Last mile
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The last mile is the final step in the supply chain process, where goods, services, and/or information are delivered from the supplier to the customer. It is the most expensive and time-consuming step in the process, as it requires the coordination of complex logistics and customer service operations. From a management perspective, the last mile requires a detailed understanding of customer needs and preferences, efficient routing, reliable delivery systems, and cost-effective solutions. Careful oversight of the process is necessary to ensure that customer satisfaction is attained and that the organization is able to meet its delivery commitments.
Example of last mile
- Last-mile delivery is the process of getting goods from a transportation hub or warehouse to the final destination, usually the customer's home or place of business. Examples of last-mile delivery include online purchases of goods, grocery deliveries, and restaurant deliveries. In the retail industry, last-mile delivery is typically handled by a third-party logistics company.
- Last-mile delivery solutions are also used in the healthcare industry, where medical supplies and equipment are delivered to healthcare facilities and patients. Delivery robots and drones are also increasingly being used in last-mile deliveries. For example, Amazon recently announced plans to use drones to deliver packages to customers.
- Last-mile delivery also applies to digital services. For example, mobile app developers often need to deliver their product to customers’ phones or tablets. This requires the use of a digital delivery platform such as an app store or a content delivery network.
- The last-mile delivery of energy is also gaining traction in the energy industry, particularly in the area of renewable energy. Utilities are increasingly turning to distributed energy resources (DERs) such as solar panels and battery storage systems to deliver energy to customers. These DERs are often installed and maintained by third-party providers, who then manage the last-mile delivery of energy to customers.
When to use last mile
The last mile is a crucial step in the supply chain process, and it can be applied in a variety of business scenarios. Here are some of the most common applications of the last mile:
- Retail and eCommerce: Last mile delivery is used by retail and eCommerce companies to deliver products to customers quickly and cost-effectively. The last mile is also used to return goods that customers are not satisfied with.
- Logistics: The last mile is used by logistics companies to transport goods from suppliers to customers in a timely manner. This typically involves the coordination of multiple drivers to ensure that goods are delivered on time and in the correct order.
- Healthcare: The last mile is used by healthcare organizations to deliver medical supplies and equipment to patients in a timely and cost-effective manner. This includes the delivery of home medical equipment, prescription drugs, and medical supplies.
- Manufacturing: The last mile is also used by manufacturers to deliver goods to retail stores or warehouses. This typically involves coordination with multiple carriers to ensure that goods are delivered in a timely manner.
Types of last mile
The last mile encompasses a range of delivery methods and services, including:
- Traditional shipping: This method involves the shipping of goods from the supplier to the customer via traditional carriers such as FedEx, UPS, or DHL.
- Direct-to-consumer fulfillment: In this model, the supplier sends the goods directly to the customer's door.
- Click-and-collect: The customer orders the product online and picks it up from an in-store location.
- Instore pickup: The customer orders the product online and picks it up from an in-store location.
- On-demand services: This method involves the delivery of goods or services within a specified time frame. Examples include food delivery, ride-hailing, and on-demand retail.
- Crowdsourced delivery: This method uses a network of independent contractors to make deliveries.
- Drone delivery: This method uses unmanned aerial vehicles to deliver goods to customers.
- Automated delivery: This method uses robotic systems to transport goods directly to the customer.
- 3PL services: This method involves the outsourcing of delivery operations to a third-party logistics provider.
Advantages of last mile
The last mile of the supply chain offers a variety of advantages that can help organizations improve efficiency and customer satisfaction. These include:
- Increased visibility and control over the delivery process. Last mile operations provide organizations with greater visibility and control over the delivery process, allowing for more accurate forecasting, better resource allocation, and improved customer service.
- Improved customer service. By focusing on the customer experience, last mile operations can reduce delivery time and increase customer satisfaction. This can be achieved through better routing and communication, as well as more efficient delivery methods.
- Reduced costs. Last mile operations can help reduce costs by leveraging existing resources and improving the efficiency of the delivery process. This can be accomplished through better routing, better use of technology, and improved coordination between suppliers and customers.
- Increased flexibility. Last mile operations offer organizations greater flexibility in terms of delivery methods, allowing them to choose the most cost-efficient option for the customer. This can help organizations meet customer demands while minimizing costs.
Limitations of last mile
The last mile of the supply chain is a critical step that is often costly and time consuming, and it is important for businesses to understand the limitations associated with this process. These limitations include:
- Limited capacity for large-scale deliveries: Last mile delivery services are often limited in capacity, meaning they may not be able to handle large-scale orders or deliveries. This can be problematic for businesses that need to scale up their deliveries quickly.
- High costs: Last mile delivery services can be expensive, as they typically require extra personnel, specialized vehicles, and fuel costs.
- Lack of visibility: Last mile delivery services often lack visibility, meaning businesses can’t track their deliveries in real-time. This can lead to delays, missed deliveries, and customer dissatisfaction.
- Complex logistics: The last mile process can be complicated, requiring coordination of multiple suppliers, logistics, and customer service operations. This can lead to delays and increased costs.
- Customer service issues: Last mile delivery services often require customer service support, which can be costly and time-consuming. Additionally, customer service issues can arise due to delays, missed deliveries, and other problems.
In order to effectively manage the last mile, there are several approaches organizations can take. These include:
- Automating the Process: Automation can be used to streamline the entire last mile process, from routing to delivery. This can reduce costs and improve efficiency.
- Employing Technology: Technologies such as tracking systems, route optimization software, and mobile applications can help organizations better manage the last mile process.
- Outsourcing Delivery: Outsourcing delivery operations can help organizations manage the last mile more effectively, by taking advantage of the expertise and resources of a third-party provider.
- Focusing on Customer Service: Providing excellent customer service is essential for successful last mile management. This includes ensuring that deliveries arrive on time and communicating with customers about any issues or delays.
In conclusion, organizations must take a comprehensive approach to last mile management, utilizing automation, technology, outsourcing, and customer service to ensure that customer satisfaction is achieved and delivery commitments are met.
Suggested literature
- Lee, H. L., & Whang, S. (2001). Winning the last mile of e-commerce. MIT Sloan management review.
- Boysen, N., Fedtke, S., & Schwerdfeger, S. (2021). Last-mile delivery concepts: a survey from an operational research perspective. Or Spectrum, 43, 1-58.
- Mangiaracina, R., Perego, A., Seghezzi, A., & Tumino, A. (2019). Innovative solutions to increase last-mile delivery efficiency in B2c e-commerce: a literature review. International Journal of Physical Distribution & Logistics Management.
