Challenges of Last Mile Delivery: Supply Chain Weak Links
Challenges of last mile delivery are a big deal. They include poorly optimized routes, traffic, and delays from road work and accidents. Ecommerce giants like Amazon have trained consumers to expect fast, free shipping options. Smaller businesses can quickly find themselves outclassed by more robust and efficient operations.
According to the Council of Supply Chain Management Professionals (CSCMP), challenges of last mile delivery in logistics consist of high costs, unsuccessful solutions, and varying consumer expectations. These hurdles can impact customer satisfaction and a company’s bottom line.
If you’re ready to wrap your head around the challenges associated with last mile delivery, we’re here to help. Join us as we examine these challenges, their solutions, and how partnering with USA Last Mile Logistics takes the guesswork out of this important process.
Understanding the Challenges of Last Mile Delivery
Last mile delivery is the home stretch of delivery. This stage is laden with challenges that can affect efficiency and customer satisfaction. In this section, we discuss these obstacles and how supply chain bottlenecks can make them worse.
What Are Common Last Mile Delivery Issues?
Delivering a parcel to its final destination is often the most difficult aspect of logistics. Much can go wrong in the final mile, and delivery companies face many challenges overcoming these potential issues.
There are a few common challenges that almost every last mile delivery faces.
- Delivery Times: Meeting customer delivery windows is often difficult due to route planning challenges. Traffic and detours due to accidents also impact this aspect.
- Cost Management: The last mile accounts for a large portion of overall delivery costs.
- Failed Deliveries: Incorrect addresses or the recipient not being available lead to failed delivery attempts.
- Environmental Concerns: With increasing numbers of delivery vehicles, pollution and congestion are growing issues.
All of these obstacles can lead to increased costs and unhappy customers. Unfortunately, supply chain difficulties can compound these challenges.
How Supply Chain Issues Exacerbate Final Mile Challenges
Even the most efficient supply chain can face disruptions outside its control. These disruptions can create a domino effect that significantly impacts last mile delivery.
Some of the most common supply chain issues in shipping include:
- Inventory Shortages: Issues such as manufacturing delays can lead to insufficient inventory. For example, the chip shortage affected everything from PC gaming equipment to vehicle manufacturing.
- Delayed Shipments: Have you ever been stuck on the interstate behind miles of vehicles due to a wreck? Shipments arriving late at the hub can lead to delayed last mile deliveries. Delays can easily arise from inclement weather.
- Increased Costs: Fluctuations in fuel prices or freight costs can increase last mile delivery costs.
A famous example is the global supply chain disruption caused by the Suez Canal blockage in 2021. This blockage led to delayed shipments worldwide. As significant as this disruption was, its impact on last mile delivery pales in comparison to that of COVID-19.
The pandemic had a massive impact on the final mile and ecommerce in general. Ripples from that impact continue to shape the shipping industry.
The Ecommerce Boom Since The Pandemic
The pandemic acted as a catalyst for ecommerce growth, changing the landscape of retail and increasing demands on last mile delivery. With restrictions in place and many retail locations limiting their hours or shutting down outright, customers turned to online ordering for everything from toothbrushes to toilet paper.
How Have Ecommerce Sales Skyrocketed Post-Pandemic?
Ecommerce sales skyrocketed in 2020, increasing by 27.6% over 2019. This shift towards online shopping resulted in a higher volume of last mile deliveries. The logistics industry was rocked by this increase in demand.
The Increasing Expectations of Modern Consumers
As online retailers adapted to the demands resulting from the pandemic, a side effect occurred: customer expectations increased. New standards were set, and those standards haven’t gone back down in the post-pandemic world.
Modern consumers increasingly expect fast, free, and convenient shipping options. Logistics companies must meet these expectations or risk losing business.
The following table contains some of the key metrics of increased consumer demands from 2022.
| 60 Percent | The percentage of consumers who won’t order from a business that misses a scheduled delivery window. |
| 58 Percent | The amount of freight deliveries that were rescheduled. |
| 50 Percent | Consumers who found poor communication to blame for unsatisfactory deliveries. |
| 41 Percent | Percentage of customers who want to track each delivery step in real time. |
| 74 Percent | Customers who don’t want signature at delivery to be required. |
Customers are also increasingly concerned about sustainability. They expect delivery companies to balance speed and efficiency while minimizing harm to the environment. This has driven the popularity of autonomous delivery. Driverless vehicles are smaller, requiring less fuel than their manned counterparts.
Why is Consumer Demand for Fast and Free Shipping Growing?
Meeting customer expectations in the last mile has been no easy task over the last several years. This is a direct result of increased expectations and demands from consumers.
