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Hidden Costs: The Impact of Poor Omnichannel Orchestration on Last Mile Delivery

The rise of e-commerce and digital retail has propelled omnichannel fulfillment strategies to the forefront of the retail industry and made last mile delivery a critical component of the customer experience. Unfortunately, the widespread expectation of free shipping means last mile delivery often carries a significant price tag for retailers, accounting for up to 53% of total shipping costs. These changes are forcing businesses to explore new technologies and process improvements that optimize last mile delivery, reduce costs and improve omnichannel orchestration.

This article will explore the relationship between last mile and omnichannel orchestration, the costs associated with poor omnichannel execution and how technology can support a holistic omnichannel approach for last mile delivery.

Last Mile and Omnichannel Orchestration: Two Sides of the Same Coin

Last mile delivery and omnichannel orchestration are closely intertwined, as both focus on providing an exceptional customer experience. Optimized last mile delivery involves improving the final leg of the delivery process, from the distribution center to the customer’s doorstep. Four critical steps for optimizing last mile logistics operations include route optimization, real-time tracking, seamless communication and accurate performance metrics. By leveraging data-driven insights and technology, businesses can streamline last mile processes, reduce inefficiencies and ensure timely and cost-effective deliveries.

Omnichannel fulfillment, on the other hand, revolves around providing a consistent and seamless customer experience across all sales channels, from brick-and-mortar stores to online platforms. Effective omnichannel orchestration involves integrating various touchpoints — including inventory management, order processing and shipping, to create a unified and efficient shopping experience. By successfully orchestrating their omnichannel efforts, businesses can meet the rising consumer expectations for convenience, personalization and fast delivery.

Last mile delivery and omnichannel orchestration go hand in hand because both share a common goal: enhancing and improving the customer experience. By optimizing last mile logistics and implementing a comprehensive omnichannel fulfillment strategy, businesses can effectively meet customer demands, reduce costs and stay competitive in the retail market.

The Costs of Poor Omnichannel Orchestration in Last Mile Delivery

In the dynamic e-commerce and retail environment, the fusion of last mile delivery with omnichannel orchestration presents its own set of unique challenges. These hurdles, when not properly addressed, can escalate into substantial costs for businesses, both in terms of monetary value and customer experience.

Hurdles on the Path: Challenges of Last Mile in Omnichannel Orchestration

Implementing an effective last mile delivery strategy within an omnichannel fulfillment approach is often easier said than done. Businesses face a myriad of omnichannel challenges, including:

  • Complex Delivery Networks – The fragmented nature of courier and last mile delivery networks makes it challenging to achieve efficiency and optimization across multiple fulfillment channels. As businesses expand their networks, they must find effective ways to coordinate and orchestrate deliveries, which is difficult with traditional manual processes.
  • Cost Management – Balancing the rising costs of last mile delivery with customer expectations for free shipping is a major challenge. Retailers need to optimize last mile logistics to minimize costs and maintain profitability across various sales channels.
  • Enhanced Visibility and Tracking: Meeting the high expectations of today’s online shoppers means providing real-time tracking updates and accurate delivery times. Businesses need to implement advanced last mile solutions to ensure seamless visibility and enable proactive exceptions management.
  • Resource Optimization – As demand for last mile delivery grows, businesses must efficiently manage additional courier partners, vehicles and delivery drivers while navigating ongoing labor shortages. Shippers must consider automation solutions that drive resource efficiency and align with omnichannel orchestration strategies.

Counting the Cost: Implications of Poor Omnichannel Execution

The costs associated with ineffective omnichannel orchestration in last mile delivery extend beyond direct monetary expenses. They can impact various facets of business operations, including:

  • Retail and Brick-and-Mortar Store Availability – Poor planning in last mile delivery can lead to stockouts in physical stores, causing customer frustration and lost sales opportunities.
  • Omnichannel Challenges – For retailers operating both online and in physical stores, poor coordination can result in inefficiencies and inconsistencies between different sales channels, leading to a disjointed customer experience.
  • Customer Satisfaction and Loyalty – In the world of e-commerce, late or failed deliveries, as well as high delivery costs due to poor planning, can significantly harm customer satisfaction and loyalty.
  • Returns Management – E-commerce often grapples with a high rate of returns. Inadequate planning around last mile delivery can make managing these returns a challenging and costly endeavor.

Understanding these challenges and costs is the first step toward designing a dependable omnichannel strategy for last mile delivery. The next step is leveraging the right technology to overcome these hurdles, optimize processes and ultimately enhance customer experience.

