Understanding and improving last-mile delivery

Last-mile delivery is the final stage of a product's journey, from a distribution centre to the customer’s premises. It has a big influence on customer satisfaction, delivery costs and a company's carbon footprint. Efficient last-mile delivery will reduce costs and retain customers. 

What is the last-mile delivery problem? 

Last-mile delivery is the most challenging leg of the supply chain. Complexities arise from various factors, including: 

• Geographical Diversity: Urban, suburban, and rural locations require different last-mile delivery strategies. Metropolitan areas face congestion, parking issues and restrictions, while rural areas have greater distances between deliveries. 
• Delivery Density: Achieving a high delivery density on each delivery route will minimise costs and mileage per delivery. 
• Customer Expectations: Customers expect reliable deliveries with short delivery windows and precise ETAs. They seek delivery options that suit their needs.  

• Cost: Balancing the need for a variety of delivery options while remaining cost-effective is a challenge for logistics operations. However, offering consumers choice in delivery influences buyer behaviour and incentives can drive delivery density.  
• Operational Issues: Driver shortages, unpredictable weather, traffic congestion and road works, will impact also last-mile delivery operations. Read more about – Making deliveries in extreme weather conditions.

Key challenges in last-mile delivery 

Challenges need to be addressed to improve last-mile deliveries. 

• Customer Expectations: Customers expect reliable deliveries, narrow delivery windows, accurate ETAs, and the ability to choose a preferred delivery date and time. 
• Demand Peaks: Busy peaks such as Black Friday create delivery frenzies that increases the pressure on last-mile delivery operations. 
• Rural Deliveries: Distances between rural drops and any difficulty in locating them will increase delivery miles and the time taken, adding to the cost and increasing CO2 emissions. 
• Urban Deliveries: Congestion, road works, low emission zones or restrictions in urban areas and difficulty finding parking spaces, make finding the delivery address difficult and time-consuming. Read more about The urban logistics challenge. 
• Driver Shortages: The ongoing shortage of van and HGV drivers impacts delivery times and costs. A shortage of drivers reduces delivery capacity. Whilst driver retention tactics can lead to increased costs. 

• Real-time Tracking: Providing customers with the ability to track their orders in real-time on a map improves customer experience and satisfaction, while at the same time helps to ensure they are available and ready for their delivery, reducing the wait times for a driver and improving overall efficiency. 
• Digital Proof of Delivery (POD): Proof of delivery captures delivery information such as time and location of delivery, any damage, pictures, and signatures to eliminate paperwork and enhance visibility. Scanning parcel barcodes will reduce the risk of missing or delivering the wrong item at a customer’s location. 
• Customer Feedback: Gathering customer feedback about their delivery through digital surveys provides genuine insights into each customer’s experience and enables timely and proactive corrective action where necessary. Being able to do this immediately after a delivery, increases the chances of receiving feedback or fixing the problem, helping to retain the customer and increase repeat purchases. 

The role of technology in last-mile delivery 

Technology plays a crucial role in optimising last-mile delivery. 

• AI and Machine Learning: AI and machine learning can be used for route optimisation, dynamic scheduling, and real-time data analysis to improve decision-making. Information taken during a delivery is fed back into the system and helps make future deliveries more efficient and accurate. Read more about machine learning in fleet management.
• Cloud-Based Software: Cloud-based, software-as-a-service (SaaS) solutions provide an efficient and scalable way to manage growth in a home delivery operation. Read more about the advantages of SaaS solutions.
• Mobile Apps: Mobile apps enhance driver efficiency by providing intuitive workflows, delivery information, and real-time updates. They also enable delivery directions to be presented to the driver and enables communication with the customer via delivery notifications. Read more about mobile apps for deliveries. 
• GPS Tracking: Real-time GPS tracking provides visibility of vehicle locations, enabling proactive action on delays and service disruptions. Vehicle telematics can be integrated with dispatch software for enhanced visibility for managers. 
• Telematics: Telematics data provides insights into vehicle location, driver behaviour, and adherence to legal parameters, enhancing compliance and safety, while also enabling timely interventions for mechanical work and notification of any issues with the vehicle. Read more about Telematics solutions. 
• Customer Engagement Software: Software that provides real-time progress updates and delivery tracking maps enhances the customer experience and improves satisfaction, leading to repeat purchases and competitive advantage. Read more about customer engagement software. 
• Proof of Delivery: Capturing location and details such as photographs and signatures at the time of delivery, reduces fraud and lost goods while speeding time to invoice and eliminating errors due to human input. Digital consignment notes and proof of delivery eliminates paperwork which is better for the environment. 

