Last mile logistics is the final and the most important stage of the supply chain. It involves receiving an order from a warehouse and delivering it on time to the customer, shop or a specific pick-up point. What last mile logistics challenges must logistics companies face to ensure the effectiveness of their processes? What are expectations of the customers regarding deliveries and why should adjusting the company to high expectations of consumers be nowadays a priority for every business?
How did the expectations of the customers change in view of the e-commerce growth?
According to a report by Interaktywnie.com, “E-commerce 2020,” Poles have spent 70 billion PLN on online shopping! For over 52% of the respondents, online shopping is easier and cheaper and offers a wide product choice. 36% of the Internet users expect an immediate delivery, preferably on the next day, while 35% of the customers waits for the delivery 2 days from placing their order. This data shows the growing expectations of customers and pose a challenge for last mile logistics. 53% of the customers say that for them, the most convincing argument in favour of online shopping is the ability to return the product free of charge if they are not satisfied with it. Such options offered by online shops are a challenge for logistics companies.
The dynamic growth of the e-commerce industry and the current situation in Poland have changed the behaviours and shopping habits of customers.
In the past, customers could use two types of deliveries: postal services at convenient prices and courier services that were more expensive. Their shopping process took longer that it does now because every customer could visit shops in person, compare the offers, and decide where to buy the product.
Nowadays the customers have more access to goods with e-commerce and a much wider choice of deliveries, even though the CEP services have become more common and cheaper due to the growth of e-commerce. Consumers can also receive their packages at pick-up points at any time, in line with the out-of-home delivery concept. The noticeable increase in online orders results in the need to improve last mile logistics at many companies.
What are the challenges in last mile logistics?
The most difficult last mile logistics challenges include, above all, an increase in orders requiring effective logistics and very short deadlines for delivery of some goods (in case of medications or products with a short shelf life) to the destination point. Another challenge is also organisation of the logistics team and smooth information flow which are possible thanks to modern monitoring systems and working on data. With the higher number of orders (particularly those that require transport in specific conditions, e.g. in coolers at an appropriate temperature), the last mile logistics process becomes more complex. This requires flexibility from carriers and planning the best routes for drivers.
What are currently the most important last mile logistics difficulties that the workers must face?
According to an expert, Piotr Roczniak, Global Account Manager at Trans.eu, the key features are flexibility and adaptation.
- Piotr Roczniak
- Global Account Manager, Trans.eu
- 2020 is a period of unexpected and surprising changes. We are experiencing significant acceleration of digitalisation. What we are observing is particularly influenced by the epidemic and the resulting limitations. The challenges for last mile logistics relate mostly to a quick response to customers’ expectations. That is why flexibility seems to be so crucial, both in terms of efficient delivery and an ability to quickly adapt to new conditions. These are the decisive factors when choosing a carrier. Let us not forget that customers expect also a low delivery cost. We can intuitively feel that those three factors (flexibility, speed, price) are in opposition to each other and combining them in one model may lead to a success or a collapse. Thus, proper consolidation and access to opportunities that are available on the market are important. I have an impression that the days when one common scheme or model was enough are way past us. There are many indications that the effectiveness of last mile delivery organisation will allow us not only to survive but also to improve the processes.
How to improve last mile logistics?
The last mile logistics management differs depending on the business sector. The B2B industry involves two stages: raw materials are delivered to a manufacturing plant and then the finished products are transported to a shop, warehouse or another pick-up point. In the B2C segment, last mile logistics is a complicated process mainly due to the issue of reconciling high delivery costs with timely deliveries The owners of online shops who identify demand for the products they sell should strive to reduce the routes taken by suppliers as much as possible.
Planning logistics activities is a step towards better organisation within the company and increased flexibility, which also allows for faster deliveries. However, it is also important to ensure efficient warehouse activities, as it is hard to maintain effective last mile logistics without them.
Another challenge is the fact that the modern retail customer wants to receive their packages as soon as possible while maintaining a particular level of safety and attractive delivery prices, which is extremely difficult to reconcile. Every consumer wants to have access to ongoing delivery tracking and many modern systems allow for providing the customers with a link for monitoring the package in real time, which is convenient and gives them a sense of control over the whole process.
Why is timeliness so important in last mile logistics?
Timely deliveries are particularly important in e.g. automotive industry. Any downtime due to a lack of an ordered part causes the manufacturing process to stop and results in enormous financial losses for the company. In this industry, every second counts and that is why customers are more willing to use the so-called fast-time delivery and can pay more for delivery in exchange for e.g. a guarantee of delivering the package to the destination point within two hours. The downtime also blocks the work of the team and influences the decision whether to collaborate with the suppliers. Even 55% of the customers declare that the two-hour delivery guarantee would increase their loyalty to a given company and that is why it is worth taking this into account.
This perfectly explains why effective and timely deliveries should be the foundation of every logistics company that wants to survive in the current market and maintain good relations with the customers. When receiving their package, the target customer assesses the quality and duration of the entire logistics process. This has an enormous influence on their perception of the company and further purchase decisions. The growing expectations of customers and the fulfilment of these needs should a priority for every company that prides itself on having good relations with its customers.
How to maintain the supply chain efficiency during the pandemic?
According to Piotr Roczniak, maintaining the supply chain efficiency results in increased effectiveness and may be a source of inspiring innovations.
– Effective planning and execution in the supply chain are possible on the basis of data, e.g. in road transport where we have many spread participants (forwarders, carriers), access to data is particularly important. Maintaining the supply chain is the more effective, the more we use management platforms that can be used by other participants of our chain. Basing our operating activities on traditional activities (e-mail, messengers, spreadsheets) may create a mistaken impression of effective management—we have data but we cannot relate them to the market and translating this data to knowledge in short time is basically impossible or too expensive. Diligence in efficiency management should be reflected in processes supported by proper tools. The supply chain efficiency is, among others, the results of productivity of people and tools and systems. The future is transparency and work automation.
The adjustment of logistics companies to rapidly changing conditions and expectations of customers is crucial for the business growth. It is estimated that in 2021, even 35% of consumers will use home delivery at least once a week. This is good news for companies providing services for retail customers. Their satisfaction may result in more purchases at the same shop, with a higher financial value. At the same time, the qualitative and efficient last mile logistics at companies guarantees a competitive advantage and long-lasting relations with customers from particular sectors. It is worth remembering that improvement of last mile logistics depends not only the effectiveness of deliveries. You need to analyse the entire supply chain and improve the elements that require improvement.
It will also be helpful to regularly use the modern systems supporting last mile logistics, as this increases the effectiveness and ensures a quick response to changes and queries from customers. Such activities allow for avoiding downtimes and delayed deliveries and for more detailed route planning, which will definitely ensure the customers’ loyalty.
