Essential Guide to Last Mile Delivery

December 6, 2023

Table of Contents

What is Meant by Last Mile Delivery

Last-mile delivery refers to the final stage of the delivery process, when goods are transported from a transportation hub to the final recipient, usually a consumer’s home or business. It is the supply chain’s most expensive and time-consuming part, accounting for up to 50% of the total delivery cost.

The last mile is often complex and challenging due to several factors, including:

Urban congestion: Deliveries in urban areas are often slowed down by traffic congestion.
Delivery location: Deliveries to rural areas or remote locations can be difficult and expensive.
Customer availability: It can be difficult to coordinate with customers to ensure they can receive deliveries.

Here are some of the critical characteristics of last-mile delivery:

It is the most visible part of the delivery process to customers. This means that it has a significant impact on customer satisfaction.
It is a complex and often unpredictable process. Many factors can affect the time and cost of last-mile delivery, such as traffic congestion, weather, and the specific delivery location.
It is a labour-intensive process. Last-mile delivery typically requires a large number of drivers and other personnel.

As e-commerce continues to grow, last-mile delivery is becoming increasingly important. Businesses are pressured to provide fast, efficient, and cost-effective delivery services to their customers.

Why Last-Mile Delivery is Important

Here’s why last-mile delivery is important:

Customer Satisfaction: Last-mile delivery directly impacts customer satisfaction, representing the final touchpoint between the business and the customer. Efficient and timely deliveries can enhance customer satisfaction, leading to repeat business and positive word-of-mouth.
Brand Perception: Last-mile delivery plays a crucial role in shaping customer perception of a brand. Consistent and reliable deliveries can reinforce a brand’s reputation for dependability and quality, while poor last-mile experiences can damage a brand’s image.
Cost Efficiency: Optimizing last-mile delivery can significantly reduce logistics costs, as it involves minimizing fuel consumption, reducing delivery attempts, and streamlining overall operations.
Competitive Advantage: In today’s competitive e-commerce landscape, efficient last-mile delivery can provide a significant competitive advantage by offering customers faster, more convenient, and more cost-effective delivery options.
Environmental Sustainability: Optimizing last-mile delivery can reduce the ecological impact of logistics operations by reducing fuel consumption, minimizing emissions, and promoting sustainable delivery methods such as electric vehicles and cargo bikes.
Business Agility: Efficient last-mile delivery enables businesses to adapt to changing customer demands, expand delivery reach, and cater to diverse delivery needs, enhancing their overall agility and responsiveness in the market.

Last-mile delivery is an evolving field, and advancements in technology, data analytics, and delivery strategies are continuously improving its efficiency and customer satisfaction. By embracing innovative solutions and optimizing last-mile operations, businesses can reap significant customer satisfaction, brand perception, cost-efficiency, competitive advantage, and environmental sustainability benefits.

What Are the Benefits of Last Mile Delivery

Last-mile delivery offers several significant benefits to businesses.

Improved Customer Satisfaction: Efficient and timely last-mile delivery increases customer satisfaction, as customers receive their orders quickly and without hassle. This can foster repeat business, positive word-of-mouth, and enhance brand reputation.
Enhanced Brand Perception: Consistent and reliable last-mile delivery reinforces a brand’s reputation for dependability and quality. This can attract new customers, strengthen customer loyalty, and differentiate the brand from competitors.
Reduced Logistics Costs: Optimizing last-mile delivery can significantly reduce logistics costs by minimizing fuel consumption, reducing delivery attempts, streamlining overall operations, and leveraging cost-effective delivery methods.
Competitive Advantage: In today’s competitive e-commerce landscape, efficient last-mile delivery can provide a significant competitive advantage by offering customers faster, more convenient, and more cost-effective delivery options.
Increased Sales and Revenue: Improved customer satisfaction, enhanced brand perception, and reduced logistics costs can increase business sales and revenue.
Expanded Market Reach: Efficient last-mile delivery enables businesses to expand their market reach by delivering to a broader geographical area and reaching new customer segments.
Data-Driven Decision Making: Last-mile delivery generates valuable data that can be analyzed to identify trends, optimize routes, improve driver performance, and make data-driven decisions to enhance overall logistics efficiency.

