WHAT IS LAST MILE DELIVERY:

PART 2: ADAPTING TO RETAIL & E-COMMERCE ORDER FULFILLMENT CHALLENGES

What is Last Mile Delivery?• Last Mile Delivery is the movement of goods from a retailer’s

transportation hub to the final delivery destination – consumer homes – with the goal of items being delivered as fast as possible.

• The growing demand for fully integrated omni-channel retailing has forced retailers and their transportation and logistics partners to adjust to a new series of challenges encountered.

• The challenges will force transportation and logistics businesses to think outside of the box and make significant changes in their portfolio of delivery offerings.

Evolution of Last Mile Delivery

The addition of the last mile delivery methods pictured above are in response to the added complexity that comes with omni-channel retailing. Logistics businesses worldwide have battled a variety of challenges in order to make these methods successful.

Last Mile Delivery Challenges:e-Commerce Growth

2009 Future2014

Brick & Mortar eCommerce

• Surveyed retailers reported that between 2009 and 2014 e-Commerce sales skyrocketed with an increase of 47% compared to that of brick and mortar locations which saw an average 6% increase. E-Commerce is expected to reach $2.3 trillion by 2017.

Brick & Mortar vs. eCommerce RevenueGrowth

Last Mile Delivery Challenges:e-Commerce Growth• This shift in retail channel utilization poses problems for retailers:

how to manage increased order fulfillment requirements and the associated costs.

• The solution? Evaluate current shipping capabilities to determine whether or not your delivery network can handle the additional volume moving forward. If not, search for alternative delivery solutions to incorporate into your distribution network.

• This may be in the form of smaller localized distribution centers, outsourcing in appropriate areas or more creative solutions such as drones or click-to-collect locations.

Last Mile Delivery Challenges:Rising Shipping Costs• Last Mile Delivery is often the least efficient leg of the supply chain,

contributing to nearly 28% of total transportation costs. This is referred to as the “last mile problem”.

• How can you reduce shipping costs?

1. Utilize intermodal freight channels to link logistics clusters. Some lower populated areas can not justify dedicated logistics centers and rail transportation can help to connect first mile and last mile logistics. This can help to reduce or eliminate the cost of OTR transportation.

2. Consolidate shipments using crossdocking. Many carriers report low load factors - the ratio of average load to total freight capacity. Consolidating more LTL deliveries into fewer FTL deliveries can help to reduce last mile delivery costs.

Last Mile Delivery Challenges:Rising Shipping Costs• How can you reduce shipping costs?

3. Eliminate primary delivery channels such as UPS, FedEx and USPS by shortening delivery routes with strategically placed distribution centers. Traditional distribution operations may have only 3-5 facilities where last mile DCs may have anywhere between 8-12.

Shorter delivery routes help to reduce fuel costs associated to last miledelivery and avoid the ever-increasing shipping rates of the primary carriers.

4. Offer click-and-collect centers or parcel lockers for delivery. This helps to consolidate multiple direct-to-home deliveries into a single drop off.

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Last Mile Delivery Challenges:Government Regulations• Many municipalities, both US and abroad, face limitations within

residential areas such as weight & size limits, parking policies and noise restrictions. This can pose problems in regards to size of vehicles, delivery times and other issues.

• How can you remain compliant? Many transportation and logistics businesses have invested in smaller delivery vehicles for use in local regional delivery. These smaller vehicles typically make less noise and comply with size and weight restrictions.

Some businesses have also shifted delivery times to evening hours to avoid daytime noise regulations.

Last Mile Delivery Challenges:Overpopulation• Countries such as China, India and the US have densely populated

urban areas that make last mile delivery more difficult. In some cases, motorized vehicles are not a feasible option and alternatives must be explored.

• The solution? Amazon Now is one example of how retailers can efficiently fulfill orders in these densely populated areas. With this service local courier businesses complete last mile delivery services on behalf of the retailer. These businesses act as one-time contractors on an as-needed basis. In areas where motor vehicles are prohibited, last mile delivery by bicycle is also being used.

These types of services are best used for small and lightweightpackages.

Last Mile Delivery Challenges:Information Visibility• Customers now expect detailed information regarding their online

orders including when their order has been accepted, processed, shipped and delivered. Tracking and communicating details about these orders throughout the multiple steps of the omni-channel retail supply chain can be complex.

• How can you gain cross-channel supply chain visibility? Many retailers and their supply chain operators are implementing inventory management software or warehouse management software to track inventory data throughout the supply chain.

These systems, if built to fit your retail operation, can provide full audit trail data capabilities to both you and your customer. This will help to satisfy customer demand for full visibility into order status.

Conclusion• With e-Commerce revenue expected to reach $2.3 trillion by 2017,

retailers and their transportation networks must be capable of adapting to changes in both volume and customer expectations.

• Last mile delivery is the last touch point with consumers and plays a vital role in customer satisfaction and loyalty. Focusing on the potential solutions outlined can help your retail operation improve the effectiveness, efficiency and cost of last mile delivery operations.

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Sources:https://www.mitchellsny.com/blog/overcoming-last-mile-logistics-challenges/http://www.colliers.com/-/media/Files/Global/ResearchReports/Colliers-From-First-Mile-to-Last-Mile-Global-Logistics http://logisticsviewpoints.com/2015/04/01/e-commerce-growth-brings-last-mile-headaches/

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