The challenges in managing final mile logistics arise from the diverse circumstances associated with each delivery. New construction may mean addresses are not available on Google Maps, and despite what the Internet says, navigating to a given location can be problematic. Take this into consideration with the need for more secure deliveries. In recent years, the incidence of packaged theft from porches and garages has skyrocketed, and customers think twice before ordering a package to be sent to their doorstep. Now, Amazon had a revolutionary idea to overcome such challenges, giving customers the opportunity to leverage smart devices and allow entrance to the home to delivery drivers. Of course, that service is still rare today, but it represents the ongoing need to identify the challenges in managing final mile and white glove services and overcome them with technology and improved service.
Final mile delivery depends on both the capabilities of the carrier, the specifications for the delivery and the ability of the customer to meet the expectations of the shipper. This confusing principle occurs when a shipment requires a wet signature for confirmation of delivery. If the customer is not home, the delivery cannot take place. It might not seem like a big problem, but that extra space goes wasted on the next trip to the consumer. It adds additional fuel costs, labor costs, and wear and tear on the delivery vehicle. Unfortunately, that is not the brunt of the problem. That rests on missed delivery, especially when shippers make a promise of guaranteed delivery. In these instances, the shipper could be on the hook for the entire cost of the product, plus delivery fees.
Missed or failed delivery will always tarnish the customer experience. Customers expect their products to arrive, and even if they are not at home, they expect an option that still gets a product in their hands as expected. This might include delivering to a work office location, leaving a package with a friend or neighbor, and other options. The lack of transparency within the final mile itself contributes to the deterioration of the experience. Customers do not know when exactly a product currently listed as “out for delivery” will arrive. Now, UPS has made strides in creating an estimated time of delivery, providing customers in urban areas with the exact location of a delivery vehicle as shown on a map within the MyUPS interface. Unfortunately, even UPS still suffers from the limitations of its technology, especially in rural areas.
Key challenges in managing final mile often revolve around poor collaboration within local final mile logistics providers. While the big three carriers may operate final mile service for a given area, it makes sense to outsource this process to a local servicer. This is especially true for areas with limited drivers for the primary carrier, and as a result, shippers may not know who is in possession of the shipment in final mile delivery. This is a major problem, especially since most trucks operated within the US are held by private businesses with fewer than five trucks in operation. Take that in combination with the hybridization of final mile tracking, including the outsourcing of final mile delivery to freelance drivers, and it is easy to see where collaboration may falter.
High costs are the name of the game in the challenges in managing the final mile and white glove services. As explained by Supply Chain Dive, final mile incurs high transportation costs resulting from the distinct, often unreliable destinations for individualized shipments. If the carrier and delivery driver cannot find your location, how can they get to it?
Deadhead is a terrible thing for shipping. The space is wasted space, and, final mile delivery converts occupied space into deadhead. Deadhead miles cost an average of $1.59 per mile, reports Omnitracs. That could amount to thousands in lost costs per year per truck. Applied across a nationwide or even statewide company, those costs soar to more than $1 million.
White glove services include the installation, setup, or extra care needed for delivery beyond simple delivery to a porch or person’s hands. These services add to the complexity of final mile logistics and may require the services of non-logistics providers. For instance, technical equipment may require an IT expert, and if the shipper wishes to keep the customer, they must find a way to include such services within the transaction. This might be as simple as relaying consumer delivery data to a qualified expert or scheduling heavy-item delivery with a third-party at the time of shipment tendering. Of course, integrating these capabilities within the system of record, the transportation management system (TMS), is significantly more efficient than handling it manually.
The basic means of shipping have not changed. Shippers still send products to consumers, offer service in brick-and-mortar locations and can send products directly from the manufacturer when an out-of-stock issue arises. Unfortunately, any shipment that involves sending a product to a customer’s doorstep or workplace will naturally lead to higher costs. Since these shipments rarely consist of multiple packages or bulk shipments, they carry added risk. The delivery driver stops more often, adding to fuel costs. The route might not consider new construction or highway closures. Despite these challenges, the market is accelerating. More customers want more purchasing and shipping options. They want the world, and it is up to shippers and carriers to give it to them. Fortunately, a lineup of new capabilities and technologies that drive visibility and increase efficiency have the potential to transform final mile from a cost center into a profit center. Yes, that is the key. White glove service could recoup the costs, and at the same time, TMS implementation may offset the costs. In the next part of this final mile this series, we will take a closer look at how technology continues to reshape the landscape of final mile logistics management.
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