Last-mile delivery is crucial in enhancing customer satisfaction, improving brand perception, reducing logistics costs, and expanding business market reach. It provides convenience, faster delivery times, real-time tracking, flexible delivery options, and reduced delivery costs for customers. As technology and delivery strategies evolve, last-mile delivery will become more efficient, sustainable, and customer-centric.

What is the Last Mile Delivery Scheme

A last-mile delivery scheme is a set of strategies and processes designed to optimize the final step of the delivery process, which involves transporting goods from a transportation hub to the final recipient, typically a customer’s residence or a retail store. Last-mile delivery schemes aim to address the challenges of this phase, such as varied delivery locations, traffic congestion, high customer expectations, and the need for customer interactions, to ensure efficient and effective deliveries.

Critical Components of a Last-Mile Delivery Scheme

Route Optimization: Employing route optimization software to plan and optimize delivery routes, minimizing travel time, fuel consumption, and emissions.
Delivery Vehicle Diversification: Utilizing a variety of delivery vehicles, such as bicycles, cargo bikes, electric cars, and traditional delivery vans, to navigate urban environments effectively, reduce congestion, and cater to different delivery requirements.
Delivery Locker Networks: Establishing networks of secure lockers where customers can pick up their packages, reducing the need for home deliveries, minimizing delivery attempts, and providing customers with flexible pickup options.
Predictive Analytics: Leveraging data analytics to predict delivery demand, forecast delivery times, optimize resource allocation, and proactively manage delivery operations.
Customer Communication Tools: Providing real-time tracking and delivery notifications to enhance customer satisfaction, keep customers informed about delivery status, and manage customer expectations.
Technology Integration: Integrating GPS tracking, mobile applications, and warehouse management systems to streamline delivery processes, improve visibility, and enhance decision-making.
Partnerships and Collaborations: Collaborating with third-party logistics providers, local delivery partners, and community organizations to expand delivery reach, optimize resource utilization, and cater to specific delivery needs.

Benefits of Implementing a Last-Mile Delivery Scheme

Improved Delivery Efficiency: Optimized routes, diversified vehicle fleets, and proactive resource allocation lead to faster deliveries, reduced travel time, and lower delivery costs.
Enhanced Customer Satisfaction: Real-time tracking, timely notifications, and flexible pickup options improve customer experiences, increase satisfaction, and contribute to brand loyalty.
Reduced Environmental Impact: Diversification of delivery vehicles, such as bicycles and electric cars, can reduce carbon emissions, promote sustainability, and align with environmental goals.
Increased Flexibility and Scalability: Adapting to changing delivery demands, expanding delivery reach, and catering to diverse delivery needs enhances business agility and resilience.

These examples demonstrate businesses’ diverse strategies and approaches to optimize last-mile delivery operations and enhance customer experiences. By tailoring last-mile delivery schemes to specific business needs and adapting to evolving customer expectations, businesses can improve efficiency, reduce costs, and gain a competitive advantage.

What is Last Mile Delivery Tracking

Last-mile delivery tracking is a system that allows customers and businesses to track the location and status of a package during the last leg of the delivery process, from the distribution centre to the final delivery destination. This real-time tracking provides visibility into the delivery process and helps to manage customer expectations.

How Last-Mile Delivery Tracking Works

Package Identification: Each package is assigned a unique tracking number, which serves as an identifier for tracking its movement.
Data Collection: Sensors and scanners embedded in delivery vehicles, warehouses, and delivery lockers capture data on the package’s location and status.
Data Transmission: This data is transmitted to a central database or cloud platform via cellular networks or Wi-Fi connections.
Tracking Platform: A web-based or mobile tracking platform allows customers and businesses to access the package’s location and status information using the tracking number.
Real-Time Updates: The tracking platform is updated regularly with the latest data, providing real-time visibility into the package’s movement.
Delivery Notifications: Customers can receive email or SMS notifications when the package reaches certain milestones, such as out for delivery.

Benefits of Last-Mile Delivery Tracking

Enhanced Customer Experience: Tracking provides customers with peace of mind and allows them to plan accordingly for the delivery.
Reduced Customer Inquiries: Customers can track their packages, reducing the need to contact customer service for status updates.
Improved Efficiency: Businesses can monitor delivery performance, identify potential delays, and proactively address issues.
Optimized Resource Allocation: Tracking data can be used to optimize route planning, resource allocation, and delivery personnel scheduling.
Reduced Costs: Efficient delivery operations can lead to lower fuel consumption, reduced delivery attempts, and decreased overhead costs.

