Tag Archives: last mile delivery

How to Cut Costs on Last Mile Delivery

The last mile is a key part in a supply chain process, for both B2B and B2C businesses. It leaves the final impression about your company in the customer’s mind, so outlining the right last mile strategy is very important.

What is last mile delivery?

Last mile delivery involves transporting freight from a transportation hub to the customer’s home or company’s warehouse. It is considered the most expensive and inefficient component of shipping and may consume from 20 to 30 percent of general shipping costs. Regardless of your transportation management level, neglecting last mile delivery strategy can disrupt the shipment and lead to unforeseen expenses.

Optimizing last mile delivery can be complicated and difficult for both small and large businesses. This happens because of many circumstances that are very hard to manage, such as recipients that aren’t home/present, delays, and misuse of tracking technologies. There are certain applicable ways to improve the quality and speed of delivery as much as possible.

• Planning. Before seeking a solution, you have to determine the problem. Review your last mile tactics and define the weak spots. It may be an outdated tracking system, poor review of drivers and pickers, and other features that impact the shipping process. Create a plan of actions considering all the elements that require modifications.

• Proper management of human resources. Technology and innovation helps improve company’s performance a lot, but people still do the main job. Humans tend to make mistakes and fall under uncontrollable circumstances, so specific overview will let you define the drawbacks and fix them.

• Implementing real-time tracking and automation. The analysis of shipment transit helps to optimize routes as much as possible and decreases the occurrence of delays. It is also crucial to provide final recipients with access to shipment tracking, as it notifies them approximately when the freight is going to arrive at the destination.

• Seeking innovative solutions. The challenge of tackling last mile delivery has come into the spotlight in recent years. New companies, narrowly specialized in delivering solutions for the final link of shipping, offer different services and strategies that can help businesses optimize the last mile delivery process. Vehicle manufacturers also noticed the problem and focused on creating automated trucks specifically for the last mile delivery. For instance, Renault and Mercedes recently presented autonomous delivery vans, developed for the efficiency of end-to-end shipping.

It becomes more and more important to recognize the role of last mile delivery, so tackling the right strategy might be reasonable for your supply chain efficiency. There are plenty of possibilities to improve the performance and ship the way your customers want. Keep up with the trends and constantly apply new solutions to your businesses practices to help ensure a successful last mile delivery.

4 Innovations That Will Seriously Effect Last Mile Delivery

Continued growth of e-commerce and heightened customer expectations have prompted huge innovation in last-mile delivery practices. Last-mile delivery involves three main players – customers, merchants, and delivery providers – each with a different set of challenges and expectations.

Customers have high expectations for speed, flexibility, security, and delivery cost. A 2016 survey by Temando showed that most customers value the option for same-day delivery. Many would also like in-store shopping experiences to offer home, office and other shipping capabilities.

In addition to location expectations, time and day preferences are also prevalent. Customers prefer deliveries to take place on the weekend or after business hours for fear of weather or theft risks.

Small retailers face high shipping rates since they lack the bargaining power and a large network of distribution centers needed to offer cheap, fast delivery.

Large retailers, on the other hand, must meet the variety of expectations demanded by fickle customers. This entails offering multiple shipping options.

For delivery providers, meeting the complex demands of both the consumer and the merchant is a struggle, especially when trying to do it profitably. They’re expected to provide flexible, tech-savvy service while also managing peak times and costs and poorly packaged goods.

In order to keep up with the evolving customer expectations and high volume of deliveries, these innovations have been developed. They’ve increased competition in the business.

Advanced Algorithms and Analytics

Advanced algorithms and analytics are being used by both traditional firms and new entrants. They allow new entrants to access the last-mile market quickly and with the low initial investment and operating costs.

Companies that rely on crowdsourciniStock-537331536.jpgg or subcontracted drivers are especially attracted to them because they allow the company to avoid operating their own fleet and to employ full-time drivers.

