Last Mile Cost Control: The Supply Chain’s Inevitable 2020 Problem

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It appears new technology developments and advanced systems continue to push the boundaries of efficiency in logistics, but last mile savings remain elusive. And, last mile cost control is becoming more difficult for both urban and rural deliveries to consumers and business. According to Business Insider, “in rural areas, delivery points along a particular route could be several miles apart, with only one or two packages getting dropped off at each one. In cities, the outlook isn’t much better; what urban areas make up for in stop proximity is quickly negated by the near constant delays of traffic congestion.” Unfortunately, following the COVID-19 crisis, the battle lines for the last mile through 2020 are clearly drawn as customers look to order more of everything online. As a result, supply chain leaders need to start thinking about the forces leading to higher last mile costs, why newer, connected technology can help, and a few tips for maximizing efficiency. 

Final Mile Considerations Shippers Must Make to Develop a Sound Strategy

What’s Forcing Last Mile Costs Out of Control

Last mile costs continue to spiral out of control due to poor visibility. According to Food Logistics, “the last mile is historically inefficient, however, and can account for 40 percent to 50 percent of a company’s logistics costs. Between continuously changing routes, rising fuel costs and the burdening cost of delivering individual items to distinct locations, it’s increasingly important for companies to remain on top of innovative solutions that address delivery concerns, specifically as it relates to the last mile.”

Clearly, limited visibility leads to poor decision making and additional waste in last mile logistics. 

Improved Last Mile Controls Reduce Waste

The rise of the last mile is inexplicably linked to increased e-commerce demand. However, last mile deliveries continue to generate a significant share of total logistics costs, and maintaining last mile cost control through technology that adds value is the only way supply chain leaders can keep costs and waste in check. The biggest improvement lies within gaining more visibility in the last mile. Think about it; the last mile has a major visibility problem. It is difficult to see the shipment location after it’s loaded onto a delivery vehicle. And, the reason for not gaining additional visibility into the last mile is now mute following the implementation of the electronic logging device (ELD) mandate. After all, companies could use data from the ELD to track real-time GPS data and determine exactly where a truck is located. These insights have a natural value benefit in providing updates to the ETA for all last mile deliveries, and when a delay does occur—it often does—customers could indicate their ability to be home, at their business, or any other location. The key to success lies in reducing the risk of missed delivery and the need to reschedule delivery. Ergo, more information about timely delivery will reduce costs by shrinking the volume of activity for each shipment to a final delivery. 

How to Enhance Last Mile Efficiencies

Supply chain leaders should apply these tips in redefining and improving last mile cost control and strategy:

  1. Take advantage of the Gig Economy. The Gig Economy is also known as the crowdsourcing of last mile delivery to non-traditional drivers, such as those working for DoorDash or Uber. These Gig workers could help your company move more freight in urban areas, so your more experienced drivers can tackle the needs of rural areas or vice versa. 
  2. Integrate your order fulfillment systems with the TMS. Integrating the WMS, YMS, OMS, or any other order fulfillment system with the TMS is crucial to understanding and maintaining control over last mile spend. Fortunately, integration with APIs is much easier and helps to reduce the problems associated with data siloes is supply chain management. 
  3. Use big data analytics to better understand last mile cost control. Analytics provide additional insights into what is and is not going right in your operation—leading to more opportunities to improve the final mile. 
  4. Automate redundant processes. Any mention of automation immediately carries the implication for use of drones and robotics in last mile cost control. However, robotics—while still under testing—are not yet ready for the full deployment. So, keep them in mind, but do not dedicate your whole strategy to the use of robotics in the final mile.
  5. Use telematics to track all last mile movements, leveraging the full power of the Internet of Things (IoT) and connected technology to gain end-to-end visibility in the final mile. Increased use of telematics provides a mountain of data, helping to plan future routes, optimize existing movements to avoid traffic or adverse weather, and keep customers and companies informed of possible changes.
  6. Consider using parcel last mile delivery services. Outsourcing is an excellent way to increase volume without adding additional stress on logistics management. Of course, using a TMS that enables the immediate outsourcing of last mile management is another opportunity to connect with parcel service providers too. 

Gain Stronger Last Mile Cost Control With the Right System and Partner

Stronger last mile cost control is possible for companies that take the time to consider the growing demands for e-commerce and less waste. Follow the tips listed above, and start thinking about other opportunities to trim excess waste in your company by choosing the right TMS provider, such as Cerasis, to gain end-to-end last mile cost controls. 

In January 2020, Cerasis was acquired by GlobalTranz, a leading technology and multimodal 3PL solutions provider. To learn more, please read the press release. If you are a current or prospective Cerasis customer, we invite you to reach out to us to learn how our combined capabilities can deliver new services, solutions and enhanced value to your supply chain. To learn more about GlobalTranz, please visit www.globaltranz.com.

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