How Efficient Is The Local Last Mile Delivery? (+ 5 Strategies for Successful Last Mile Delivery)
The continued growth of the e-Commerce industry in the Philippines is fueling the parcel delivery market. Millions of parcels are delivered daily in the Philippines alone.
Today, many e-Commerce and delivery companies have augmented most of the supply chain to deal with increased customer demands and higher workloads.
For instance, many businesses have started to process orders in minutes instead of hours. However, many companies still fail to improve their last mile deliveries, which can result in unnecessary expenses.
Last mile delivery is the final connection in the supply chain. It is the delivery of parcels from the carrier hub/facility to the requested destination, or the last leg of the journey.
An efficient and successful last mile delivery strategy can help deliver goods faster and reduce costs. In this article, we discuss the importance of last mile delivery, how efficient the local last mile delivery system is, and best practices to form a winning last mile delivery strategy.
The Importance of Last Mile Delivery
Last mile delivery is the most important step in the supply chain, as the shipment is completed once the goods are finally delivered to the recipient. Customers often form their opinions about an e-Commerce business and carrier depending on the quality of the service that they receive at the delivery stage.
E-Commerce businesses depend on shipping services to deliver their products to their customers.
The bigger these companies are, the more customers they serve, often at a national or even global scale.
Therefore, they require a delivery service that can handle their delivery standards and workload. The e-Commerce market is assessed at $3.3 billion and some project that the market will grow to $4.5 billion in 2021. Moreover, studies reveal that by 2040, e-Commerce will account for about 95% of all purchases.
E-Commerce companies and retailers compete to offer more flexible and faster shipping options to attract customers. Customer demands and expectations are rising, with around 25% of customers willing to pay extra for same-day delivery services.
How Efficient is the Local Last Mile Delivery System?
Last mile delivery is the only link in the e-Commerce supply chain that connects the customer and the delivery person, particularly on a door-to-door delivery. Consumers are highly likely to abandon a retailer when there are issues with their deliveries; thus, making a good customer experience crucial for companies.
This is often one of the most important parameters for evaluating customer experience and efficiency of last mile delivery.
New models for handling the last mile such as ‘click and collect’ locations are anticipated to drive the growth of e-Commerce logistics with a CAGR of 24.6% during 2018 – 2024, with revenues reported at Php 36.6 billion by 2024.
The Need for a Successful Last Mile Delivery
Last mile delivery might seem simple, but it actually presents many challenges such as inefficient delivery routes and other end-user problems like order cancellations and inaccurate data.
Last mile delivery also takes up a significant portion of the shipping fee. When companies commit to same-day deliveries, it can result in excessive labor and fuel costs for the transportation of just a few items along a specific route.
Due to these issues, many shipping services choose to outsource their last mile delivery services to local carriers. However, while companies often benefit from better cost efficiency, these carriers don’t always deliver the same level of customer service provided by an online store or retailer.
Common Challenges of Last Mile Delivery
Some challenges of last mile delivery include:
- In some urban areas, increased traffic congestion can slow down delivery times. Even though delivery points may be close in proximity, traffic can hinder a driver’s ability to get from Point A to Point B within an acceptable timeframe.
- Rural areas may not always experience congested traffic like in an urban area; however, the distance between delivery points may span several miles. If only a few packages are dropped off at each point, the effort used to transport these items over long distances is disproportionate to the substantial cost incurred to deliver only a few products.
- The rise of e-Commerce has affected last mile delivery as customers’ expectations continue to rise to higher standards, demanding fast delivery at little-to-no-cost. Moreover, due to the increase in orders as online shopping continues to become more and more popular, companies must be able to successfully balance the delivery of larger, more frequent shipments.
Strategies for Successful Last Mile Delivery
Incorporate these strategies into your last mile delivery to ensure that it is well-optimized, cost-efficient, and successful.
Establish standard operating procedures.
Do you have an established standard operating procedure (SOP) when it comes to last mile deliveries? If not, make sure to create them. How? Analyze data associated with previous last mile deliveries, including service times and load times. Using this data, you can then establish optimal performance benchmarks against which you can measure future performance. Best practices should also be identified and followed at every step of a last mile delivery.
With these established SOPs in place, you will be able to analyze planned vs. actual delivery performance. You can assess the accountability and productivity of drivers; identify performance gaps that when addressed can increase improve customer satisfaction and increase profitability; and identify areas of the delivery schedule that must be changed in order to meet consumer demands.
Implement technologies that align with your business needs.
Oftentimes, companies implement technologies only to find that it doesn’t work as promised or doesn’t align with their business needs. As a result, most companies adapt their business processes to fit the technology. This is backwards. Businesses shouldn’t have to adjust their processes; instead, technology should be flexible to meet those needs.
A logistics solution should provide consistency in ease of use, execution, and visibility into the entire distribution process going into the last mile delivery. When assessing technologies for your last mile delivery, consider its flexibility to support your business processes, ease and speed of implementation, and reliability.
Give customers the power to choose.
Give your customers some level of power when it comes to your last mile delivery services. Allowing your customers to choose from several delivery options serves two purposes in improving last mile delivery:
Increase the probability of first-time success. When customers are allowed to choose the delivery time and date during the checkout process, this in turn can increase the probability of a successful first-time delivery as the customer will likely be present to receive their order.
Increase customer satisfaction. Often, customer satisfaction is tied to whether or not a package arrives on time. With customers in control of the delivery time and date, customer satisfaction increases since orders will be delivered exactly when and where they specified. Further, a flexible fulfillment system that allows customers to change delivery windows until the day of delivery can also increase satisfaction and the likelihood of first-time success as customers usually prefer to be present when their packages are delivered.
Implement an effective tracking system.
Are packages frequently misplaced or lost throughout last mile delivery? You’ve just identified an issue in your logistics process. So, what can you do? Make sure to implement an effective tracking system before the product even leaves your warehouse. Throughout the supply chain, make sure that you’re able to easily and quickly track an order from placement to delivery. This will enable you to monitor the amount of time it takes for the package to travel from Point A to Point B, then from Point B to Point C, and so on.
Gathering this data and comparing it against established SOPs can give you an insight into the performance of your supply chain, especially your last mile delivery. To ensure customer satisfaction, packages must arrive at your customer’s doorstep in a timely manner.
Partner with a reliable third-party logistics provider.
A third-party logistics provider (3PL) is a vendor that fulfills orders for companies. Products will be shipped in bulk from the company to the vendor who then stores it in a warehouse that serves a specific section of customers. Once orders are placed, the 3PL becomes accountable for final transportation and fulfilling last mile delivery.
Partnering with a 3PL offers numerous benefits:
- Reduce overhead increases. If a company experiences a sudden increase in sales volume, successfully meeting that demand in a timely manner can be quite difficult. With a 3PL, a company can quickly expand its operations to meet the increase in demand.
- Decrease shipping costs. A 3PL located nearby areas with high consumer demand can help save on costs, as less mileage and time is required to deliver the product.
- Maintain or improve customer satisfaction. Partnering with a 3PL will help you maintain or improve customer satisfaction in the event of a sudden increase in demand. Or, it can improve it by reducing delivery times across the country. Partnering with an industry leader in shipping and other supply chain services can enhance profitability and performance.
The Bottom Line
Last mile delivery is becoming increasingly important in giving today’s customers the service that they expect. Assessing your logistics system with a fresh eye and implementing some of the strategies above can help you control your logistics costs, improve your services, and enhance customer satisfaction.