The Long and the Short of Last Mile Delivery

Stephen DeAngelis

January 06, 2020

In logistics, the “last mile” is a euphemism for the effort it takes to get a product or service delivered to its final destination. Historically, the last mile involved delivering goods to stores, where customers would shop and take items home. In today’s omnichannel world, the last mile can lead almost anywhere. Chris Cunnane (@ccunnane), an analyst with the ARC Advisory Group, explains, “In order to truly be omnichannel, retailers and brand manufacturers must provide a unified brand experience for their customers. This is true for all three major phases of the customer journey — before, during, and after the sale. The last mile of an order tends to be the most costly and headache inducing for retailers and consumer brands.”[1] He asks, “So how are companies handling last mile deliveries today, and what does the future hold?” Those are good questions. Traversing that last mile has become so important some pundits now talk about the last 50 yards or the last yard or, even, the last step. Like any journey, omnichannel delivery begins with the first step and ends with the last step and retailers and brands need to be vigilante at every step.

Growing urgency in last mile deliveries

For decades, consumers purchasing items out of mail order catalogs were content to place their order and wait weeks for the item to show up. Those days are long past. In the early years of omnichannel operations, consumers were still patient enough to wait a week or so for a product to be delivered. However, as Adam Robinson (@AdamRobinsonCDM), Director of Marketing at Cerasis, explains, consumers are increasingly less patient. He writes, “Increased shipment visibility has been a cornerstone of effective supply chain management for years, but final mile logistics elevated the demand for shipment visibility. Consumers understood that the product would be ‘out for delivery,’ and they were complacent. Then, Amazon changed things again. Amazon’s new promises to offer breakneck shipping speed created a sense of urgency among consumers. Now, consumers could get access to their products as soon as dinner, and traditional retailers struggle to stay competitive. Gaining visibility into final mile shipments in real-time is essential.”[2] He goes on to note, “Final mile logistics are subject to the same technological revolution as all industries, and since final mile logistics remain an area of great risk for supply chain managers, technology will catalyze significant changes in how the industry approaches final mile.”

In an earlier article, Robinson notes the sense of urgency felt by consumers is reflected in retailers, brands, and the logistics providers they employ. He explains, “Each process leading to final mile delivery becomes moot if a delay occurs or shippers don’t keep customer service in the highest regard. While shippers have found ways to enhance efficiency and productivity through technology, final mile delivery teeters on the edge of oblivion.”[3] Why such a dire warning? Robinson notes, “Final mile delivery represents the highest costs and risks within a shipment.” As he noted in his subsequent article, “If shippers cannot compete with Amazon, consumers will go to Amazon.” Anyone following logistics news, knows Amazon continues to innovate when it comes to last mile delivery. Adding to the complexity of the last mile are large, bulky items. Rich Weissman, a practitioner turned college professor, observes, “Home delivery of the big stuff, like appliances and furniture, has always been a challenge for the seller and consumer. The delivery driver needs to be sure someone over 18 is home, that they have access to the residence and that inside delivery is safe and reasonable. For appliances, the delivery crew will often set up the new refrigerator or stove, take away the old one and remove all packaging. More than a delivery crew, they need to be able to get that new appliance working. Customer service skills are a must.”[4] If things don’t go just right, customers get irked and retailer, brand, and/or logistics provider reputations can take a hit. That’s what makes last mile logistics such a minefield.

Improving last mile delivery

How important are last mile logistics? According to DELMIA Quintiq analysts, “Sixty-one percent of consumers said the availability of same-day delivery would make them more loyal to a retailer, yet only one percent would be willing to pay for full delivery costs. Retailers are currently charging customers only 80 percent of the overall delivery costs, which happens to be the most expensive part of the retail supply chain.”[5] They add, “The last mile is also the one part of the supply chain with the most potential for error. Supply Chain Dive reports that the last leg of a journey can account for up to 28 percent of a product’s total transportation costs. … The battleground to win shoppers has moved from in-store aisles to the digital space, where shoppers can easily search for products and compare prices. They can choose where and when they want their purchases delivered; retailers trying to outdo each other are providing shoppers with flexibility through more delivery options, faster speed and even lower prices.” Since last mile logistics are increasingly critical to consumers, Brian Chan, Product Manager at UNEX Manufacturing, offers ten things to consider to improve deliveries. They are:

1. Determine how fast the delivery really needs to be.
2. Offer flexible delivery options.
3. Provide order tracking information.
4. Improve visibility into supply chain processes.
5. Attach conveyors directly to trucks in the loading dock area.
6. Use brick-and-mortar stores as fulfillment centers.
7. Eliminate mispicks in order picking operations.
8. Share your expectations for the delivery.
9. Train customer service reps.
10. Use technology to plan and optimize driver routes.

DELMIA Quintiq analysts observe, “Shoppers want a lot from retailers. On top of more delivery options, more flexibility, faster speed and cheaper (or free) delivery, they also expect retailers to be more sustainable. This puts a lot of pressure on last mile delivery one of the top contributors of urban air pollution. Efficient routing and resource planning make operations more environmentally and socially responsible as they help reduce fuel consumption, empty miles and miles traveled. Optimization allows planning for different vehicles, including electrified ones that need constant recharging.”

Concluding thoughts

Cunnane concludes, “The last mile of delivery is complex, time consuming, and expensive. Retailers are constantly looking at ways to be innovative, efficient, and most importantly, satisfy the customer. Not surprisingly, most brands are still relying on the major parcel players to make their deliveries, even though this does not give them as much control over that final experience as they may like. But the future potentially looks bright for disruptive technologies. It looks to only be a matter of time before autonomous mobile robots, cars, and drones are delivering packages to a neighborhood near you.” One problem with autonomous delivery vehicles is a lack of white glove service. Robinson explains, “As major carriers and customers begin to focus on final mile as an extension of the customer experience, especially in consideration of white glove services, such as product installation and setup, final mile will dominate all interactions.” Brands will have to decide what last mile method is best for them and their customers.

Footnotes
[1] Chris Cunnane, “Where Does Last Mile Go from Here?Logistics Viewpoints, 25 September 2019.
[2] Adam Robinson, “Trends in Final Mile Logistics,” Cerasis Blog, 15 August 2019.
[3] Adam Robinson, “The Current State of Final Mile Delivery,” Cerasis Blog, 14 August 2019.
[4] Rich Weissman, “The last 50 feet: Challenges of delivering the big stuff,” Supply Chain Dive, 20 November 2019.
[5] Staff, “How to excel in last mile delivery,” The DELMIA Blog, 2 December 2019.
[6] Brian Chan, “Optimizing the Last Mile,” Inbound Logistics, 17 September 2019.