Advanced algorithms and analytics also make it easier for new entrants to offer same-day delivery and the option to shop for a product on behalf of someone else. Product search-and-match tools allow the latter, while task-courier matching and routing optimization make same-day delivery possible.

Traditional delivery companies can enhance their offerings by using this innovation too. More sophisticated algorithms allow them to fulfill customer requests for specific delivery times, inform the customer of the delivery time, and allow the customer to schedule a specific pickup time from a retailer. Other algorithms make it possible for deliverers to offer a change of delivery location or time and submission of specific delivery instructions.

Drones

The key advantage to unmanned drones is speed. Unconstrained by road congestion and infrastructure issues, drones are able to deliver faster than cars and trucks.

Drones can also travel through difficult terrains, such as mountains and forests, easily and with a shorter route.

Utilizing drones instead of delivery cars and trucks offers a decreased environmental impact, as fewer cars and trucks will be needed on the roads, resulting in less pollution.

But, drones currently have a very small shipping capacity. In addition, their GPS data can be inaccurate, causing errors in delivery locations. If a package was delivered into a swimming pool, for instance, the contents would likely be damaged, causing issues for the delivery provider and the merchant.

These cons aren’t necessarily limiting for drone usage, though.

It is estimated that around 20% of Amazon’s e-commerce orders meet the size and distance criteria for drone delivery, making drones a pretty attractive technology for this company and many more.

RobotsDelivery Robot.jpg

Similar to drones, delivery robots are unmanned delivery devices that are remote-operated by a controller. But, these devices are designed to travel by “foot” or bike at no more than 4 miles per hour.

This innovation is perfect for suburban areas that aren’t busy, assisted-living facilities, and campuses. They allow quick, flexible delivery and a reduced environmental impact. Robots are carbon-emission free.

Their advantage over drones is their larger shipping capacity. Of course, this means they’re able to deliver larger packages, but it also means they’re able to carry more than one package at a time. This increases efficiency and allows multiple deliveries to be made to customers in a close area.

Driverless Vehicles

Driverless, or autonomous, vehicles are becoming more and more buzzworthy. These vehicles are capable of sensing their environment and navigating with no human input or control.

Major automakers and tech companies like Google and Uber have already begun testing autonomous vehicles, and hope to significantly reduce the number of car accidents and car-related fatalities through the use of them.

Delivery companies are attracted to these vehicles because of the little-to-no labor costs associated with using them. In addition, without a human driver, the cars and trucks can operate for longer periods of time without stops and breaks.

Driverless vehicles would also be ideal for deliveries to remote locations.

Read next: Driverless Trucks: A Labor Force Threat or an Invaluable Industry Opportunity?

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Advice for Retail Shippers Struggling with Last Mile

Understanding Last Mile Logistics

Last mile logistics refers to the outbound transportation from a fulfillment or distribution center to the final delivery at the customer’s door. The last mile is the top priority for retail brands but is also the most expensive, least efficient and most challenging part of the delivery process.

Read 6 Signs it’s Time to Outsource Transportation Management

The e-commerce consumer market is growing; eMarketer forecasts that global B2C e-commerce will reach $2.3 trillion by 2017. With more shoppers comes increased need for quick fulfillment, generating further attention to the last mile.

With last-mile logistics, retailers have the opportunity to obtain loyal, lifelong customers or risk dissatisfying them and damaging its reputation. 62% of consumers are less likely to shop with a retailer if an item wasn’t delivered within the two days of the promised delivery date. According to Todd Everett, it’s also critical to pay attention to the last mile’s return process. Return policies can drive more business. He says, “If the consumer doesn’t have a convenient and enjoyable returns experience, they probably aren’t going to buy from that retailer again.”

Read Reverse Logistics: Everything You Need to Know

Retailers are under pressure to manage inventory and provide structured delivery in terms of speed, rate, service, and quality.

