Last-mile delivery is the last-leg of a supply chain that deals with movement of goods and services from warehouses to the customer destination. This is the most critical part of the supply chain that determines customer satisfaction.
Steps involved in last-mile delivery
Last-mile fulfillment is one of the most difficult aspects to get right. Adding to the challenges are the various demands that pull businesses in different directions. For instance, customers want faster deliveries but are also concerned about rising carbon emissions. To top this, the cost per delivery must also be viable to contribute to revenue. Here are four reasons why last-mile delivery is important.
The margin of error is very small for last-mile delivery. This is because it accounts for 53% of total shipping and 41% of total supply chain costs. And seemingly small factors can compound over time to have a great effect on your overall costs. For example, if your routes stop at traffic stops longer and often, the transit time of your fleet and idling costs increases, along with fuel costs.
Another important aspect that makes your last mile expensive is failed deliveries. If your customers are not available at the time of delivery, your driver must make successive trips to ensure a successful delivery attempt. Apart from a poor customer experience, every failed delivery also multiplies your cost by four times. This is why last-mile delivery is critical to bring down your total shipping costs.
In today’s day and age, imagine if a business can only deliver orders to customers a week after being placed. What would be a customer’s immediate response? They would cancel the order and move to another competitor who provides them a quicker delivery option, often within the same day itself without a second thought.
A World Economic Forum report states that faster delivery has become the new normal. As a result, delivery options like same-day delivery, on-demand delivery and next day delivery are quickly becoming the new norm. Your customers always remember a poor delivery experience, and to improve the speed of deliveries and build brand loyalty, it is necessary for your business to get last-mile delivery right.
Your customers need not know the effort that went into an order to reach their doorstep. What is important is the convenience and the timeliness of their order reaching them.
In a PwC report, 73% of customers pointed out that customer experience is the important factor that determines their purchasing decisions. Also, it states that 59% of customers will walk away after several bad experiences and 17% after one bad experience.
If your last-mile delivery is less than delightful, your customer is at a risk to move to the competition. Which is why, more often than not, the primary factor behind the success of every brand in last-mile delivery is exceptional customer experience.
Due to increased customer awareness around the impact of our current manufacturing and consumption patterns, sustainability has become a top priority for all delivery businesses. In a 2021 survey, 44% of consumers mentioned that they buy from brands that have a clear commitment to sustainability.
A World Economic Forum survey states that emissions from delivery traffic will increase by 32% until 2030. This is not a healthy trend and as a result, consumers are highly concerned about the carbon emissions from last-mile delivery.
With demand for last-mile delivery expected to grow by 78% globally, there is an urgent need to bring down carbon emissions. By actively cutting down these emissions in last-mile fulfillment, we can contribute to the overall sustainability of operations alongside improved operational efficiency.
From traffic congestion, high delivery costs, lack of efficient delivery routes, and limited delivery options, the last mile is quite challenging to get right.
Understanding the challenges of last-mile delivery is crucial for businesses and organizations as it can greatly impact customer satisfaction and, ultimately, the success of the company.
Read more to know about the diverse last-mile delivery challenges that can be solved to help companies reduce costs, empower workers to make more deliveries, and improve the overall customer experience.
Inefficient route planning snowballs into delays and kills customer satisfaction. Also, it does not consider multiple factors like traffic and sequence of deliveries. How could you plan the sequence of 20 deliveries for a driver on a single shift and a peak weekend?
Manual planning with spreadsheets makes the lives of drivers and fleet managers more difficult. Maps, too, are not dedicated route planners and do not provide you with the necessary last-mile assistance. This is why there is a need to invest in a tool like a route planning software.
Another big challenge in last-mile delivery is the inability to deliver orders in the customer's preferred time windows, resulting in failed or delayed deliveries.Today, fulfilling timely deliveries is getting more challenging due to increasing customer demand for speedy deliveries and friction in deliveries. Failed deliveries can increase your operational costs, harm your brand’s reputation, and slow down business growth.
Gone are the days where your business provides tracking codes to check the status of deliveries. Modern customers want to witness what’s happening in the last-mile till the order reaches them.
End-to-end visibility has become a necessary component because customers get real-time status on the order fulfillment. When your customers are unable to track the deliveries, they become hesitant and make WISMO (Where Is My Order) calls. This adds up your customer service expenses.
A survey states that cost is the biggest challenge for logistics providers in last-mile delivery in the United States. Businesses managing last-mile deliveries on their own have numerous costs to manage—failed delivery costs, additional stops on delivery routes, complex routes, driver salaries, fuel expenses, time under the roof cost, and reattempted delivery costs.
Any form of increase in delivery costs and passing those costs on to customers forces them to abandon the cart. In addition, these costs can double or triple if you fail to complete your deliveries in the first attempt. So, it has become costlier for businesses to set up the right infrastructure for timely deliveries and manage them.
When your last-mile delivery lacks efficiency, it results in delays in delivery and increased customer disappointment. More than all this, it becomes much more difficult for your business to manage bulk orders.
With an inefficient delivery process, your on-ground staff find it challenging to complete their shift with maximum productivity. They end up working for longer hours, which disturbs their work-life balance, and further brings down their productivity.
Unpredictable situations like traffic, bad weather or vehicle issues are delivery exceptions that disrupt your last-mile delivery. Often these situations are out of the immediate control of your drivers.
To manage these unpredictable events, you need to have contingency plans that ensure effective communication among your teams, as well as end-to-end visibility. This helps you encounter adverse events and plan dispatches for the orders.
In this decade, leading e-commerce companies like Amazon have set the bar high with their ability to deliver in shorter time frames while notifying customers of their order status in real time. Other brands are striving hard to live up to customer-preferred delivery deadlines consistently.
To deliver products quickly and efficiently, provide a superior customer experience, and survive in a complex and competitive landscape, there is a need to invest in tech solutions.
Here is a list of six tech solutions that may be useful for your business to tackle some significant last-mile fulfillment issues.
Planning multiple routes manually is a burdensome and time-consuming affair. Fleet managers should factor in various route constraints while planning routes such as traffic congestion, roadblocks, and so on. There are likely chances of making mistakes, which can ultimately result in disappointed customers.Read more
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