Every stage in the supply chain has its challenges, but the last one, where the ordered product goes directly to the customers, is particularly crucial. It's that moment that is critical to the overall user experience and influences whether or not consumers will return. Fast, efficient and hassle-free delivery is essential today to stay competitive. And that's exactly what Last Mile Delivery is all about.
What exactly is Last Mile Delivery?
Last Mile Delivery (LMD) is the end stage in the supply chain when a parcel arrives at its final destination, usually an address or collection point chosen by the customer. In fact, this is the only moment when the customer has direct contact with the whole logistic process - from the moment the order is placed, the customer becomes an observer and participant of the delivery, seeing its successive elements and... getting impatient if the parcel is delivered later than expected.
It's no wonder then that the world's biggest transport companies are investing huge amounts of time, money and resources into making LMD as efficient as possible - with eCommerce exploding in popularity, instant, seamless delivery is no longer a 'nice to have but an absolute 'must have'.
A breakthrough in eCommerce and delivery
The coronavirus pandemic was a huge challenge but also an opportunity for eCommerce and related industries. When people started shifting their shopping habits to online in 2020, the market was not ready for it, primarily due to the burden of transport and logistics. Deliveries were delayed and customers, also first-time buyers, turned their attention towards the companies that had handled the delivery crisis best. Often, these were those that had already set their sights on developing innovative technologies in the delivery system.
What problems LMD faces
Inefficiency . Logistics companies today have incredible opportunities to make the supply chain as efficient as possible. Capacious means of transport, fast loading and unloading processes, optimally located warehouses and modern technologies that allow every step to be monitored, risks to be caught and processes to be optimised. Everything works perfectly in this well-thought-out mechanism. And then comes the LMD - a large number of small parcels that have to be delivered to a great many locations, almost defying the efficiency patterns developed so far.
LMD costs account for as much as 53% of total shipping costs. That's a lot, and with the current delivery model, it's hard to make the process cheaper. The situation is not helped by the fact that the practice of 'free delivery’ is becoming more common. Customers are starting to expect not to have to pay for courier services, which somehow forces transport companies and suppliers to take these charges on themselves.
Loss of trust. LMD involves enormous pressure because at this stage the customer and the transport company come into direct contact. Every mistake costs a loss of trust and a negative reputation that is hard to forget, especially if the delayed parcel was a birthday present for a niece or a dress the customer intended to wear to their best friend's wedding. Every little delayed or lost package means one unhappy customer + the friends they tell about it. The consequences of such mistakes are enormous! Besides, delays in the transport company also directly affect the reputation of the partners, because an unhappy customer will "take offence" at the courier and the shop from which he ordered.
Competition. Everyone wants to be the best and have the most efficient supply chain. The difference is that most of the steps in the process are of interest only to people in the industries, while the policy towards Last Mile Delivery is also followed by consumers. This makes it a powerful marketing bargaining chip. To stay competitive you have to follow the standards set by others, and not everyone can afford the cost and effort involved.
Poor communication. One has to admit that for such a risky stage, LMD still has a lot to do in terms of communication. Customers first get emails and text messages from the company they ordered the product from. Then, they get further emails from the shipping company, which allows them to track the package with a link. The link does not always take customers to the tracking panel right away - it often requires providing additional information. Also, it often happens that the information in the tracker is not correct. Then customers receive a phone call from an unknown number. Usually, it's a courier wanting to confirm the collection time, but how are customers supposed to know? Previous communication has been via emails. As a result - they do not answer the call from a strange number. Sometimes they also don't pick up for other reasons, and sometimes they would like to pick up but the driver doesn't try to contact them. As a result, shipments are picked up at the 2nd or 3rd attempt, or returned to the warehouse, which generates additional costs and customer dissatisfaction.
Only technology will save us
The problems associated with Last Mile Delivery mean that technology companies are racing to provide digital solutions to support transport and logistics. How does software help improve LMD?
Route optimisation - the key in LMD is for the courier to deliver as many packages as possible in the shortest possible time. However, it is not easy when you have to leave packages in various houses scattered around the city, at the same time taking into account traffic jams, renovations or roadblocks. A lot of time is wasted on inefficient courses and trying to plan them. This is where route optimisation software comes to the rescue. This solution continuously processes all LMD elements such as courier availability, their location, vehicle capacity, place and expected time of parcel delivery and road conditions to automatically propose the best possible route.
Contact app. 73% of clients expect improvement of communication with their transport company. The answer would be to create a mobile application as the default contact point. Thanks to this, the customer will be able to determine the best place and time of delivery and inform about any changes quickly and efficiently. What's more, the app can be linked to a route optimisation system, allowing any updates to be taken into account in real-time.
Real-time tracking - one of the most popular functionalities in applications like Uber is the ability to watch how the awaited vehicle moves on the map. Such a solution will also work perfectly for transport companies. Customers will not only see the progress of their delivery in real-time but will also be able to react quickly if they see a potential error. This solution prevents potential delays and problems and ensures user experience for our consumers. Win-win.
Feedback system - in the case of LMD, which is the carrier of a company's reputation, it is very important to receive ongoing feedback. With the help of appropriate software, customers can provide information after each shipment whether the delivery went smoothly, in what condition the items were received, how they rate the contact with the courier, whether they received the package on time and whether they were informed about the delivery. Besides, the system can also be used by drivers who will be able to confirm delivery, for example in the form of a photo, and inform if they were unable to get to the building or contact the recipient. Such data is extremely valuable to optimise and personalise future deliveries.
Virtual assistant - customers often ask questions that can be checked in a moment, based only on the order number. To simplify the process of informing about the status of a shipment, it is worth implementing a solution such as a chatbot or a voice assistant. A virtual "employee" of our company will respond quickly and efficiently to the majority of easy-to-verify customer enquiries, allowing us to engage far fewer people in the process.
International laws - overseas shipments are always associated with problems and delays, especially during pandemics where the situation at the borders is so uncertain. Modern software allows you to constantly monitor changes in regulations and new restrictions in various countries, which allows you to significantly improve the efficiency of international shipments, and more accurately inform customers about their packages.
Reporting - knowledge is the basis for growth. By bringing together multiple functionalities in a single delivery management system, we can then generate detailed and comprehensive reports. The information and statistics obtained in this way will allow us to seek more effective solutions, save money and time, and plan work more efficiently for our team.
Do what others do (as long as they do it well)
For the biggest players in the industry, optimising Last Mile Delivery is an absolute priority, so they continually invest in the latest solutions to improve this stage. How?
Amazon is the benchmark when it comes to efficient Last Mile Delivery. This is due to several factors: multiple warehouses in the vicinity of large cities, an annual fee that includes "free" shipping for customers, and powerful software to manage a huge number of elements in the supply chain. Also, the company has a strong focus on user experience, which is underpinned by a perfect Customer Relationship Management CRM system that allows customers to know everything about their shipment in real-time and makes the entire purchase path simple and enjoyable.
UPS optimises its drivers' routes and fuel consumption with the Orion software. The solution allows them to shorten a single trip by an average of 10-13 km per day, the equivalent of up to $50 million in annual savings.
FedEx has decided to increase the efficiency of its deliveries by integrating express services with ground services. This will eliminate repetitive courses by compacting parcels in transit. This will result in fewer vehicles and a more secure and sustainable supply chain.
Last but not least
Last Mile Delivery is the most sensitive point in the supply chain, not only because of the logistical difficulties and low efficiency but also because of the huge image risk associated with the negative feedback from customers who only see this stage out of the whole process. Modern technological solutions and reliable software are the best way to optimise LMD and save huge amounts of effort, time and money.