It has been said before. The supply chain is in disarray. The industry has been chronically behind the times with its technology implementation, resulting in many business decisions resembling a game of “telephone” instead of a well-oiled machine. When a sudden e-commerce boom, pandemic, and war add to the chaos, it can be hard to know what to expect out of the industry.
FreightWaves saw this exactly when it reported that “Retailers are showing mixed results in first-quarter earnings reports. Amazon (NASDAQ: AMZN) saw its e-commerce sales fall 3% in Q1. Best Buy’s online sales fell 12%. However, the online marketplace BigCommerce reported Q1 revenue increased 42% year-over-year to $66.1 million, and UPS and DHL both reported business growth driven by parcel demand. Shopify (NYSE: SHOP) posted a quarterly loss, as did Wayfair.” So, how can shipping companies and retailers stay on top in today’s industry landscape? Many believe the answer can be found within last mile delivery.
The Overarching Last Mile Delivery Problem
While some business professionals may have last-mile delivery optimization top of mind, others may be trying to grapple with the meaning of those four words next to each other. Simply put, when an item moves from product manufacturing to a warehouse (or two or three) in its journey toward being purchased, final-mile delivery is the last leg of the transportation that puts the item directly into a customer’s reach. The final mile for a grocery e-commerce experience would be the move from the store onto the home porch, while the automobile sales final mile would be from the last storage place onto a car lot.
Unfortunately, this last leg of the transportation journey is the most costly and most likely to be disrupted. Items may be marked as “out for delivery” for hours, or a carrier might provide an unclear ETA window as one vehicle makes multiple stops for individual items. Considering the rest of the process, shippers realize that final-mile delivery is the least efficient, least effective, and most costly part of transportation. This article will provide supply chain professionals with nine specific last-mile procurement issues that shippers should address for business success.
1. Final Mile Often Lacks Transparency Into Real-Time Transit Status
Unbeknownst to most consumers, ordering pizzas has changed the game for final-mile tracking expectations. For instance, most major pizza chains can provide customers with updates from the time of order placement to preparation, cooking progress, and delivery status, right down to what street the driver is on while bringing the pie to the customer’s front door. This real-time visibility provides customers with the information they need to be ready to receive their food and tip the driver. But why isn’t that same tracking capability of delivery available when ordering a part from a home improvement chain or purchasing a frozen pizza from a local grocer?
This new cultural norm of final-mile tracking has yet to reach most of the supply chain. The lack of a procurement tracking system leaves customers with questions and shippers without the time and data they need to optimize carriers’ routes.
2. Final-Mile Costs Are Subject to Wide Fluctuations
Within over-the-road (OTR) transportation options, many expected costs can be anticipated and estimated due to the predictable nature of the transport. However, shipping professionals understand that final-mile delivery can experience many disruptions and thus has a broader cost fluctuation. Is additional labor required for unloading and loading? How much fuel was used waiting in traffic or purchased at more expensive locations than those on the open road? Will delivery occur within high-traffic time frames? Due to the expedited nature of the final mile, one bad delivery service can mean more in this circumstance than in OTR, causing customers to seek alternative parcel delivery strategies before the return or review is even complete.
3. Distribution Routes Continually Change
Capacity procurement issues start with the uncertain nature of future driving conditions. Today’s driving conditions may have been clear, but tomorrow could bring unfavorable weather, uncharacteristic traffic, or urban congestion. In addition, final-mile delivery may even experience pickup and delivery location changes due to localized issues. With this in mind, final-mile services must involve an accurate procurement tracking system to provide shipping professionals with the data they need to quickly and accurately diffuse the exceptions.
4. The Proliferation of the Gig Economy Makes Last Mile Fulfillment More Complex
When the gig economy found its way into transportation and logistics, many considered it an excellent solution to driver procurement tracking within the final-mile sector. However, the gig economy presents a challenge in choosing between courier networks, gig platforms, and other last-mile carrier options. Since every final-mile carrier provides different services, it can be challenging for a capacity procurement manager to know how to choose which is the best solution for each load. Additionally, specific industries, such as retail, have only utilized final-mile delivery to reach the storefront. Yet today, the gig economy has changed consumer expectations. There may also be a priority challenge. Will the manager need to forgo one service in favor of another? The answer rests in needing to choose between two evils: upsetting a customer or losing sustainability. The shipper must still keep priorities over final-mile delivery top of mind.
5. Shippers Lack Visibility Into Last Mile Costs
The Energy Information Administration reported on May 9, 2022, that the national average for on-highway diesel fuel price is $5.623, which is $2.437 higher than the national average in May 2021. With fuel costs rising higher than ever before, many consumers and businesses simply absorb the additional costs of delivery without adequately evaluating the cost breakdown, whether food and grocery or a new vehicle. Final-mile tracking is more than just knowing where freight is; it’s maintaining a transparent relationship with the data surrounding it — especially the expenses associated with each load move. Instead of paying whatever an arbitrary carrier decides, shippers must stay in charge of their finances by partnering with final mile delivery services with a transparent fee schedule.
6. Final Mile May Blend White Glove Capabilities, Including Setup and Haulaway of Debris
For many professionals, final-mile procurement issues occur outside the transport vehicle. With more significant companies choosing to provide setup or haulaway, a procurement tracking system ensures capacity for on-time delivery and the manual labor required to complete the contracted work. White glove final-mile delivery and setup are frequently used with appliance purchases and construction deliveries. These are incredible intangible assets worth the extra penny to the customer. But to the logistics manager, this presents another opportunity for mishap or error without the right team backing them.
7. Shippers and Customers Want and Need Better POD to Track Damage Risk
Proof of Delivery (POD) is more than just handing off a package to the customer. Major players in the freight transport game have moved over to digital document management to effortlessly provide POD and other vital documents anywhere in the process. These documents are especially crucial for communicating and managing damage risk. Final-mile tracking includes the contracted drop-off instructions that ensure the carrier and shipper are released of liability once the conditions have been met. By partnering with last-mile carriers who provide their insurance, shippers can focus on 3PL performance and business growth.
8. All Parties Need Clear, Concise Communications
According to the Supply Chain Game Changer, “There are important elements involved in the last-mile delivery process that customers are looking for, namely the speed, timeliness, accuracy, and precision of the product deliveries after reaching their endpoint.” These vital pillars of the last mile (alternatively known as final-mile delivery) are accomplished only through clear, concise communications B2B. It is impossible to overstate the importance of accuracy in order and routing details, whether with wholesale distributors or with a mom-and-pop grocer branching into delivery services.
9. Couriers Need Automation to Plan Stops and Handle New Pickups/Deliveries
Believe it or not, courier networks are an essential part of an environmentally friendly supply chain. Businesses can infuse efficiency into final-mile tracking by incorporating a courier network filled with local drivers. Because final-mile delivery involves multiple stops at new and previous locations for pickups and deliveries, it’s easy to waste time and fuel by sending someone unfamiliar into the area to complete the route planning and drive. By optimizing courier networks reinforced with local expertise and automation to change course as needed quickly, shippers can see more successful touchpoints across multiple locations around the nation.
Gain Complete Visibility in Last Mile Tracking and Procurement With OneRail
The first step to achieving final-mile tracking abilities is facing capacity procurement issues with an experienced courier network. OneRail is a top-quality courier network that provides procurement tracking at any step of the final-mile delivery process. To learn how next-level visibility and communication can change your final-mile process for the better, request a OneRail demo today!