Solution – 8 MIN READ
Solution – 8 MIN READ
The last-mile optimization remains a priority subject for many distributors who want to meet the expectations of consumers without reducing the unit margin and ecological performance. It’s today the logistical challenge for these professionals.
March 10th 2020
It is estimated that one in five vehicles running in Paris carries parcels to deliver. This last mile is the most expensive, not only for the supply chain, but also for the environment with about 30% of polluting emissions. While orders continue to increase, experts are trying to develop solutions to reduce the financial and ecological impact of the last mile. The objective is to offer flexible, fast and sustainable delivery.
The purchasing behavior and consumer habits are changing, it is now an absolute certainty. The number of low-volume orders is increasing due to the development of e-commerce and the need for immediacy. This new way of consuming is causing an increase in the flow of goods with a growing number of packages to be delivered to the consumers. In addition, we observe the same trend in the food delivery industry. As consumers no longer want to go to supermarkets on busy days, they regularly order their groceries online. These orders are made on weekdays for home delivery in a few days or even in a few hours.
In recent years, we have seen an increase in urban traffic with increasingly difficult traffic and parking conditions in downtown areas. The consequences of pollution on the health of city-dwellers are no longer to be proven. That’s why many cities have decided to introduce new regulations limiting the access to certain urban areas. For example, in European countries, there are now traffic and access restrictions for vehicles which are too polluting.
The distributors also have to meet the sustained demand for specific events, such as sales, Black Friday or Cyber Monday, which continue to multiply. The consequences are significant for the logistics activity and the management of flows to the end customer.
The demand for priority deliveries continue to increase and these deliveries are particularly complex to manage. For exemple, they could be vital for customers or require the traceability of products, such as for the delivery of medicines or fresh products.
To meet the expectations of consumers, distributors are now offering several delivery methods: at home, in parcel pick-up point, in store, at the workplace, in secure lockers and more. This geographic distance between the warehouse and the points to be delivered complicates the building of delivery routes.
Consumers are more and more demanding on the time needed to make goods available. Therefore, professionals must succeed in reducing delivery time to the end customer. That’s why, they now offer express deliveries. This delivery in less than 48 hours is a real selling point and there are more and more consumers who are choosing this method. Nevertheless, managing this type of delivery is particularly complex and the associated transport costs are the highest.
The cost of last-mile delivery is particularly high in the logistics supply chain. As the goods get closer to home, the cost of transport increases. That’s why the last mile count for 20% of the transport costs to the end customer. The businesses usually decide to cover a part of the delivery costs because excessively high costs could dissuade many consumers from validating their basket and proceeding to payment. Therefore, the management and optimization of the last mile is one of the main concerns of distributors. To maintain delivery at a reduced or even free price, professionals must succeed in implementing new solutions limiting the operational costs of this last mile delivery.
Beyond the product, consumers are more and more concerned about the delivery conditions. Delays, damaged packages, errors in merchandise delivered, the lack of delivery service to D-day and the lack of delivery tracking can have a major impact on the customer satisfaction. In the event of unsatisfactory delivery experience, consumers usually no longer place orders with these distributors.
Today, consumers have several expectations regarding the delivery:
Fast and efficient last-mile delivery helps to create customer loyalty and encourages them to increase spending. Furthermore, satisfied customers usually share their positive experience with friends and family. That’s why, distributors must focus on the customer experience during the last-mile delivery.
Why should you offer a quality delivery experience?
Due to the global warming, consumers are more and more concerned about the sustainable approach implemented by distributors. That’s why, distribution companies, which are responsible for a major part of polluting emissions in urban areas, are now focusing on their environmental performance. In addition, measures to restrict access to polluting vehicles within downtown have been taken. These measures affect vehicles used for the delivery of parcels, which are today responsible for greenhouse gas emissions of up to 30%. The establishment of Low Emission Zones in many French cities should encourage distributors to adopt a more sustainable approach.
The automation of processes in storage centers enables the fast preparation of orders and dispatch of packages to the customers.
It’s not just about delivery costs anymore. Today, consumers are now concerned about the possibility of choosing a point of delivery and a time slot. They want to manage the reception of their goods and make sure to not miss the deliveryman. That’s why, its essential to allow consumers to define a point of delivery : home, workplace, store, parcel pick-up point, secure lockers and more.
Distributors must smartly schedule orders to limit delivery time and associated operational costs. Plan manually these delivery routes could be a real headache. Therefore, software has been developed to automate the scheduling of orders and the building of delivery routes. These solutions offer customers the possibility of defining a time slot and thus limit the delivery failures. For example, the AntsRoute route optimization software offers these features. In addition, defining more flexible time slots and achievable delivery plans ensure a leeway during the route. Thus, deliverymen can more easily meet scheduled delivery time. Finally, the presence of API Rest allows distributors to interface these tools with their own order-taking or merchandise labeling system.
The pooling of freight allows several businesses to group their deliveries within a distribution center where vehicles are responsible for delivering the parcels to the customers. These deliveries made on behalf of others allow distributors to minimize their expenses by improving the filling rate of vehicles.
While home delivery remains the first choice of consumers, distributors should encourage consumers to choose delivery in parcel pick-up point. This delivery method is today one of the most sustainable solutions. It helps to reduce the number of stops made by deliverymen and therefore to limit extra miles. Thus, the fuel consumption of vehicles decreases and the unit delivery cost is lower.
Last-mile logistics is also about the management of associated information flows. Therefore, distributors must allow consumers to track the delivery of their goods. In particular, systems allows the automated sending of SMS and email notifications at each stage of the delivery process. A final message can be sent to communicate an estimated time of arrival (ETA) and ensure the reception of goods.
Distributors can replace diesel vehicles with low-emission engines, such as electric or NGV, to improve their environmental performance. These low-emission vehicles allow deliverymen to access downtown.
What about the years to come? New delivery methods should be developed to reduce the delivery time and associated costs. Some companies already offer alternatives to deliveries via road infrastructure. For example, it’s now possible to deliver packages by drone to areas which are more difficult to access.
To conclude, distributors must focus on the optimization of last-mile logistics. As the volume of packages to be delivered will continue to increase, professionals must focus on implementing solutions that meet the expectations of customers without overlooking their environmental performance.