Regardless of how well you manage all the major supply chain issues, if any problems occur during last-mile delivery, your order will be unfulfilled.
It is, therefore, essential to take steps to ensure that the last leg of the journey in the supply chain is running smoothly and efficiently. Identifying issues that may arise is in itself a big challenge in last-mile delivery. Only once the common problems are known, you can proactively tackle the challenges and develop measures to minimize any complications.
Why is Last-Mile Delivery a Growing Concern
When the pandemic initially began, people were forced to stay home, and we saw explosive growth in the already growing e-commerce industry. Along with this growth, we also saw severe disruptions in supply chains globally.
Even the general public became aware of the drama surrounding global shipping issues, and everyone kept tabs on how issues like the Ever Given incident and issues relating to port congestion unfolded. Due to global disruptions, end consumers quickly noticed unreliable delivery times, shipping delays, and price increases.
Businesses bore the brunt of the price increases, hoping the situation would be temporary. With the increased demand for affordable delivery and ever-growing competition, businesses were looking to find a way to overcome the biggest challenges of last-mile delivery.
Competition and Customer Expectations
Although e-commerce businesses have been popping up left and right and even industry giants like Amazon trying to enhance their online offerings with a broader product catalog and Prime subscription delivery options, customer expectations have been increasing with customers demanding stellar services that are both timely and cheap.
To keep up, businesses had to find ways to optimize last-mile deliveries and fulfill orders faster. Whichever branch of industry you are in, if you are in the business of delivering goods to end customers, you will face both large and small competition.
7 Challenges in Last-Mile Delivery
1. Rising costs
Although last-mile delivery is the shortest part of the delivery process, it is also the most expensive for both the end user and the business sending the items. Integrating new infrastructure to handle an increased volume of demand can also be costly.
On top of that, there could also be unexpected expenses that arise during delivery, such as delays or order cancellations.
Unfortunately, passing these costs on to the customer might be a bad idea. Customers are prone to shopping cart abandonment if there are any added expenses they didn’t expect. Therefore, your best option would be to minimize and absorb these costs elsewhere.
Late deliveries and failure to meet delivery deadlines can quickly become incredibly costly. In global shipping, delays are usually easier to anticipate but also more expensive to deal with. However, when it comes to last-mile delivery, your best option is to plan delivery routes carefully and avoid delays through a distributed delivery network and real-time communication.
In extreme cases, late deliveries can lead to failed orders. If you can anticipate failed orders, then it would probably be best to cancel delivery orders on the go. This can save you from the hassle of going through a complicated returns process. However, you will still need to deal with customer expectations and late delivery penalties.
3. Unpredicted issues
It seems as though we have reached a paradox of sorts. How do you account for something that you can’t predict? Honestly, most major projects have an expected tolerance for things to go wrong. Depending on the industry in question, that number usually hovers between 5% and 15%.
Experts in the industry, who regularly deal with local and long-distance transportation issues, recommend creating a contingency fund. You should set aside enough time and money to deal with any unforeseen complications. The exact amount can depend on the number of complications you have dealt with in the past.
4. Real-time visibility
A lack of visibility is probably one of the biggest challenges of last-mile delivery. Thankfully, it is also one of the most straightforward issues to solve. You can implement visibility tools that allow real-time communication with drivers. Customers will also appreciate the ability to track their shipments in real time instead of relying on tracking codes that don’t regularly update.
5. Inefficient routes
Optimizing routes is one of the best ways to cut down on your operating costs for last-mile delivery. This has the additional benefit of improving delivery times and increasing customer satisfaction. Of course, businesses that don’t have experience with shipping and logistics might have trouble factoring in the multiple variables that influence route planning.
6. Outdated technology
You would be shocked to discover just how many logistics companies use outdated technology. Even when businesses implement modernization, for some reason, last-mile delivery is often overlooked. The improvements are usually focused on warehouse optimization or global transportation.
However, even minor improvements to last-mile delivery can yield excellent results. When you consider the shipping and transportation innovations and the number of modern solutions at your disposal – there is really no excuse. Even outfitting your drivers with GPS devices and tracking software can help you monitor and optimize deliveries in real-time.
7. Reverse logistics
It’s incredible to think how many companies don’t have reverse logistics systems in place. In case you don’t know what we are talking about, reverse logistics refers to transferring goods from customers back to sellers or manufacturers. Your company will need to develop a return shipping system for efficient product returns.
Remember that reverse logistics isn’t intended only to benefit the customer. If that’s all you are interested in, you could simply ship customers a new product. Reverse logistics should help your company regain some value from the returned products.
As you can see, both small and large businesses have their work cut out for them if they want to keep up with their competition and maintain customer satisfaction. The situation with customer expectations and supply chain logistics is constantly shifting, so we recommend continually monitoring the biggest challenges of last-mile delivery and optimizing your approach to logistics.
Foreign buyers are showing more interest lately in having their goods shipped to their ultimate destinations by air or sea on prepaid basis. The shippers have better and more optional choices to select the carrier with direct delivery from port to port or airport to airport and without transshipment during transit.