Technology is shaping retail’s supply chain world. Only 21% of retailers said they are more confident than one year ago in their ability to delivery omnichannel experiences. Zappos and Amazon lead the way in terms of consumer expectations on delivery and return policies. Amazon, for example, controls its last mile logistics by operating out of massive distribution centers, with robotic technology, and owns a private fleet for deliveries. This strategy permits Amazon to be flexible to consumer needs and reduce costs.

Why Are Retailers Struggling with the Last Mile?

The last mile is a fundamental logistics step and is exceedingly difficult to manage. For success in the last mile, retail shippers should evaluate their fulfillment rules and distribution processes. The last mile is typically the least effective piece of the transportation process and contributes as much as 28% of the total transportation cost. The last mile is expensive because:

  • It can be difficult to reach the customer
  • Consumers aren’t home when the delivery arrives
  • The likelihood of returns
  • High costs associated with driving around.

Read: E-Commerce Changes Traditional Retail Shipping Strategies

How to Master Last Mile Logistics

Retailers have to find the right mix to master their last mile, omnichannel approach. The secret behind successful strategies is delivering to the customer what they want. Visibility, control, flexibility, and collaboration are the key qualities for a successful last mile logistics strategy.

Creating visibility permits retailers to fulfill, forecast and trace product shipments proficiently and in real-time.  Formulating shipping options enables customers to choose the selection that fits their need in that exact moment. When customers decide where to shop, shipping flexibility is an essential feature.

A responsive last mile strategy enables retailers to meet demand, efficiently manage shipping options and maintain inventory. Technology creates efficiency – automating processes and rules like carrier selection, track and trace features, and lane analysis – save time and money. Streamlining transportation initiatives with a TMS is the best way to overcome the challenge of last mile logistics.

More consumers are moving online to get their shopping done. For retailers, optimizing the supply chain, specifically the last mile logistics, will provide opportunities to increase business revenue and bring customers back.

Read: Keys to Omni-Channel Success

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5 Tips for Small Businesses to Ship On-Time, Every-Time

Delivering products on time is crucial in any industry. With businesses and consumers alike, this final touchpoint in the supply chain represents your ability to fulfill their needs competently. It is especially important for small businesses to deliver products on-time, as a poor reputation can be detrimental to the bottom-line. 

Whether you are shipping to consumers or businesses, delayed shipments should be taken seriously. Late deliveries slow down the entire supply chain and hurt customer relationships, which can have serious consequences for your bottom line: 70% of consumers may not shop with a retailer again after receiving a late shipment, and 86% of consumers say their expectation for on-time delivery increases in peak seasons like the holiday shopping season.

A transportation management system (TMS) is a great tool for small businesses to improve shipping performance. TMS software helps you find the lowest linehaul rates on the market, choosing from a network of carriers pre-qualified for safety and service. Freight billing and audit is automated, and all data is collected in one system, enabling freight reports for visibility into your transportation processes.

A TMS provides the foundation for freight optimization. It gives you the visibility to discover flaws in your distribution network. If you couldn’t see what’s wrong with your transportation, how would you fix it?

To ship on-time, every-time, follow these 5 tips:

Analyze Performance Data for Supply Chain Partners

Are some of your inbound materials consistently delivered late or damaged? Are you delivering late to one of your customers more often than the others? Sometimes, suppliers, customers, and freight carriers cause late deliveries. With the visibility you gain from a TMS, you can pinpoint which partners in your supply chain are causing trouble and work with them to fix it.

Assess Dwell Time at Your Facility

The way you ship items may be slowing down the transportation process and causing late deliveries. Dwell time, or how long a driver has to wait at your facility or location, is very important. If dwell time is too long, it may force the driver, due to hours of service rules, to take an extra day to arrive at the destination. Long dwell time will decrease a driver’s willingness to haul your freight, leaving you to work with carriers that have a bad history of truck and driver out of service rates.

