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