As consumers increasingly turn to e-commerce for all their shopping needs, speedy fulfillment isn't just a "nice to have", it's the expectation of every online shopping experience. As a result, businesses have begun racing to develop new technologies and experimental supply chain models to increase parcel volume, expedite deliveries, and delight customers all while trying to cut costs.
One of the biggest expenses and challenges any e-commerce company is the last mile shipping.
According to a report published by the "Business Insider", 53% of the total costs associated with an online order is the "last mile" delivery costs.
What is last mile?
The term "Last Mile" is a misnomer. Last mile is a term used in supply chain management and transportation planning to describe the movement of people and goods from a transportation hub to a final destination in the home.(Goodman, R W, 2005).
In terms of e-commerce fulfillment, "Last Mile" is NOT the last leg of the journey of a product purchased online, BUT the full journey from the shelf in the store (or warehouse) to the customers doorstep.
Challenges of Last Mile
1] It is highly complicated as millions of individual packages has to be delivered to the right address at the right time.
2] In urban areas, traffic congestion is a major problem and adds to the fuel cost and customer dissatisfaction due to late deliveries.
3] It is labour intensive and costs of labour, shortage of labour are serious issues
4] Poor infrastructure can be a serious problem
Solving Last Mile Challenges
- Crowed Sourcing the Last Mile delivery - E.g. Deliveroo (UK)
Firms are increasingly turning to the model employed by UK based food delivery company Deliveroo with uses independent self-employed couriers to transport orders from restaurants to customers.
This model is called crowed-sourcing model of last mile delivery. The crowdsourcing model has been prevalent in transportation, hospitality, and food delivery for some time now, and retailers are eyeing its low startup costs, asset-light operations, and improved customer experience to ease their last mile delivery woes.
- AI & Drone Technology for Last Mile Delivery
Amazon, UPS and a host of others are testing drones and AI powered robots to do the last mile delivery.
There are huge technological challenges as well as legal and regulatory hurdles to be overcome before drones and other automated systems can begin last mile deliveries. But the testing is in full steam.
- Parcel Delivery Lockers
Alternative delivery locations and lockers are already in use by companies including Amazon and United Parcel Service through their UPS Access Point Program. This program makes it easy for consumers to schedule package delivery at an established time to a specific UPS Access Point location for quick retrieval.
This provides peace of mind for the consumer, knowing that their parcels are secure and helps meet their scheduling needs. Package drop off is also available at these locations.
- IoT, RFID, Sensors and Smart Technology Provide Parcel Traceability to the Consumer
From IoT sensors that monitor data including location, fuel consumption and cornering speed in delivery vans to sensors that measure and monitor the temperature of parcels, technology is enabling supply chain executives and consumers to have access to the most expansive array of real time information in history.
The Internet of Things is revolutionizing the supply chain logistics industry and completely altering delivery operations. Supply chain operations are using combinations of technologies including barcodes, RFID, IoT, Bluetooth and NFC. Used in combination, these technologies help both consumers and supply chain operators see across the supply chain network from the retail store to the point of delivery. Here is a brief look at some of the recent technologies:
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