The Last mile is the total journey that is covered by a manufacturer to a customer within the supply chain industry. Meaning that it involves both warehouse and distribution centres. This is often considered to be the most difficult and complex part of the supply chain process because the shipment goes through a lot of challenges and if once also, there lies a fault - it may pose a break in the efficient routing.
In this blog, we will talk about what are the challenges in the last mile and what are the trends that are being followed in 2024 to overcome those challenges.
To begin with, let us understand the steps of supply chain management which first includes supplier sourcing - which means deciding on suppliers to fulfil your need for goods and materials
The initial step of the supply chain management process is planning about which product to ship (from source to destination). This also includes logistics support.
Step 2 - Collaborating with the Supplier
The second step is to go and collaborate with the supplier of the product. Either they will have the finished product ready or will manufacture it on your demand.
Step 3 - Manufacturing
The third step arises when the good that needs to be shipped is yet to be produced. The production takes place and then they are sent to the warehouse department.
The finished products are then kept in the warehouse with accurate temperatures to retain the quality of the products - if they are perishable.
Step 5 - Distribution
The next step is receiving the order and proceeding with the distribution centre also known as logistics facilities where goods are kept unloaded from the shipment, kept for some time and then packed for final distribution (delivered either in retail stores or to customers.)
Step 6 - The Last Mile Delivery
This is what we will be talking about in our blog today. This is the final and the most crucial step in the supply chain management process. The supply chain cycle is incomplete until the product reaches the end user.
Challenges in the Last Mile Delivery
With e-commerce on the rise, more and more people have switched to shopping online. Not only because it is convenient but also cheaper than the products available in the same quantity in their nearby stores - but priced higher.
This has put constant pressure on last-mile delivery. In a recent report by Tidio, over 2.14 Billion people shop online and trust products that do not involve middlemen. 27 per cent of 7.9 billion people are online shoppers.
Some of the key challenges in the last mile delivery are as follows
1) Costing - The last mile delivery involves processes like order processing, dispatching and routing, shipment tracking, final delivery and then the customer follow-up. All these processes are not easy.
With this, huge costing comes into play. Fuel costing, vehicle maintenance, manpower charge and other operational costs. Not only this, but the cost that occurs during system failure, product return and customer abandoning or cancelling the order due to delivery delay, change of mind or simply as a part of mood swing.
2) Delivery Delays - You must have received a message from your logistics partner that your shipment is late. We know, this single message is enough to push you towards a second thought “whether I should cancel my order and purchase from somewhere else.” You are not doing anything wrong, but you must know that such delay arises due to traffic jams, system failure, remote locations, accidents, unfavourable weather conditions etc. The driver always takes the shortest and the best possible route but exceptional conditions may arise with them too - which results in huge loss.
3) Visibility Tracking - With the help of real-time tracking, this is easy but remote location deliveries pose threats when information is not passed properly about where the shipment is.
4) Reverse Logistics - As discussed above, reverse logistics means when the customer refuses to accept the product, cancels it or absconds at the time of last-mile delivery.
5) Non-sustainable - The entire process of the cold chain and logistics requires a lot of energy consumption that also involves a lot of carbon emission. The entire process is often questioned by sustainability enthusiasts.
What is the way forward?
1) Subsidised Shipment - The last mile delivery is already a costly process and if the cost is because of the customers, the demand would ultimately go down. So now, the last-mile delivery industry is looking for ways to bring the cost down. This involves better route mapping, consolidated deliveries, enhancing tech support, using EVs and smart vehicles that are environmentally friendly and optimising data analytics.
2) Tech Enhancement - Navigating the complexities of last-mile delivery which is directly proportional to an increase in cost, new-age technologies such as Artificial Intelligence play wonders! Enabling AI in supply chain management, major issues related to delivery route optimizations, fault mapping, tracking orders etc. can be minimised.
The latest trend to look out for in this segment is Generative AI - which analyses the heavy flow of data and makes shipment delivery smooth and easy! It also predicts demand patterns within the customers so that the last mile delivery could be ready with challenging circumstances while also reducing picking times and planning for larger storage capacity.
As reported by Wha Tech, the Generative Logistics AI Market is projected to reach USD 3951.73 Million by 2030.
3) Smart and Sustainable Packaging Solution - We all know that goods in transition are packed and then loaded. To avoid damage and preserve quality, sustainable and smart packaging solutions are gaining importance. The design and technology applied to packaging can never be ignored because this is what makes all the difference.
This is done by;
Customization in Packaging - A normal psychology here is when customers order their products in customised packaging, they don't easily refuse to accept it. The reason is the emotions attached.
Everything here is all Psychological Aspects of Packaging which first is customised and then makes the consumers feel valued.
Meyers in their article have described it very clearly - View Article Here
Sustainable Factor - Many logistics companies are using sustainable packaging considering the rise in attention towards climate change. Reusable and recyclable materials are everyone’s choice.
Smart Packaging - Equipping sensors and smart devices on boxes (packages) are new ways to leverage technology. Smart packaging boxes have a machine attached to them that records temperature, present state of the content in the box and humidity. Not only does this help the last mile delivery team but also customers who can track their products’ state in real time.
4) Increased Warehouses - Majorly companies like Amazon, Flipkart etc. are practising same-day delivery for their prime and valued clients. But many times, we tend to receive a sorry message. This can be avoided only when there is an increased warehouse and inventory management also known as fulfilment centres.
5) Fewer COD options - The last-mile delivery industry should give COD options to only valued customers or on fewer items. Sometimes, customers refuse to accept the products out of no valid reason which is very unfavourable for the delivery department.
So, we see via this blog, what is the last mile delivery, its challenges and what are the plausible ways it can be minimised. If you have an innovative idea to share, a product to exhibit or just want to connect with key cold chain and logistics industry enthusiasts - do register yourself at the World Cold Chain Expo 2024 Dubai.
