Finding Hidden Cost Savings With Your Middle-Mile Strategy
What is the Middle-Mile?
Middle-mile refers to a phase of the supply chain process in which goods are moved from a warehouse to a distribution or fulfillment center. Once those items leave the distribution center to make their way direct to customers or retail locations, this is the last-mile phase.
The entirety of the delivery process happens within three main phases. Handled in distinct ways, each phase is equally valuable to the transportation of goods. It is important to note that these definitions do vary slightly from one company or industry to the next. The difference in definition stems from the difference in processes that one company may have versus the process of another.
- First-Mile: While there is some discrepancy in definition, first-mile delivery often refers to the process of products being taken from the factory to a distribution facility.
- Middle-Mile: The second phase of the delivery process is not present for all companies or products, but involves the transport of goods from the warehouse to a regional fulfillment center.
- Last-Mile: Leaving the fulfillment center and traveling to the retail locations the goods will be sold at, this is the phase of the last-mile delivery.
Why Do Businesses Focus So Much on the Last-Mile?
Intuitively, it seems like getting packages directly into the hands of the customer is the most significant part of the process. Likewise, it makes sense that this is the area where optimization is most needed.
The popularity of ecommerce serves as an ever-present reminder that consumers want to receive their goods as quickly as possible. Same-day and next-day delivery are both common and popular consumer demands. For this reason, it is easy to lose sight of the fact that the last-mile isn’t the only phase of the delivery process that can benefit from some extra attention.
Improve Your Middle-Mile Strategy to Improve Your Efficiency
By optimizing operations between destinations owned by a single company, a middle mile strategy offers businesses a way to save a considerable amount of time and energy. For example, some companies are beginning to experiment with innovations such as driverless vehicles within the middle mile. This type of technological advancement allows companies to lean on more innovative strategies and reduce the number of drivers needed. This is especially true in a time when drivers are scarce and difficult to come by.
For a long time, automation in the logistics industry has focused on first-mile and last-mile delivery. These portions of the delivery process are ripe with opportunities for automation and it’s easy to think of ways to improve efficiency and communication during these phases.
However, in fairly recent times, innovators have looked between the lines and seen the benefit in automating the middle-mile. After all, the middle-mile tends to be the most expensive portion of the whole operation. Add this to the fact that there is a significant shortage of drivers to fill the ever-increasing demand in the field and it’s easy to see why automation is not only a helpful change to the delivery process; it is essential.
Passing Savings On To Customers
Customers actively seek ways to save money on their purchases. This has always been the case, but it has only increased over time. This situation is now at a critical juncture as inflation continues to be an ever-growing problem. Prices are rising across the board during a time in which many people are experiencing financial obstacles.
With a middle-mile strategy, companies can provide savings to consumers via lower-priced goods.
Large Companies are Leading the Middle-Mile Charge
Giants in the retail industry such as Amazon and Walmart have shown how effective middle-mile strategies can be. Their decisions to place more emphasis on their middle-mile strategies have allowed them to continue to meet customer demand.
Automated vehicles have been a major push and focus within Walmart’s middle-mile strategy.
Meanwhile, Amazon demonstrates the ability to effectively control both the last-mile and the middle-mile portions of its delivery process. They do this by taking an asset-based approach, purchasing all of their own trucks, warehouses, and fulfillment centers. Even despite the labor shortage and hiring issues caused by the pandemic, Amazon has continued to hire more workers. Moreover, they have hired at a rate higher than most of their competitors who place less emphasis on the middle-mile.
Middle-Mile Strategy for Small to Mid-Sized Businesses
Larger enterprises pave the way for effective middle-mile strategies. However, this does not mean that smaller companies have to be left out in the cold.
By partnering with a 3PL like Redwood Logistics, small to mid-sized operations stand to benefit. Through partnering with a reputable 3PL they gain support and tools needed to find ways to improve their middle-mile processes through often simple yet meaningful changes in their processes.