The Last Mile Delivery Problem: Why It Matters and How to Solve It

What is Last Mile Delivery Problem?

The last mile delivery means the process through which a package is transported from a delivery hub to the consumer’s house. This may sound obvious but, it is usually the most costly and complex aspect of the supply chain process. With the advancement of time, the popularity of online shopping increases and customers expectations for delivery in shorter time also increases. The last mile delivery is critical in the logistics and e-commerce industry because it directly impacts customer satisfaction, delivery costs, and overall operational efficiency.

As consumers increasingly prefer online shopping so their expectations for fast and flexible deliveries have skyrocketed. The last mile delivery problem is one of the most important issues that need to be solved in order to sustain competitiveness of the businesses and meet the needs of the customers. In this blog, we will look into some of the issues that companies encounter in last mile delivery and possible ways to improve on the last mile delivery.

Why Last Mile Delivery Problem Matters

Rising Consumer Expectations

Customers today are more demanding and they want their products to be delivered in the shortest time possible, in most cases, these are same day or next day delivery. Serving these demands is not easy for firms because any delay or poor delivery in their products can result in negative word of mouth and lack of repeat business from customers.

High Costs

The last mile delivery also contributes to the highest delivery costs and may be as high as 53% of the total cost. Bearing individual packages to various destinations consumes a lot of fuel, time and money in maintaining the vehicles. Minimizing these costs while improving efficiency is the key to sustainable profitability and competitiveness of the companies.

Environmental Impact

Some of the last-mile delivery practices discussed above include multiple delivery attempts and long routes that increase carbon emissions. With an emphasis on sustainability, firms have to switch to environmentally friendly means such as electric cars and efficient routes that allow delivery services to be effective.

Urban Congestion

This makes the last mile delivery to be challenging especially when it is done in urban areas because of the traffic jam that is always encountered. For logistics companies working in the urban areas, this has been a problem that they need to solve as the population of people in the urban area increases.

Key Challenges in Last Mile Delivery

Address Accuracy

Sometimes it may be very difficult to identify the customers, especially in areas with a congested network of roads or wrong addresses. This leads to delivery delay, increased operational cost and hence a poor customer relation.

Traffic and Route Optimization

This is especially because there is a lot of traffic jams within the urban areas, roads may be closed or changed at certain times. If the routes are not well optimized, the drivers are likely to take longer time to deliver goods and fuel is likely to be used and not put to productive use.

Customer Availability

Making deliveries when the customers are not at home results to cases where the deliveries are made and the customers are not around hence, more than one attempt has to be made, all these translate to costs and time.

High Costs

The last stage of delivery can be difficult in terms of resources as fuel, labor and vehicle expenses are incurred at this stage and in addition to this, delivering each parcel to different destinations is also costly. The control of such expenses is one of the most significant problems.

Package Returns

Returns are an unavoidable cost of doing business. On the one hand, people are more eager to purchase when they know an item may be quickly returned if they change their mind. The costs are especially serious when the retailer pays for the return’s pickup and processing.

How to Solve the Last Mile Delivery Problem

Technology and Automation

Some of examples of using advanced tools that can improve delivery efficiency include route optimization software, artificial intelligence and machine learning. These technologies involve traffic flow pattern identification, weather conditions, and current information to suggest the best paths. This does not only shortens the delivery time but also decreases fuel usage and expenses in operations. Also, AI targets in forecasting the busiest delivery periods and assists businesses in managing their resources well.

Micro Warehousing

It is also possible to develop micro-warehouses or fulfillment centers in densely populated regions, which will minimize the distance between the product and the customer. This approach is known as micro warehousing and is effective in reducing transit time hence making deliveries faster. High-demand inventories can be kept closer to consumers;, some products can be delivered within the same day or within an hour increasing customer satisfaction and decreasing transportation expenses.

Crowdsourced Delivery

It is possible to extend cooperation with people who work in the gig economy through Uber or local delivery services, which helps to increase the level of flexibility. Crowdsourced delivery enables organizations to hire drivers who are not restricted by working hours or busy traffic conditions thus delivering products within the shortest time possible. This model also frees up the traditional delivery fleets, cuts down on costs and can easily be scaled up during busy periods.

Electric Vehicles & Drones

Thus, electrification of vehicles and drones are seen as a viable solution with increasing emphasis on sustainable solutions. EVs emit lesser and are cheaper to operate in the long run because they use less fuel and are cheaper to maintain. Drones can be used for fast delivery and can get through areas that may be difficult to access or congested areas that would otherwise slow down traffic and delivery of small parcels to consumers. These technologies do not only solve the issues of the environment but also enhance the delivery time and the cost.

Parcel Lockers and Pickup Points

Making the lockers or pick up points available helps customers to make arrangements on when they want to pick up their parcels. This helps to minimize multiple deliveries and cases where the consignment is delivered at the wrong time. It also helps in reducing the cost of delivering the meals as the meals can be dropped at one point rather than having to be delivered to each home. Parcel lockers are very helpful in places where the area of land is limited, and there is much traffic in the city.

Buy Online Pick up Store (BOPIS)

This can be the best option for both, Customers are able to order and make payments online and then come and collect their order when it is ready. This is cheaper for the retailer and in most cases more convenient for the client, hence it is gaining popularity. The major success factor for BOPIS strategy is to ensure that everything is as convenient as possible for the customer. Communicate with them through emails or text messages once the purchase is ready to be picked up.

You May Also Read: How Autonomous Mobile Robots (AMRs) are Transforming Warehousing

Conclusion

Solving the last mile delivery problem is a necessity for firms to cut cost, increase effectiveness and adapt to increasing customer demands. This is one of the most costly and complicated stages of the supply chain, and therefore, improvement of this stage will enhance client satisfaction, reduce operation costs and make the supply chain more sustainable.

The continuous advancement in technology including, AI in route optimization, electric vehicles, drones and crowdsourced delivery will be instrumental in addressing last mile issues. With time, these advancements will help companies to meet increasing demands, minimize the effects of their operations on the environment, and offer better and more efficient delivery services in the future.

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