Last-mile challenge turns eCommerce priority

Expert explains how industry is solving the last leg problem

When you order something on an eCommerce website, have you ever wondered about the processes and technology that companies use to deliver the product at your doorstep?

Delivering a single product to you might seem trivial, but this last-mile delivery from the nearest distribution centre to your doorstep is one of the most challenging problems faced by logistics professionals today.

Addressing a session on ‘Transportation Strategy for Last Mile Delivery’ at the ninth edition of SCPC (Supply Chain Practitioners’ Council) at JDA Software, here recently, Chainalytics Senior Manager George Kochumman said, “The challenge in solving the last-mile problem is threefold. First, customers have an option to select a time delivery window that suits their convenience.

“There are usually four to five time windows in a day each with duration of three to four hours. Imagine, if two next door neighbours select two different time windows and the delivery person has to visit the same location twice in the same day.”

Kochumman added, “Second, customers expect to be serviced within the same day. This do not give companies much time to do detailed planning. It requires real-time planning. And finally, there are thousands of customers that have to be serviced with the available resources in terms of vehicles and manpower.”

Costs up to 30%

A recent survey by major corporations revealed that 30 per cent of the overall transportation costs is spent on last-mile delivery.

This is significant when we think that the distance covered in the last mile is significantly low. Are there any strategies that companies use to reduce the spend and effort in the last mile?

The answer is yes and companies are using the following strategies to control the last-mile challenge: a.) build their own fleet of vehicles to ensure high service levels; b.) invest a lot of money in technology, for instance, a transport management system that enables complete visibility over each shipment; and c.) adopt smarter strategies like multi-drop where multiple shipments are delivered by a truck in a single trip rather than deliver shipments individually.

Kochumman said, “Companies which have adopted the above strategies have seen their service levels go up, empty distance travelled come down, and vehicle utilisation go up.”
“By adopting the above strategies, companies typically save about 5 per cent to 10 per cent of their net transportation costs.”

In nutshell

In summary, last-mile delivery is a challenging problem that has to be solved in real time.
There has been lots of developments in this area in recent times with development of better algorithms and availability of heavy computing power.

So the next time you receive a product at your door, please take a moment and think about the technology and resources that went into making it possible.


Last mile delivery

Challenges

 Customers have an option to select a time delivery window that suits their convenience
Customers expect to be serviced within the same day
This do not give companies much time to do detailed planning

Solutions

 Build their own fleet of vehicles to ensure high service levels
 Invest a lot of money in technology
 Adopt smarter strategies like multi-drop