Last-mile delivery tracking has become an indispensable tool for both customers and businesses, providing transparency, efficiency, and enhanced customer satisfaction in the increasingly complex world of e-commerce and logistics.

What is Last Mile Delivery Payment

Last-mile delivery payment refers to the final payment made to the delivery carrier or driver for successfully delivering goods to the customer’s doorstep. It is the culmination of the payment process, ensuring that the carrier is compensated for their role in completing the delivery cycle.

In the context of e-commerce and logistics, last-mile delivery payment typically involves the following steps:

Order Placement and Payment: The customer places an order for goods and makes an upfront payment, often through an online payment gateway.
Order Processing and Fulfillment: The retailer processes the order and prepares the goods for shipment.
Shipment and Transportation: The goods are packaged, shipped, and transported to a distribution centre or local delivery hub.
Last-Mile Delivery: The goods are transported from the distribution centre or hub to the customer’s final destination, typically by a designated delivery carrier or driver.
Last-Mile Delivery Payment: Once the goods are successfully delivered to the customer, the retailer or shipper makes the final payment to the delivery carrier or driver.

The specific method of last-mile delivery payment can vary depending on the agreement terms between the retailer or shipper and the delivery carrier. Standard payment methods include:

Per-Delivery Payments: The carrier is paid a fixed fee for each successful delivery.
Volume-Based Payments: The carrier is paid based on the volume of goods they deliver, often as a percentage of the total sales revenue.
Performance-Based Payments: The carrier’s payment is tied to specific performance metrics, such as delivery timeliness, customer satisfaction ratings, and adherence to delivery guidelines.

Last-mile delivery payment plays a crucial role in ensuring the smooth flow of goods and the overall profitability of e-commerce businesses. By establishing fair and transparent payment structures, retailers and shippers can foster strong relationships with their delivery partners, ensuring timely and efficient customer deliveries.

What is KPI in Last Mile Delivery

Here are some of the most critical KPIs in last-mile delivery:

On-Time Delivery Rate: This KPI measures the percentage of deliveries completed within the promised or expected delivery time frame. It reflects the reliability and efficiency of the delivery process and is crucial for customer satisfaction.
First Attempt Delivery Rate: This KPI measures the percentage of deliveries completed on the first attempt. It indicates the effectiveness of route planning, driver performance, and address accuracy.
Delivery Success Rate: This KPI measures the percentage of deliveries completed without any issues or exceptions, such as failed deliveries, undeliverable addresses, or customer refusals. It reflects the delivery process’s overall success and identifies improvement areas.
Cost per Mile: This KPI measures the average cost of delivering goods per mile travelled. It helps businesses track fuel consumption, vehicle utilization, and delivery costs.
Order Accuracy: This KPI measures the percentage of orders delivered correctly, without any errors or discrepancies between the ordered and delivered items. It reflects the accuracy of order fulfilment and inventory management processes.
Customer Satisfaction: This KPI measures customers’ satisfaction with the last-mile delivery experience. It can be assessed through surveys, feedback mechanisms, and customer reviews.
Damage Rates: This KPI measures the percentage of shipments that arrive damaged or defective. It reflects the care and handling of goods during the delivery process and identifies potential issues with packaging or handling procedures.
Delivery Timeliness: This KPI measures the average time it takes to deliver goods from the distribution centre to the customer’s doorstep. It reflects the efficiency of routing, scheduling, and delivery personnel performance.
Empty Miles: This KPI measures the percentage of miles travelled without any goods onboard. It reflects the efficiency of route planning and vehicle utilization, identifying opportunities to reduce wasted travel and fuel consumption.
Fuel Consumption Rate (FTR): This KPI measures the average fuel consumption per mile travelled. It helps businesses track fuel efficiency, identify potential vehicle maintenance issues, and optimize fuel usage.

By tracking and analyzing these KPIs, businesses can gain valuable insights into the performance of their last-mile delivery operations, identify areas for improvement, and implement strategies to optimize their delivery processes, enhance customer satisfaction, and reduce costs.