What Is Last-Mile Delivery And How To Optimise It?


The evolution of e-commerce has literally changed every aspect of consumer buying behavior. More and more businesses and organizations are moving online.

From e-commerce giants and retailers to small-time food and beverage chains, getting shipments to final destinations, servicing valuable customers, trimming down costs yet efficiently delivering what is promised has become crucial.

By integrating technology with analytics, e-commerce retailers, manufacturers, and 3rd party logistics, fulfillment agencies are able to optimize their delivery processes. On-time delivery is made possible by enhancing end to end logistics operations.

Understanding last mile delivery – the final stage of the supply chain, its challenges and potential solutions is more relevant than ever before.

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What is last-mile delivery?

Last mile delivery definition denotes a set of activities that are included within the final steps of delivering a shipment from a transportation hub to the end user in a business to customer (B2C) or business to business (B2B) model. It is a crucial logistics component and also an expensive one.

Customer demands are ever changing and challenging. Coping with it is clearly a survival basic for today’s businesses. A fast yet efficient and cost effective delivery is the optimum formula for success in last mile delivery.

Steps involved in last mile delivery

Every minute detail of the delivery process has to be studied carefully, re-designed if needed and updated from time to time. Let’s take a look at 6 crucial steps involved in last mile delivery.

Entering the orders into a digital system

Be it the sender or the recipient, both need to be updated on the live status of shipment. Orders and customer requests are entered into a centralized digital system and a tracking number is all it takes to know its delivery status.

Orders arrive at the transportation hub

This is the actual starting point of last mile delivery. Senders have to ensure that shipment is collected from the transportation hub and delivered to end users as quickly as possible. This starts with shipments being received, documented and stored at the hub before final dispatch.

Routes and recipient addresses noted

Fast delivery is made possible by knowing the recipient address and having an optimum route plan in hand. Optimum routing helps in the allocation of delivery personnel and ensuring maximum deliveries with minimal resources.

Orders assigned to the delivery personnel

Strategic sorting of shipments and allocation based on route knowledge and prior experience of delivery personnel helps boost efficiency of last mile logistics. Orders are assigned to delivery personnel based on numerous metrics. This includes the drivers’ knowledge regarding routes, prior delivery experience in the area etc.

Orders loaded on delivery vehicles

Now that the delivery plan is in place, shipment needs to be tracked for one last time before it leaves the transportation hub. Items are scanned and entered into the centralized system for tracking by senders as well as end users. This step is critical, especially, to secure the item during transit.

Orders reach customers and proof of delivery noted

Shipment reaches its final destination – the end user. Delivery personnel enter delivery status acknowledged by customers into the digital system, marking the end of the entire delivery process. Proof of delivery enhances credibility between buyers and sellers and also supports the information system.

Challenges in last mile delivery

In this final stage of logistics, numerous challenges are faced from time to time. However, in general, they can be split into 6 broad categories.

Expenses – high operating costs or low profits

Last mile connectivity constitutes most of the logistics expenditure incurred between a sender and receiver. With product alternatives at its peak for most industries, it is no wonder that customers prefer free, fast or nominal shipping charges.

Operating costs, especially fuel and labor related, are skyrocketing. Gas prices are soaring in all cities. Non-availability of labor and increase in wages reduce profit margin in the logistics business.

Loss of time

Time is undoubtedly a limited resource. No matter how efficiently planned and executed, there is still room for time deficiencies when it comes to meeting targeted numbers of deliveries in a working day.

Failed deliveries

Non-availability of a customer on a specific day or time of a pre-planned delivery process happens with every industry. This problem is mostly unforeseen and takes up a lot of the supply chain’s resources.

Complex routes

The delivery personnel are not always aware of the routes. Always being dependent on electronic gadgets for route assistance has its own sets of flaws. One such flaw is, with the complication of routes, making delivery time consuming and costly.

Returns and refunds

Business is all about survival and sustainability. You have to offer not at par, but more than what your competitors offer and customers expect.

As always, the customer is the king and the right to refund or return a good is at their discretion. Though unavoidable in recent times of tough e-commerce competition, it is one expensive area in logistics solutions.

Customer interactions

This is a highly subjective area. Customer interactions by last mile delivery personnel is a double edged sword of some sort.

This final human interaction impacts the purchase decision of the customer and can lead to good feedback or negative feedback. It largely depends on the individual interpersonal skills of each delivery personnel when handling customers. Recruiting, selecting, training and retaining talents with the right attitude is important.

