Managing the delivery process to the last mile requires understanding and rethinking the current strategy if it is not working effectively so far. In practice, the last mile is the last stage of delivery, which plays a key role in the success of the business.
Understanding and Rethinking the Last Mile Delivery Strategy
If you are wondering why you need to change something in your current last mile delivery decisions, the answer is quite transparent. Delivery to the home or office of the last mile is usually 25-35% of fully unloaded shipping costs, estimated by carriers and large e-commerce retailers.
The total cost of delivery includes many other services, because the whole process goes through the collection of packages, order processing at a local terminal, transportation, sorting of goods and delivery to the end customer. Optimizing the delivery strategy can provide a number of savings and more revenue for traders and other participants.
The main focus should be on reducing delivery costs to the B2C segment, as opposed to B2B delivery to the last mile, which is much lower than standard home or office deliveries. Why one option is so expensive, see in the following lines!
Home delivery against B2B
There are many reasons why e-commerce carriers and retailers find it difficult to complete certain tasks in order to achieve more efficient delivery – fast, secure and lower costs.
These are, for example:
- The points to which the various packages are to be delivered are usually not close locations. this leads to higher bills compared to the B2B supply method.
- Calculations show that the average home delivery parcels are less than 1.5 per stop, while B2B deliveries are more than three parcels per stop.
- In the case of parcels delivered to an address, errors, losses or other unpleasant situations often occur, which delay the carriers and lead to additional costs.
- Packages are increasing, but so are suppliers, making it more difficult to scale delivery to the last mile.
- There are many other specifics in the process of delivery to the door, such as sometimes it is necessary to re-deliver because the customer is not found at the address, as well as loss or theft of packages.
For all these reasons, it is clear that efforts need to be made to rethink the delivery process to the last mile.
There are many specific features that require the right measures, such as some of the following innovations:
- Delivery received from Forward Stocking Retail
- Storage Models on Demand – they are application-based and very efficient in point-to-point delivery, to the last mile or within the same day.
- Delivery to various access points – to parcel lockers, mailboxes, delivery centers and third-party stores and more.
- Working with cheaper carriers or modes of transport
- Autonomous delivery vehicles are a good choice, but they can still be limiting because everything happens on the road.
- Use of delivery bots – this method is in the process of testing and development, but perhaps in the future it would be more successful.
The role of technology
Technology and the continuous improvements that are taking place are important moments in rethinking delivery to the last mile. They can improve the user experience as well as significantly reduce delivery costs to the last mile. It is achievable through various applications and software developments. They favor the efficient management of vehicle routes and the optimization of the entire logistics process.
The fact is that the main motive for online ordering from customers is free delivery. The convenience of shopping online is known, but the customer is also looking for its advantage in terms of price. That’s why new technologies, such as parcel terminals, are a way for retailers to cut costs and offer free and fast delivery.
The benefits of a holistic strategy for the last mile and how to make decisions that will lead to success
The benefits of a holistic approach in the process of developing a strategy for the last mile are many and very significant.
See who they are
- Reducing the order-delivery cycle
- High reliability of packages
- Improving the user experience, which leads to increased competitiveness
- Higher visibility and flexible conditions in the organization of delivery – adapting the shipment to customer preferences and more options in the chain for deliveries.
- Reduce total logistics costs to the last mile – a more efficient process is achieved.
- Build loyalty and trust in the eyes of current customers and make it easier to attract new ones.
In terms of the recommendations that could be given in terms of better business results, they are many. Of course, there is no one-size-fits-all formula for success, but there are many good steps you can take.
Here are some of these approaches
- Take a good look at the links in organizational and physical infrastructure. This will make sure that a comprehensive integrated approach is built that works to reach the full potential of the last mile.
- Develop a performance management plan with the right KPIs to measure performance correctly.
- Take a close look at each supply chain process and see how they can have a positive effect on last mile mileage. Find a solution that could cover the entire supply chain – from start to finish.
- Invest in better technologies that will increase visibility on the web.
- Enter a working program to manage the changes that occur. Let it be tailored specifically for your business. In this way, it will be possible to make adequate decisions at the earliest possible stage.
Before making a change, retailers and companies need to identify the barriers that stand in the way of success in this integrated and holistic approach. For example, the lack of reliable and applicable data and insights makes decision-making a challenge. Also, limited system infrastructure and capabilities can cause poor visibility of various features, making reporting a holistic approach. One of the most persistent obstacles is the cultural one. Organizational silos, accountability and control can turn holistic thinking and approaches in traditional organizations into a cultural barrier.