The Logistics of the Last Mile
The term last mile should perhaps have a trigger warning attached to it due to all the headaches it causes for supply chain managers. There is a large amount of uncertainty surrounding this term which can cause problems for even the strongest of supply chains. Many of you may be familiar with the convenience of last mile delivery regarding parcel shipping. However, the modern customer is beginning to demand this same level of convenience on a larger scale, such as large and bulky item transport. Companies who can position themselves to effectively fulfill this demand may poise themselves to capture greater market share and profits.
LTX is here to provide you with the information you need to effectively understand and address the last mile. First, we will define the term last mile and identify the problems it creates. Second, we will provide solutions to the logistical problems of the last mile. Finally, we will pinpoint opportunities for competitive advantages within the coordination of the last mile and the potential benefits for your company.
What is the Last Mile?
Basically, the last mile refers to the movement of products or materials from the transportation hub to its final destination. This final part of the shipping journey is oftentimes the most inefficient and the most expensive.
Consider Amazon, according to their warehouse data, they receive 35 orders every second. That’s over a billion orders every year. It is impressive that Amazon can process all these orders at their warehouses and distribution centers but the true challenge is transporting every unique order directly to these customer’s doorsteps. The uniqueness and sheer volume of these orders make the logistics of transporting the orders the “last mile” to each customer an incredibly expensive undertaking.
This is especially true when the customers live in a variety of locations that makes transportation more difficult. Such as urban residential areas that are difficult to navigate or remote rural locations. In fact, the “last mile” can cost upwards of 30% of the total cost of delivery despite the comparatively shorter distances involved. This is a problem that all companies involved in transportation must face to some extent.
So, now that we understand the “last mile” and the costs associated with it, let’s discuss possible solutions.
The Problems Associated with Last Mile
Perhaps the most obvious problem associated with the last mile is the uniqueness of every customer. Every customer has a unique order to a unique address at a unique time. This makes it extremely hard for supply chain managers to structure or standardize last mile deliveries. Because every customer is different they require different solutions. This can quickly become both time consuming and financially costly. This is especially true for LTL carriers.
The advantage of utilizing LTL shipping is freight consolidation, which saves time and truck space. The uniqueness of each customer delivery destination can make it difficult to effectively consolidate freight. After all, how do you group the freight by truck when there are so many different final destinations?
Another related problem is finding carriers who can perform the required last mile deliveries. Many carriers simply do not want to deal with the hassle of performing last mile service, and will not provide the option. These problems can be extremely daunting for supply chain managers and you may be tempted to simply ignore it. However, with the rise of e-commerce, the last mile dilemma is not going to go away. Consumer demand for last mile convenience is going to continue to grow. Companies who recognize this trend and adapt to it may be better off overall.
Solutions for the Last Mile
Problems associated with the last mile may seem overwhelming at first, however, there are solutions available. These solutions are found in technology. Technology specifically applied to the problems of the last mile can help identify areas of inefficiency.
For example, API linking between the carriers can make track & trace seamless. Allowing for all parties involved in the transportation process to receive automatic updates on the status of each shipment.
This application can provide valuable information and analytic data on the nature and structure of the supply chain which can help pinpoint inefficiencies associated with the last mile. This information can also provide valuable cost analyses of various delivery routes which can help businesses make sound pricing and operational decisions. The application of technology to the last mile of a supply chain can allow companies to further optimize their transportation strategies and processes.
Competitive Advantage of Last Mile Logistics
Despite all the problems associated with the “last mile” there are some potential advantages that can be seized by forward-thinking businesses. The hard truth is that most businesses are not running optimal supply chains, particularly regarding the last mile. Businesses who can recognize the deficiencies in their processes are already one step ahead of their competition who may be either too complacent or miss-informed to recognize the problem.
Another factor to consider is customer demand. Customer demand has shifted toward increasing convenience. Online retail has trained consumers to expect a certain level of convenience. Modern customers expect that most orders will be transported directly to them in a reasonably short amount of time. Businesses who can proactively address and meet this shifting customer demand can greatly improve their chances of increasing their market share and value creation.
The last mile can be a challenge for many firms to address. However, it is a problem that is rapidly being technologically addressed within a highly competitive industry. Businesses that can take steps to better understand and evaluate their supply chains regarding the last mile are going to be better positioned to capture market share within the transportation industry. This is why it is so important to work with a qualified 3PL. A solid 3PL possesses the technology and carrier relationships to effectively address problems regarding last mile shipping.
LTX Solutions possesses vast industry experience and knowledge. We have state-of-the-art technology and close relationships with a large selection of carriers. If you are struggling with the last mile dilemma we have the tools to help! If you would like to learn more, we would be more than happy to answer all questions you may have regarding the last mile or any topic regarding the transportation industry. If you are interested in learning more or taking the next step to revolutionize your supply chain than contact us below today!