The Building Blocks of Omnichannel Orchestration to Reduce Last Mile Costs 

A successful omnichannel approach to last mile delivery is based upon four essential building blocks. By implementing and optimizing these key components, businesses can reduce last mile delivery costs while increasing customer satisfaction.

Customer-Focused Last Mile Strategy

The customer experience should be at the heart of any omnichannel last mile strategy.  Focusing on questions like What do customers expect from last mile delivery? and What is the most cost-effective way to meet those expectations? helps retailers create a delivery model that aligns with customer demands while optimizing costs and resources.

Last Mile Network Diversification & Optimization

While omnichannel distribution models offer various fulfillment options, many customers still prefer the convenience of home delivery. To effectively cater to this preference, retailers need to build a diverse last mile carrier network and have the ability to quickly compare carrier costs and service levels. This helps identify the most efficient and cost-effective delivery method for each order or individual item, ultimately reducing overall delivery costs.

End-to-End Visibility

Comprehensive real-time visibility is crucial for successful last mile delivery operations. Retailers should have complete insight into the entire process, from order placement and warehouse departure to final delivery to the customer’s doorstep. High-level visibility enables businesses to identify potential risks, proactively manage exceptions and ensure on-time delivery, all of which contribute to reducing last mile costs.

Data-Driven Decision-Making

To effectively manage last mile operations, businesses must rely on accurate and relevant data. By leveraging data-driven insights, retailers can make informed decisions that drive revenue, increase efficiency and optimize last mile delivery processes. These insights not only help in reducing costs but also contribute to enhancing the overall customer experience.

These foundational building blocks of an effective omnichannel orchestration strategy play a pivotal role in reducing last mile delivery costs and ensuring customer satisfaction. Unlocking the potential of these components to streamline operations requires a keen strategy and implementation of advanced technologies.

Harnessing Technology to Tackle the Costs of Inefficient Omnichannel Orchestration

To overcome the challenges of omnichannel orchestration and reduce last mile delivery costs, businesses must leverage technology solutions that automate processes and manage data effectively. OneRail’s platform offers a suite of features designed to address the most pressing challenges and costs in the world of omnichannel orchestration and last mile delivery.

  • Fulfillment Control Tower: OneRail integrates data across omnichannel technology systems into a comprehensive dashboard that provides real-time visibility across fulfillment and delivery processes, enabling retailers to optimize operations and quickly identify inefficiencies.
  • On-Demand Last Mile Capacity: OneRail’s orchestration technology enables wholesalers to access the largest integrated last mile courier network, with over 10 million drivers and over 600 courier entities. Whether a delivery requires courier, parcel, or LTL services, OneRail’s network can provide hotshot, same-day, next-day, expedited or economy options to meet any demand.
  • Automated Rate Shopping: OneRail’s rate shopping software streamlines the process of researching and negotiating carrier rates, with technology that predicts market rates and negotiates on the retailer’s behalf, resulting in up to 40-70% reduction in delivery fulfillment costs and a 35% increase in delivery speed.
  • Seamless API Integrations: Bridging communication gaps between shippers, last mile providers and customers, OneRail’s API integrations keep all stakeholders informed throughout the delivery journey — from DC to doorstep.
  • Real-Time Tracking with Proactive Exception Management: Integrating real-time tracking updates from the courier network, OneRail’s platform quickly identifies shipments at risk of missing delivery targets. Coupled with the Exceptions Assist™ team, a dedicated group of logistics experts, OneRail can proactively identify and resolve issues before they impact the customer experience.

By integrating these powerful features, OneRail’s solution can help retail businesses overcome the challenges of omnichannel orchestration, minimize last mile costs and create a seamless customer experience.

OneRail: The Ultimate Solution for Omnichannel Orchestration and Last Mile Delivery

The costs and implications of poor omnichannel orchestration in last mile delivery are significant, impacting customer satisfaction, brand reputation and profitability. As the retail industry continues to evolve, businesses must adapt by implementing innovative strategies that harness technology to optimize last mile operations and create seamless customer experiences.

OneRail’s comprehensive solution addresses the challenges and costs of omnichannel orchestration and last mile delivery. With a host of powerful automation and data-rich features, OneRail empowers businesses to streamline processes, reduce costs and exceed customer expectations. 

Elevate your last mile delivery and omnichannel orchestration efforts — schedule a demo with OneRail today.

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