In the field of logistics and particularly transportation, the concept of “last mile” refers to the final stage of the process of delivering goods to the destination indicated by the customer. It represents a crucial step in e-commerce logistics , as it has a huge impact on costs and determines customer satisfaction.
More than 80% of customers do not buy from a company that has failed to deliver, according to some studies. Therefore, the importance of investing in this section is evident and, at the same time, it is historically the slowest and most inefficient section of the chain. So the challenge is not easy and requires careful planning.
In our article, we analyze the implications of the last mile for the global logistics of the company and review the main strategies that can improve the organization of this decisive section in deliveries.
The last logistics mile: different definitions of the same concept
The management of the last mile can take on different dimensions depending on the characteristics of each logistics chain, for example:
- In production logistics chains (B2B) : the last mile covers the supply of components that are part of a production process, for example, it would cover the delivery of parts or spare parts to the factory.
- In distribution logistics directed to physical stores (B2B) : the last mile encompasses the supply of stock to physical stores, where products are put on sale to customers.
- In supply chains focused on the final consumer and the retail sector (B2C) : the last mile includes delivery directly to the customer or at a point pre-agreed with him, usually as a result of buying in an online store. This is the section that attracts the most attention due to the logistical challenges it presents.
The scope of the last logistics mile can range from a few city blocks to much longer distances. For this reason, sometimes the “last yard” is also used to refer to that final step (it would be a subdivision of the last mile).
The evolution of the last logistics mile: trends
Managing the last mile efficiently has always been a challenge, because the package, from leaving the last distribution point until it reaches the delivery destination, encounters many obstacles.
Some of these impediments are related to the transport itself, others to the type of product to be delivered. Even so, at present, certain trends in the way of executing last-mile logistics , such as the emergence of e-commerce, have drawn an even more complex picture. Let’s see the main ones:
- There is a reduction in traditional mail (letters, documents) in favor of a notable rise in moving parcels .
- The growing traffic that congests many urban centers has made the last mile the segment with the most regulations that companies must respect. This affects the delivery of goods, for example, with fixed hours for loading and unloading, traffic restrictions, limitations on the type of vehicle (usually motivated by environmental causes), among others.
- The effect of seasonality is intensifying in shipments of all kinds and, above all, around very specific dates such as the Christmas campaign or in special promotions. Of course, these peaks in logistics activity are also suffered in the warehouse in high season , where you also have to know how to handle them.
- They have increased the urgent and high priority shipments for all types of products. The challenge is even greater when these goods have special characteristics, either because they are crucial for the proper functioning of the supply chain (for example, medicines, parts or spare parts), because they are fresh or bulky. The acceleration in logistics processes has reduced the time margins for handling, transport and delivery.
- The variety of destination locations makes it difficult to design delivery routes in the last mile (offices, homes, mailboxes, click & collect collection points …), multiplying the risk of setbacks.
Why, today more than ever, it is important to manage the last mile well
The management of the last mile is decisive in two ways:
- The last mile represents a proportionally very high cost in the entire logistics distribution chain when compared to long-distance transport. For this reason, it is usually an element of common debate when debugging inefficiencies on the part of the company.
- The management of the last mile has an impact on customer satisfaction . In fact, the failures, delays and complications that occur in this section can ruin all the logistical work carried out so far. For this reason, the concept of the last mile is broader and extends beyond the simple delivery of the product to the customer.
The last mile from a holistic point of view: strategies
Although the management of the last logistics mile seems that it can only be optimized from transport, the truth is that it is advisable to approach the concept from a more global point of view:
1. Take into account the last mile to locate the warehouse
Despite the fact that the cost of the storage area is much higher when we talk about urban facilities, this is not the only factor that determines the location where to locate the warehouse .
In this sense, the demand and the nature of the orders should be considered. For example, if the warehouse responds to e-commerce sales and operates with 24-hour delivery standards, cutting distances will be crucial , as the last mile will consume a significant part of the time spent on transportation.
This pressure on delivery times is what is driving the creation of urban consolidation centers by companies and logistics operators. These types of surfaces allow the consolidation of goods , which usually arrive in larger vehicles, and organize the last-mile delivery.
2. Plan operations paying special attention to cutting all lead times
Cutting all lead times or supply times means providing logistics operations with greater agility , saving time in each of the steps that the order goes through.
In this way, the delivery in the last mile will have an accumulated extra margin that will be of great value to meet the deadlines. How to contribute from planning to improve the execution of the last mile?
- In the warehouse, he uses warehouse management software to sort the picking lists, assigning the appropriate priority for each shipment . Thus, the organization of order picking tasks is not only aligned with the transport requirements, but also allows to speed up the goods dispatch process .
- Adjust warehouse operations to transport : in last-mile logistics, it is common to work with one or more delivery agencies or operators who are in charge of executing it. These companies often use transportation management software that facilitates the design of routes and the traceability of products . The fact that the warehouse works with the same standards speeds up the handling of packages and ensures greater control of related information. The Multi Carrier Shipping Software module standardizes packaging and labeling with the standards set by the main agencies in the country.
3. Measure and thoroughly analyze the KPIs linked to the delivery process
Analyzing the data of the last mile is a fundamental step to find areas for improvement. The transport management system collects this information and facilitates its treatment, as well as the warehouse software, since some of the KPIs related to quality have the warehouse as their starting point (for example, the percentage of correct or error-free deliveries) .
Some key last mile logistics KPIs are:
- Percentage of deliveries on time.
- Fuel consumption ratio.
- Vehicle occupancy percentage compared to available.
- Mileage planned versus actually executed.
- Cost of delivery per package, per kilometer and per vehicle.
- Number of stops.
- Customer’s complaints.
- Percentage of packages damaged in transport.
4. Don’t forget to focus on the customer
The last mile is often the first physical point of contact between product and customer , especially in online commerce. So this phase is decisive for its satisfaction and loyalty.
From a logistical point of view, it is convenient to provide the customer with facilities so that they can personalize their experience within predetermined parameters.
For example, in some cases, the person prefers to be unconcerned and that the delivery be made at an agreed collection point, in mailboxes specially prepared for it or even in physical stores if the company has them. The same happens when it comes to managing returns : coordination between transport agents and warehouse is essential.
Today, the management of the last mile has become very important due to the increasing complexity of supply chains and the great dynamism that the logistics ecosystem is acquiring.
The rise of e-commerce has made what has always been a weak point in logistics to emerge even more. Ignoring this aspect can put the competitiveness and survival of the company at risk.
If you believe that your warehouse is not doing enough to contribute to the speed and efficiency of the last logistics mile in your company, we encourage you to contact us : a Mecalux specialist can help you improve picking and thus speed up the preparation processes and dispatch of orders.