Last mile logistics is a frustrating and expensive part of the fulfillment process. As a share of the total cost of shipping, last mile delivery costs comprise 53% overall. The irony is that despite the price tag, customers have become accustomed to not paying for delivery by the likes of Amazon — and this is not just B2C customers. Increasingly, the B2B world is behaving the same way. The devaluation of delivery as a part of the cost of supply chain is a major headache for distributors and retailers around the world.
In addition to the substantial cost of last mile delivery is the growing complexity of it as order profiles change over time. Even if sales volumes remain steady, the impact of e-commerce is shrinking order sizes and increasing order volumes, adding more dynamics, and therefore vulnerabilities, to last mile delivery success.
Delighting customers with seamless next day delivery, regardless of location, is one of the last opportunities to showcase excellent customer service; yet it’s often the leg of the journey over which companies have the least control. So, what can you do about it?
During the last 30 years, I’ve been building, implementing and supporting supply chain solutions and I have seen massive changes in how logistics are managed. However, the one trend that has not changed is the ever-increasing importance in getting the last mile right — getting the right product, to the right place, at the right time, for the right cost. While this is easy to say, you will not come close to “the right cost” if you don't manage the last mile properly.
Here are four key guidelines that have remained true over the years, even as industry has evolved.
- Take Control
Tossing your orders over the fence never works. If you are giving your packages to a carrier and just “expecting it to work,” that is a recipe for disaster. Creating a very tightly monitored network of delivery methods is essential to your success. I am seeing distributors even go to the lengths of running their own delivery vehicles for local routes. There are systems to help you look and feel like a major carrier that are accessible and inexpensive these days. If you need to use a commercial carrier, monitor their performance tightly and make sure they deliver on their promises.
- Offer Value to Your Customers
Research what services and features your competition is not offering and use this knowledge to create strategies that will improve your own business performance. This will differentiate your business by being that company that goes the extra mile. I have seen distributors packing orders in the sequence the items will be used by the customer in order to make their consumption more efficient. Then there are distributors offering guaranteed delivery before the start of the next workday. Whatever it is that makes real sense to your customer, find it out and make it viable by managing the last mile and become that service leader in the marketplace.
- Be Transparent
You need to go beyond the email notification that says, "We shipped your package." This is about a portal where a customer can see real-time updates on his or her order being fulfilled, processed, transported and the date it is expected to arrive. Being visible and honest are critical parts of last mile logistics. If you have delays or misroutes, you need to be upfront with your customers because it is about managing expectations and building trust.
- Monitor Your Performance
Ongoing last mile performance monitoring is vital to understanding whether your desired business and customer outcomes are being realized. You need to measure your on-time delivery rate, shipping cost per mile, hours in motion, customer satisfaction and damage to freight. These are all key elements to continuously improving your team and making last mile an element of what defines the customer's experience of your brand.
Cut through the competition with your last mile logistics strategy
The last mile will always be expensive and complicated, but it can add massive value to your business if you execute it flawlessly. You need a critical eye to navigate both immediate challenges and forward-looking readiness. However, the extra value and excellent customer service you deliver will set you apart from the competition. Continue to innovate and concentrate on this critical part of your operations. Consider these four guidelines as a starting point and you will succeed in taming the last mile beast.