What Is Supply Chain Visibility and Why It Matters
What is the Middle-Mile?
Businesses today face mounting pressure to reduce delivery costs while meeting customer expectations for speed. The middle-mile, the phase where goods move from a warehouse to a distribution or fulfillment center, is often overlooked, yet it represents a significant opportunity for optimization. In this blog post, we'll explore what the middle-mile is, why it matters, and how you can improve your middle-mile strategy to drive efficiency.
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, you might think that getting packages directly into the hands of your customers 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 reduce freight costs and 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,you may have noticed that 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
Your 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
Leading retailers have shown how effective middle-mile strategies can bethrough their emphasis on automation and asset-based approaches. 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 large retailers' middle-mile strategies.
Meanwhile, some large retailers demonstrate the ability to effectively control both the last-mile and the middle-mile portions of their delivery processes. 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, companies with strong middle-mile strategies have 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, 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.
Final Thoughts
Optimizing your middle-mile strategy is no longer optional—it's essential for staying competitive in today's logistics landscape. Whether you're a large enterprise or a small to mid-sized business, focusing on this often-overlooked phase can yield significant cost savings and operational improvements.
FAQs
What is middle-mile logistics?
Middle-mile logistics is the phase where goods move from a warehouse to a distribution or fulfillment center. It sits between first-mile movement from the factory to a distribution facility and last-mile delivery to retail locations or customers. Because it connects major nodes in the network, middle-mile planning has a direct impact on cost, speed, and overall supply chain efficiency.
Why should businesses pay attention to the middle-mile instead of only the last-mile?
Businesses should pay attention to the middle-mile because it can be a major source of cost and inefficiency, even though last-mile delivery gets more attention. Optimizing the middle-mile can reduce freight costs, save time and energy, and improve network performance. For many companies, it is the overlooked phase where meaningful operational gains are possible.
How does a middle-mile strategy help reduce freight costs?
A middle-mile strategy helps reduce freight costs by improving how goods move between company-owned or controlled locations. When routes, capacity, and transfer points are better organized, businesses can eliminate wasted movement and improve efficiency. The article also notes that automation and more innovative transportation methods can lower labor needs in a driver-scarce market.
Why is automation becoming important in middle-mile logistics?
Automation is becoming important in middle-mile logistics because this segment is often the most expensive part of the delivery operation and driver availability is limited. While automation has traditionally focused on first-mile and last-mile work, middle-mile automation can help companies reduce dependence on scarce labor and improve efficiency in the network.
How do large retailers use middle-mile strategy to stay competitive?
Large retailers often use middle-mile strategy by investing in automation and asset-based operations. Some control both middle-mile and last-mile activity by owning trucks, warehouses, and fulfillment centers, which gives them more control over the delivery process. These companies use middle-mile improvements to keep up with customer demand and labor challenges.
Can small and mid-sized businesses benefit from middle-mile strategy too?
Yes, small and mid-sized businesses can benefit from middle-mile strategy even without owning their own transportation assets. The article notes that partnering with a 3PL like Redwood Logistics can provide tools and support to improve middle-mile processes through practical, often simple changes. That makes the strategy accessible beyond large enterprises.
How does middle-mile strategy affect customer pricing?
Middle-mile strategy can help businesses pass savings on to customers by lowering operational costs. When transportation between warehouses and fulfillment centers is more efficient, companies may have more room to offer lower-priced goods. That matters even more in periods of inflation, when customers are actively looking for ways to save money.