Create Visibility into Freight Movement

Although LTL shipping is convenient and fast, you are particularly susceptible to delays. LTL trailers are filled with multiple loads from different companies, so the route is longer, and more freight handling is required, which leads to a higher chance for  damage.,  When you ship LTL, avoid delays and damage by ensuring there is a track and trace feature available, so you can keep an eye on your freight.

Lean on 3PL Expertise

3PLs have proprietary technology and a large carrier capacity to put to work for you. This enables visibility into transportation and some of the lowest linehaul rates on the market. These carriers are pre-qualified for safety and security, so you’ll experience less frequent disruptions. A 3PLs expertise will help you increase shipment speed, reliability and reduce costs. A 3PL will take care of transporting your goods while you focus on core competencies.

Additional tip: always inform customers of late delivery. While warning customers of an anticipated disruption won’t stop the shipment being delayed, it can mitigate the negative impact on reputation and perceived service. Having track and trace features from a TMS will enable you to warn customers of late delivery. When your customers are made aware of a delay in shipping, they can make plans to notify their customers and/or prepare to receive the shipment at a different date, reducing the inefficiencies on their end.

There are many practical TMS solutions for small businesses – especially TMS software hosted on the cloud, where you only pay for what you use. Typically, the cost savings from lower linehaul rates and better routing offsets the cost of using a TMS. TMS software allows small businesses to spend less time on transportation and more time on core competencies.

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Competing for Customers? Improve the Last Mile

Last mile logistics refers to the movement of goods from a warehouse or distribution center to its final destination. To create customer loyalty, the last leg of transportation needs to be flawless.

The last mile of delivery, including returns, form a consumer’s shopping habits more than ever before. As a consumer, your primary concerns are delivery costs and schedules. 93% of shoppers have taken some type of action while shopping online to qualify for free shipping, and 58% of shoppers have abandoned their virtual shopping carts because shipping costs were higher than expected.

The last mile presents a unique set of challenges in the supply chain. The final delivery is increasingly difficult for retailers to manage. The last mile can account for up to 50% of the total logistics costs on a shipment and 28% of the total delivery cost.

Challenges to Last Mile

For retailers, control over the last mile gives you a competitive advantage. Some of the biggest problems with last mile delivery include facility location, delivery distance, time allotment and traffic.

Some retailers don’t have close proximity to their customers because their DCs aren’t located in highly populated areas. Without the right number of facilities in the right places, travel time increases.

Traffic is a factor, especially in more congested locations. Traffic should be accounted for on top of distance, because it could cause serious delays.

The promise of delivery made between the retailer and the buyer depend heavily on carrier capacity and driver availability. The last mile is especially challenging for carriers; it’s difficult to make deliveries on narrow roads in congested regions.

Delivery is compounded by practical issues and doesn’t always reach the consumer on the first try – an invalid address, residents who aren’t home and can’t sign off for package, and/or a lack of parking can result in consumer dissatisfaction.

The last thing consumers want is to have a product arrive late or damaged.

Solutions to Last Mile

A solution for creating a great last mile experience is to hire a 3PL provider to manage the logistics process. 3PLs offer communication, expertise, scale and technology that allows automation of shipments and billing.

Shippers discover the most success in last mile when they incorporate a transportation management system (TMS). A TMS works with e-commerce’s unique challenges; it uses your preferred carriers but also has a reliable back up network, chooses the best mode and route at the best price, and includes a monthly analysis so that shippers can determine how to better optimize their deliveries.

Shipment tracking through a TMS is a major advantage for last mile logistics. Understanding the delivery schedule, its route and any disruptions can ensure a great customer experience. 3PLs create time and cost related savings, which shippers can pass to their own customers.

Last mile retail shippers have to optimize their entire supply chain to find success in the last mile. Partnering with a 3PL prevents disruptions and encourages real-time communication so that you can deliver on-time, every time.

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