In supply chain logistics, a job is either done or it’s not—there is no middle ground.
The end consumer doesn’t care if their order almost makes it to them. Unless they receive it, the supply chain has failed. That last leg of the journey, Last-Mile Delivery (LMD), is absolutely critical. But it happens to be overlooked, especially during times of disruption.
Adverse weather events, natural disasters, infrastructure challenges, financial disruptions, and global pandemics can wreak havoc. While such challenges are unavoidable and unpredictable, investing in LMD can minimize risk to the overall supply chain.
Like a referee in sports, no one notices Last-Mile Delivery until it falls short—then people get angry. It’s where reputations can be strengthened or ruined, and that’s why LMD should be central to every supply chain strategy.
The Last-Mile Challenge
Last-Mile Delivery amounts to approximately 53% of the overall cost of shipping and the complexity can be overwhelming.
The last stretch of the journey happens to be the toughest and also the most consequential. If that final leg is complete - a manufacturing plant operating can keep operating or an auto mechanic can make final repairs on a customer’s vehicle. If it fails - the domino affect ripples through an economy.
Some manufacturers don’t get paid until the product gets sold, so LMD is often the revenue-generation point.
LMD also the most scrutinized length of the supply chain. Because today’s end users can track and monitor, in real time, every link of the supply chain, there is no hiding. Third-party logistics providers that handle LMD have an obligation to perform, and that pressure is on the rise.
Supply chains are stretched due to the explosion of ecommerce that was accelerated by COVID-19. Consumers are becoming increasingly particular about delivery timelines, and expecting “free” shipping, putting even greater pressure on LMD logistics providers.
So how can Third Party Logistics Providers (3PL’s) manage the additional stresses?
For years, I’ve seen firsthand the importance of last-mile efficiency in the window-and-door industry. Every spring there is a mad rush of people remodeling their homes and retail outlets need an increased supply. Thousands of customers flock to home and garden sales across the country to upgrade their homes and not having the right supply on hand could be a retail disaster.
How do we manage? It starts with having contingency plans for the worst-case scenarios for each time of year. Here in the Midwest, Spring has its own unique set of potential catastrophes that could break the supply chain like road closures from the occasional snowstorm or a bridge wash out from flash flooding. These acts of mother nature are largely unpredictable from year to year but anticipating them ahead of time can put you in a better position for success if you are prepared. Here are some other ways to leverage LMD as a strength.
- Capacity -We have found that having sufficient space is critical to minimizing supply chain disruptions. Otherwise, if you can’t complete the last mile and get the product out to customers, inventory can stack up at the final warehouse location before final distribution.
- Technology - With the prospect of electric vehicles, drones, and delivery robots becoming more commonplace, and with the surge in micro fulfillment centers, the future of last-mile is exciting and should be embraced.
- Communication - While no one can predict when the next major disaster will strike, being able to take those disruptions in stride requires communicating with all the stakeholders who touch LMD in some way. Strong partnerships are tremendously helpful in risk mitigation planning.
- Adaptability- LMD is evolving in the face of new challenges as well as opportunities. For example, cybersecurity wasn’t a thing when goods were transported 100 years ago. Today, it’s a looming threat that everyone has to plan for. What will tomorrow’s threat be? We better adapt and be ready.
Bringing it Home
Last-Mile Delivery is costly, complex, and high-stakes. There will be unexpected disruptions, and there is no hiding when things go sideways. But, for 3PL’s that are able to rise to the occasion, anticipate challenges and be prepared for the worst, LMD can pay off. Customers will be appreciative of an LMD provider that plans ahead, embraces technology, communicates effectively, and adapts with the market.