What is Last Mile Logistics?

We talk about last mile delivery referring to the last and final step of the delivery process.

It originates from a distribution center or warehouse facility, and is transported to the end-user, who can be located in different areas (although the name implies “last mile”, it can range from a couple of blocks to very, very far away).

What is Last Mile Logistics?

More often than not, last mile logistics entails the use of small parcel or package carriers in order to deliver products to consumers, and tends to be a complex process, with multiple players and providers needing to be in-sync.

The increase in consumer demand has led companies to rethink the true meaning of the last mile in logistics and to design new strategies for this critical process in order to achieve faster and more efficient shipping.

Whether it’s to fill an individual or retail store delivery needs, the final stretch of the supply chain must be met at lightning speed in order to generate further sales and meet customer demand. Taking in consideration the cost of what it means to operate a last mile operation, the need to optimize resources should be a key focus in the process in order to achieve an efficient customer experience. 

Advantage of last mile logistics 

As previously stated, last mile delivery, also known as last mile logistics, speaks to the transport of products, goods and services from point of origin to a final destination, -aka- customers' doorstep. The importance of it lies in the savings produced when delivering packages in an efficient and optimized way. 

Nowadays, many retail companies have focused their attention on last mile logistics as a point of difference with their competitors. This is specifically due to the benefits that implementing a last mile delivery strategy can offer a company.

Optimizes delivery routes

Through route optimization tools provided by a last mile delivery software, it’s possible to enable companies and businesses to optimize their delivery routes in real-time, therefore avoiding unnecessary or unforeseen delays. 

It also provides transparency through mobile and desktop applications and software, knowing when a specific order was placed, by whom, who will deliver it and by when it will be delivered is a walk in the park. 

Improves shipment visibility

With visibility being one of the most important challenges in regards to last mile logistics, it’s of extreme importance being able to see where shipments are, if they’ve been diverted, and how much idle time is being spent, all in real-time, of course.

This improves businesses control over their products and fleet, and helps minimize theft and spoilage, depending on the type of product. 

Increases customer engagement

Hand in hand with real-time visibility, these types of software provide customers with data and information that significantly increases transparency of the shipping process.

Through apps, clients can now talk directly with the delivery staff to coordinate the delivery of products so it works with their schedule and limitations. 

Boosts staff productivity

Through the planning and optimization of routes, plus real-time visibility, last mile software gets rid of unplanned rerouting or idling.

It helps ensure drivers are using the most efficient routes in order to complete their deliveries, positively impacting the overall fleet performance and productivity. 

Delivery flexibility

With the use of real-time information, customers can communicate with the delivery staff and change the delivery details such as location or time of drop-off in order to fit with their timing. 

Profitability increase

By gaining all the previous benefits to the businesses or companies logistics process, it’s only natural to see an increase in profits.

This is mainly driven by fuel consumption reduction, using a smaller fleet now that it’s optimized, the management of expenses and client retention.

Overall, in order to stay competitive, ensure customer loyalty and retention, and have better control over the logistics operation, it’s important to leverage state-of-the-art last mile logistics software to achieve further growth.

Key steps in the last mile process

The last mile delivery process can be broken down into the following five steps:

Order processing

Orders are digitally entered into a centralized system. This is the last mile step in which orders and requests are monitored by both the sender and the final recipient, who normally tracks the status of the delivery using a tracking number previously provided to them by the delivery company.

Transportation hub arrival

Orders arrive at the transportation hub and await delivery to their final recipient.

This is where the last-mile delivery process really begins: Companies need to ensure that the order gets from the transportation hub to the customer as quickly as possible.

Delivery order assignment

Orders are assigned to delivery staff based on routes and recipient addresses.
Strategically sorting and allocating delivery packages is essential to having an optimized and cost-effective last mile delivery logistics solution.

Order scanning

Orders are scanned before being loaded onto delivery vehicles.Scanning the products will automatically update the status of the order, as well as tracking number for the final recipient.

This ensures better reliability in the event of a package getting lost along the way, while reducing the chances of that actually occurring.

Proof of delivery

Orders successfully reach their final destination and a POD (proof of delivery) is obtained. This is the final stage of the last mile logistics process, and it’s when the package has reached its destination.

Delivery personnel proceed to update the tracking information to verify and confirm the delivery has been successfully completed via signature and/or photographic proof upon delivery.

Challenges in the last mile logistics process

In supply chain management, the last mile describes the last and, often, the most difficult part in transporting packages from distribution centers or warehouses to their final destinations.

Common challenges with last mile delivery include minimizing costs, ensuring transparency, increasing efficiency, and improving infrastructure. This is why this process tends to be one of the most complicated and expensive stages.

By now, we have established that an efficient last mile delivery process is essential to keeping our customers happy. However, the paradox is that while customers want fast and free shipping, it also happens to be the most expensive and time-consuming part of the delivery process.

But, considering how easy it has become for customers to find an alternative place to shop, businesses can't afford to let them down, which means that companies have to pay that cost. And, right there, is the problem of last-mile delivery.

Last mile shipping and tracking can represent up to 53% of the total costs of a shipment. Companies typically cover around 25% of that cost, however, with supply chain inefficiencies becoming more costly, this number is ever-increasing.

What companies mostly use last mile logistics?

By definition, last mile delivery is relevant to companies that deliver products directly to their clients and consumers.
Some of these businesses are:

• Electronic commerce
• Couriers
• 3PL companies (third party logistics)
• Direct-to-consumer retail companies
• Food delivery companies
• Supermarkets that offer delivery services
• Department stores that offer delivery services
• Florists
• Restaurants that offer delivery services
• Pharmacies that offer delivery services

It’s important to note, that even if a company collaborates with wholesalers or retailers throughout the supply chain of a specific product, they may have an independent website with their own ecommerce store. This means they would still need to handle shipping, including last-mile delivery, for orders that arrive through those retailers.

How can route optimization help solve last mile problems?

Thankfully, it’s not necessary to invest in delivery robots or drones, expensive technology, third-party logistics companies, or copy the Amazon Prime program to solve last-mile fulfillment issues.

Route optimization is a valuable last mile delivery software that can help companies manage in a more efficient manner their fleet, increase delivery capacity and minimize unfulfilled or incomplete deliveries, making a companies last mile logistics a business asset.

How does route optimization work in last mile deliveries?

Route optimization is the process of finding the shortest and most efficient route in order to fulfill a list of last-mile deliveries. Since a driver's routes typically involve far more than just two destinations, finding the best route is a complex challenge.

With this in mind, route optimization software helps companies consider multiple variables in order to efficiently plan and schedule deliveries to their customers. In addition, it ensures that the product is delivered as quickly and cheaply as possible.

These types of software help solve last mile delivery problems such as

• Real-time order tracking and customer notifications
• Route planning that considers time windows and other constraints
• Mobile app to ensure live tracking and fewer failed deliveries
• Much faster rerouting and programming on the fly
• More control over the delivery process
• Proof of delivery for greater transparency and efficiency
• Accurately compare KPIs
• Focus on the customer experience

According to 86% of consumers would leave a brand after as few as two poor experiences. Keeping this in mind, and the fact of the overall customer experience growth during the last few years, it becomes more and more pressing for companies to stay relevant.

To achieve this, tools such as TMS (transportation management systems) are good allies to gain further control over the delivery process. Companies such as Drivin offer cloud based solutions that leverage the benefits of a last mile logistics solution, while guaranteeing the improvement of the overall client experience.