Costs involved in last-mile delivery

Nearly 50 percent of total logistics expenses are incurred during last mile delivery as per a report published in ‘Business Insider’ based out of the United States. Business owners grab 25 percent of this cost in most cases. With increasing competition  and customer demands, a set of solutions should be put in place to meet the above mentioned challenges.

Costs associated with fuel, labor, refund, reverse logistics, replacement and idling, delivery vehicle maintenance, etc constitute last mile delivery costs.

Certain unconventional costs such as environmental and route congestion related ones are on the rise too.

These are based on the fees and fines levied by local authorities on emissions by delivery vehicles.

Delivery inefficiencies and complexities results in increasing last mile costs. It is a fact that this process is certainly a large chunk of supply chain expenditure.

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Last-mile delivery solutions

Latest, updated and state of the art last mile delivery technologies can help facilitate smooth and cheaper logistics solutions. Technology combined with human experience can solve challenges faced in this industry.

Comprehensive last-mile delivery software is available in the market to facilitate smooth operations. Software aids in overall route planning, automated dispatching, real time tracking of shipment, live communication with delivery personnel and in-depth analytics, all of which are factors to be considered.

Technology combined with the right employee engagement can resolve the above discussed last mile delivery challenges. Let’s take a look at some of them.

Route optimization by automated route planning

Numerous route map solution providers are available these days. Even with the availability of real time traffic updates, it is difficult to ensure an efficient delivery.

In urban areas, usually the number of deliveries are higher within a short distance. On the other hand, deliveries are fewer in rural areas and suburbs and within a specific distance. Deliveries may become cluttered in the former case and in the latter it may prove to be costly. No route is as straightforward as we think it is.

The only way out is technology in its most adapted and updated version. Route optimization software are real saviours as it gives real time traffic updates to drivers, automatic route optimization taking into account time, location, traffic and vehicle capacity which are all key for making deliveries hassle free.

Real-time order tracking

Automation software supports end-to-end centralized logistics management systems.

Data is fed to the system periodically. In the case of parcel deliveries, data is entered to the system both automatically and manually at different points.

When it comes to the final delivery stage, shipment dispatch details are fed to the system when they enter and exit the transportation hub. These data updates can be visible to end users, known as ‘real time order tracking’ ensuring credibility to customers.

Final dispatch these days are automated too, alerting customers on final movement of goods to them. Post delivery acknowledgements by customers are also updated to the system with the help of software when implemented, making future liaisons with customers a bliss!

ETA tracking for fewer failed deliveries

Delivery failures due to customer non-availability issues is a major concern with last mile services.

To a great extent, keeping customers in the information loop by sending ‘Shipment Out for Delivery’ or ‘Estimated Time of Arrival’ (ETA) messages as short texts or via in-app notifications will help.

Providing customers with the facility to notify their non-availability or availability slots and digital authorization facility for delivery to a nearby authorised person or entity can reduce the rate of delivery failures.

Audit key metrics

With software, key metrics can be reported and audited at regular time periods. Auditing monitors delivery success rates, on-time delivery rates, time consumed for each service, distance covered etc. Teamwise auditing can be implemented, which enhances service efficiency.

Customized and comprehensive audit reports can be generated from time to time to identify issues, if any, before they become difficult to cope up with. Audit reports can be aligned with the pre-identified key performance indicators (KPIs) of employees and service process as a whole for an overall at par logistics performance.

Customer feedback

Being in touch with customers before and after delivery is essential for the businesses involved.

Last mile service delivery and delivery personnel play a huge role as they turn out to be the sole human point of interaction with the client in most e-commerce purchases.

Primary feedback data can be collected from customers during delivery on the digital platforms and acknowledgement can be shared via text and in-app notifications to customers.

Customers are looking much beyond a mere tracking number and updates these days. Time is precious and optimum satisfaction of customers within a short time period is the essence to any delivery channel.

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Every business, from e-commerce giants to small time businesses, relies on last mile connectivity providers as a part of their core business activity.

Logistics is getting a lot more optimized these days with each stage being taken care of by specialists.

Last mile delivery is the ultimate customer point of contact and technically the last stage of delivery. An efficient delivery means reducing overall costs, being on time, having live updates in place and ultimately ensuring customer satisfaction.

Understanding every step in the process, existing challenges faced and anticipating any possible issues is key.

Businesses need to be equipped with the right, updated and long lasting technological solutions for optimum last mile delivery solutions. Having the right know-how and implementation of technology at each step and analysis of collected data at fixed time periods is a clever way to go ahead in the business of logistics.

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