakeholders to ensure the available ones operate with levels of productivity. These factors make it crucial for businesses to drastically enhance route planning by embracing digital technology.

The demand for same-day delivery is rising. As much as 41% of consumers are willing to pay a charge for same-day delivery while nearly a quarter (24%) of shoppers said they would pay more to receive packages within a one-or two-hour window of their choosing. A PwC survey highlighted how customer experience is evolving. Here is a small excerpt from the report. A quarter of online shoppers said they would dip into their wallets to be sure of getting their packages within a one or two-hour window of their choosing. Older shoppers may place an even greater premium on narrow delivery time slots; according to the survey, shoppers ages 65 or over were 8% more likely (52% versus 44%) to choose “delivery at a specific time slot.” Same-day delivery puts immense pressure on route planning, delivery productivity and last mile costs.

A modern last mile logistics platform can run complex algorithms and churn large chunks of data to help carrier companies plan highly efficient yet economical routes. When minimizing the distance that needs to be traveled, such a platform generates routes by taking into consideration things like vehicle availability, schedule constraints, empty miles, ETAs and more

It reduces fuel consumption by reducing miles travelled. Through instant alerts and notifications it eliminates vehicle idling, unnecessary route diversions and mitigates instances of theft and pilferage. All these significantly reduce total cost of ownership and improves the bottom line. 

A last mile logistics platform ensures easy to manage drag and drop workflows. This goes a long way when it comes to providing customers with a self-service delivery model. Armed with flexible workflow capabilities, such a platform quickly accommodates changes in delivery location and time on the fly and updates stakeholders accordingly to ensure a customer’s expectations are met. Such a platform also makes deliveries transparent for customers and keep them updated with real-time information on the delivery progress.t generates highly accurate ETAs and makes delivery operations highly transparent for customers. Manual dependencies are drastically curbed by such a platform as it automated core delivery aspects like scheduling, task allocation, route planning, tracking and tracing and more. It further optimizes costs by increasing first attempt success rates and ensuring address accuracy. By leveraging delivery orchestration techniques and tools, a last mile logistics platform helps brands deliver seamless omnichannel delivery experience. 

Such a platform benchmarks delivery KPIs accurately. It provides delivery stakeholders access to all critical data related to delivery operations on a single pane-of-glass. There is more. It leverages gamification to boost productivity of individual delivery executives. It helps delivery executives analyze their own performance based on the number of successful deliveries executed, delayed deliveries and benchmarks the same against peers. This keeps delivery executives highly motivated.