Using data for enhanced last-mile delivery 

Data analysis is critical for continuous improvement of last-mile delivery: 

• Key Performance Indicators (KPIs): Tracking KPIs such as on-time, late and missed deliveries, fuel consumption, vehicle utilisation, and customer satisfaction, will identify areas for improvement. 

• Real-Time Visibility: Collecting real-time data on delivery demand and delivery capacity, will optimise deliveries for increased demand without having to add to the fleet or drivers. Capacity can be unlocked by calculating and optimising routes in real-time as orders are taken.
• Batch Processing of Orders: Avoid optimising orders at the end of the day as this will lead to overcapacity, requiring additional resources such as drivers and vehicles to be hired in, or alternatively disappointing customers with delayed deliveries. 
• Driver Performance: Monitoring driver performance using real-time tracking, alerts, and performance KPIs will improve adherence to route plans and ensure timely communication of deviations to customers, it also allows for rerouting when traffic incidents occur. 
• Customer Feedback: Real-time transactional surveys provide accurate and actionable data, allowing businesses to identify and solve problems with a delivery early and improve customer satisfaction with the service. 

The competitive advantage of last-mile delivery 

Efficient and flawless last-mile deliveries are a differential advantage and businesses should: 

• Offer Delivery Choice: Provide customers with a range of costed delivery options, over several days or weeks. Include timed delivery and environmentally-friendly, 30-minute, or 1-hour slots. Merely indicating the day, or at best the morning or afternoon, of delivery is no longer good enough.  Read more about delivery route scheduling. 
• Personalise the Experience: Provide a personalised experience with real-time delivery updates, delivery tracking, and self-service options that enable cancellations, rescheduling and provision of delivery information to help the driver and keep the customer informed. 
• Utilise Dynamic Pricing: Employ dynamic pricing to encourage customers to choose delivery times that are most efficient for the fleet.  

• Provide Value-Added Services: Offer value-added services like installation and removal to increase revenue. Descartes’ delivery scheduling software takes these extra services into account and amends the delivery window accordingly. 
• Focus on Sustainability: Identify and offer eco-friendly delivery options at the point of sale whilst optimising routes for existing orders to reduce fuel usage and CO2 emissions. Read – How to build sustainability into your supply chain logistics. 
• Prioritise Customer Communication: Keeping customers informed about their deliveries through automated notifications and tracking reduces customer anxiety and improves satisfaction.  It also eliminates inbound calls asking when a delivery is due or arriving and helps eliminate failed deliveries. 
• Use Feedback to Improve: Gathering and analysing feedback, both from the customer and the driver allows for continuous improvement of service. 
• Implement a Robust and Scalable Last-Mile Delivery System: Select a solution that allows for transparent planning, the booking of delivery slots at time of sale, continuously optimised routes, and the ability to adapt quickly to changes. Read more about delivery management software. 

• Real-Time Visibility: Expectation of real-time visibility and tracking from the moment an item is ordered. 
• Emphasis on Customer Experience: Continuous improvement of the customer experience through better communication, flexibility, and control over deliveries. 

Conclusion 

Last-mile delivery is a critical component of the supply chain that directly impacts customer satisfaction and business success. By understanding the challenges, adopting advanced technologies, and prioritising customer engagement and satisfaction, businesses can transform their last-mile operations into a competitive advantage. The future of last-mile delivery will be defined by automation, sustainability, and a relentless focus on enhancing the customer experience. 

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