Last mile delivery challenges in supply chain, by source of difficulty and by technology response. Includes what the last mile covers, its cost and ROI gap, environmental impact, infrastructure and route constraints, customer delivery expectations, area density, and the predictive and prescriptive analytics, optimization and real-time updates that answer them, explained by a supply chain data team.
In the fascinating and complex world of Supply Chain, "the Last Mile" represents a crucial step which separates the thin line between success and failure.
As in many areas of Supply Chain, the Last Mile is afflicted with inherent complexities that make its success both a real challenge and, when achieved efficiently, a true differentiator and a source of competitive advantage.
While addressing these challenges can be a monumental task for many companies, there are innovative technology approaches, tools, and solutions that can be utilized effectively to tame the beast.
In this short article, we give a brief overview of the most pressing challenges affecting the Last Mile and introduce a number of technologies that may be called upon to the rescue.
Table of Contents
- What are the main last mile delivery challenges?
- How can technology help with last mile delivery challenges?
- Conclusion
What are the main last mile delivery challenges?
The Last Mile typically refers to the very last leg of delivery, from a company storage or distributor hub to the actual customer and it is the culmination of what Supply Chain is really about. Just like in a football match where no matter how well you play, a single mistake by your brave goalkeeper can translate into carrying the "loser" label for eternity, complete failure, significant delay, or any observed inefficiency in the final delivery can make all the good work carried out elsewhere in the Supply Chain Network look irrelevant or useless.
Here are a few reasons why the Final Push, or Last Mile, is so challenging:
Why is last mile delivery so expensive?
One final push might sound encouraging, hinting at the imminent achievement of an objective, for example, but it is often expensive to achieve because in the face of uncertainty, there is not always enough time to respond optimally. And when it is looked at in terms of Return on Investment (ROI), it often turns out that the Last Mile is disproportionately expensive.
What is the environmental impact of last mile delivery?
The type of vehicles used to satisfy the Last Mile requirements of delivery is typically not the most eco-friendly and as such, the cost they impose on the environment is reasonably high. In addition, shortage of time in responding effectively to rapid changes in Supply Chain Networks means that the solutions in place often are not optimized in a way to minimize their environmental impacts (fuel consumption comes to mind).
How do infrastructure gaps slow last mile delivery?
The ever-growing complexities of Supply Chain Networks, with increasing number of constraints and regulations, and outdated or inadequate planning of delivery routes regularly lead to longer delivery times and fewer deliveries per vehicle. This is not only operationally expensive, but environmentally unsustainable. Unanticipated road closures, chaotic traffic patterns and unpredictable weather conditions are some of the reasons behind the complexities of the Supply Chain Network that require effective and long-term planning to address properly.
What do customers expect from last mile delivery?
Everybody wants everything now. Not later today, not tomorrow, but now! Special requirements such as same-day delivery or delivery on specific time slots put undue pressure on the underlying Supply Chain Networks, many of which are unable to cope as they reach their natural limits. And unless these networks are designed for flexibility, the problem can only get worse as the urban population and their respective demand for goods increase.
Why does area density change last mile delivery cost?
When it comes to the cost of Last Mile delivery, low density suburbs are particularly expensive, given vehicles need to cover large areas and longer distances for a successfully completion of a delivery. Again, this is where ROI does not usually shine.
How can technology help with last mile delivery challenges?
There are a number of technologies that can be effectively utilized to address the challenges described above. The following, non-exhaustive, list should give readers a flavor of what technology can achieve in the right hands. (remember, all these require the right type of personnel: the skilled ones. But that is a topic for another day!)
How does advanced analytics improve last mile delivery?
Predictive and Prescriptive Analytics are incredibly powerful tools for tackling the uncertainties of the Last Mile delivery. By analyzing relevant historical data and leveraging Machine Learning (ML) algorithms, Predictive Analytics can forecast future demand, traffic patterns, and even the likelihood of road closures, and help improve delivery routes to minimize costs and enhance Operational efficiency.
Prescriptive Analytics, on the other hand, takes the above ML approach a step further by not only predicting outcomes but also recommending the best course of action, given the latest conditions. These Advanced Analytics techniques enable companies to anticipate challenges and proactively address them, ensuring smoother operations and improved customer satisfaction.
How does optimization improve last mile resource allocation?
Optimization lies at the heart of efficient Last Mile delivery, particularly in relation to resource allocation. Limited capacity, coupled with fluctuating demand, necessitates precise allocation of delivery vehicles, personnel, and warehouse spaces. Through Optimization techniques, companies can dynamically adjust resource allocation based on demand patterns and constraints, ensuring optimal utilization, and minimizing costs at all times. By embracing sophisticated algorithms, organizations can streamline Operations and overcome the challenges of resource scarcity that afflicts Last Mile delivery.
How do real-time updates improve last mile visibility?
Real-time updates are instrumental in enabling visibility and transparency in the Last Mile logistics. By leveraging technologies such as GPS tracking and IoT sensors, companies can monitor the status of shipments in real-time, enabling proactive problem-solving and timely and positive interventions. Whether responding to unexpected delays or communicating updates to customers, real-time updates promote agility and responsiveness against the backdrop of ever-changing Operational conditions. By keeping stakeholders informed and empowered, real-time updates contribute to smoother operations and improved customer experiences.
Conclusion
The Last Mile delivery is an essential part of a Supply Chain Network where all the previous efforts, manual or otherwise, finally bear fruit. It does, however, come with many challenges, the most prominent of which include cost, environmental impact, infrastructural inadequacies, satisfying customer expectations, and area density.
These challenges can be addressed through effective deployment of cutting-edge technologies such as Advanced Analytics and Optimization techniques as well as by harnessing the power of real-time updates.
While Predictive and Prescriptive Analytics can enable effective decision-making, Optimization techniques get the best out of the available resources within a Supply Chain Network to maximize resource utilization. In addition, real-time updates lead to much-needed traceability and visibility, enabling decision makers to respond swiftly to changing conditions.
It is by embracing such technological solutions that we can hope not only to enhance Operational efficiency, but to minimize costs, improve overall speed of delivery and reduce negative environmental impact of the Last Mile delivery.
At TetriXX AI, we are obsessed with effective utilization of modern technologies to transform and improve how our clients do business. We would love to hear your take on this topic and, of course, would be happy to discuss with you many ways in which we can help you become a more competitive Supply Chain player in your specific domain. Find us at tetrixx.ai for more details.