While several factors have contributed to this change in customer behavior, there are three contributors in particular that bear mention.
- Instant Satisfaction: The on-demand economy has cultivated a lack of patience among consumers.
- Market Leaders: Ecommerce giants like Amazon set high standards with services like Prime. Customers have become used to same-day or two-day shipping, along with simplified returns.
- Increased Competition: Consumers have numerous options and will choose providers that offer the best shipping terms. Most customers won’t do repeat business after a poor delivery experience.
With all of these challenges present, how can businesses keep their customers happy and sustain a profit? One answer is to partner with a 3PL warehouse.
The Role of 3PL Warehouses in Tackling Last Mile Delivery Issues
Third-party logistics (3PL) warehouses are specialized companies that handle logistics operations, including warehousing and transportation. Increased shipping demands are one of the biggest growing pains businesses can face, and partnering with a 3PL is a smart way to send those pains packing.
How Can 3PL Warehouses Alleviate Final Mile Delivery Challenges?
Outsourcing to 3PLs can improve last mile delivery by:
- Optimizing Routes: 3PLs use advanced technology for efficient route planning.
- Reducing Costs: Leveraging economies of scale, 3PLs can achieve lower shipping costs.
- Improving Reliability: 3PLs specialize in logistics, often leading to more reliable service.
These logistics companies go the extra mile by using modern processes such as omnichannel fulfillment. This process had a tremendous effect on last mile delivery.
Embracing Omnichannel Fulfillment for Better Last Mile Delivery
Omnichannel fulfillment is a retail strategy that combines different shopping methods (e.g., online, in a physical store). This stands in contrast to multichannel fulfillment.
The following example compares the two methods to illustrate their differences.
- Multichannel: You place an order for a new gym bag with company X. The order is processed at a warehouse, shipped to a distribution center, and is delivered to your door. The process takes approximately 3-5 business days.
- Omnichannel: You place an order for a new gym bag with company Y. The fulfillment system determines that the fastest way to get the order to you is to ship them from a nearby retail establishment owned by the same company. The store packages the shoes, a fulfillment driver picks them up, and they’re delivered to you. The process takes 1-2 business days.
Using an omnichannel strategy is an effective solution to mitigate challenges in final mile delivery. Customers love options, and this process has plenty to offer. The faster your package arrives, the more likely your customer will repeat business.
How Does Omnichannel Fulfillment Address Last Mile Challenges?
Omnichannel fulfillment is an approach companies use to streamline inventory and sales channels. This approach is especially impactful in addressing last mile delivery challenges.
Take a look at some of the advantages omnichannel fulfillment brings to the table.
- Reduced Delivery Time: By distributing inventory across different locations, the distance traveled during the last mile can be greatly reduced. For example, if a retailer has both a physical store and an online store, it can fulfill online orders from the retail locations closest to the customer. Faster delivery times are easily achieved in this manner.
- Increased Flexibility and Customer Choice: Omnichannel fulfillment includes options such as buy online, pick up in store (BOPIS). This gives customers more choices in how they receive their products. It also reduces last mile delivery costs by transferring the last leg of travel to the customer.
- Improved Inventory Management: Omnichannel fulfillment needs robust inventory management systems to ensure inventory levels are accurate across all channels. This results in fewer failed deliveries due to lack of stock.
- Enhanced Customer Experience: Ultimately, the ability to fulfill orders regardless of the channel they are placed on contributes to a better customer experience. In the context of last mile delivery, this means that customers receive their orders when and how they expect, which boosts satisfaction. Satisfied customers are loyal customers.
- Cost Optimization: Using stores as distribution centers can lead to decreased shipping costs and shorter delivery times. This helps manage the costs associated with last mile delivery, which tends to be the most expensive part of fulfillment.
- Improved Resource Allocation: By analyzing data from various channels, companies can accurately anticipate demand and allocate resources more effectively. For instance, if a product is popular online but not in stores, stores can be used as mini warehouses to fulfill online orders more quickly.
Omnichannel fulfillment helps companies overcome the challenges of last mile delivery by strategically managing inventory, offering customers more options, and optimizing resources.
Partnering With USA Last Mile Logistics: The Ultimate Solution
USA Last Mile Logistics is an expert in managing the challenges of last mile deliveries, ensuring timely and cost-effective service. By partnering with us, you’ll enjoy benefits such as:
- Tailored Solutions: Customized logistics solutions that cater to specific business needs.
- Technology Integration: Use of cutting-edge technology for efficient route planning and delivery.
- Reduced Costs: Leveraging partnerships and networks to reduce delivery costs.
Our team of final mile experts is ready to help you take the next step. Call us today at 866-569-1445, or email us through our contact page. We’re ready to travel with you on the last mile.