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Overcoming the last mile in supply chain management

Last mile delivery is often referred to in e-commerce for the stage from the last hub or distribution center to the end customer. It is the last "leg” in the supply chain – basically the part where logistics get in contact with the customer.

LN Consult, 17.01.2022

Supply chain management and the last mile delivery  

The service level for e-commerce is increasing. Next day delivery, same day delivery, and specific delivery windows, track and trace etc. This increasing service levels make efficient routing more and more difficult. Keeping costs low, is a real challenge. Next to efficient routing and low costs, sustainability is a topic which increases the challenges for the last mile. Companies do not want to cause traffic and reduce the living conditions (air pollution, noise pollution etc.) Furthermore, more and more cities introduce green zones, where zero emission is the target. Delivering high service, while keeping costs low and acting sustainable and responsible are the main challenges for last mile deliveries.

The last mile is the most expensive and time-consuming step because it is the most specific one. One can compare it with travelling with public transport. Traveling from airport to airport, or from city to city with a train is relatively fast and less complex. Getting to the final destination from the airport or the train station by bus and by foot will extend the travel time considerably. A taxi is more comfortable, but also more expensive than the train. In logistics, one transports bulks in trucks and containers where the costs are shared between all orders travelling the same distance. To the final destinations we need green taxis, which bring the products exactly on time to their final destination. Costs cannot be shared among a bulk of other orders or products.


Client expectations are rising rapidly

Customers want their orders to be delivered quickly at home. At the same time, they do not want to wait at home for the delivery to take place.

Customer expectations are rising high – just to name a few of them:

- Low costs (free delivery)

- Faster delivery (same day)

- Exact time frame for delivery

- Transparency of delivery (always know the exact status of the order)

How to (technically) handle those expectations

The technological possibilities can be divided into 3 categories:


1. Software to better plan orders

Like automatic dispatch, flexible vehicle routing planning or bus routes where time slots are available based on when the 'bus' passes the area, dynamic time slots (available time slots linked to the vehicle routing programs).

Vehicle routing programs have improved a lot in the last years, increasing the calculation capacity, new (close to) optimal routes based on given orders can be calculated quickly, enabling to replan constantly. 

This enables shorter through put times, enabling next day and same day delivery and moreover reduces costs. With dynamic time slots a clear trade off between time windows with efficient routing and costs can be made.


2. Type of transportation and use of consolidation hubs

To give a few examples, think about electric vehicles, cargo bikes, autonomic robotics or drones (for example for medication). 

Cargo bikes and electric vehicles enable zero emission transport and often allow more flexibility for urban deliveries. Some city centers only allow truck traffic within certain time windows. Autonomic robotics and drones reduce the cost as no manpower is required for the last mile. 

There are hubs which take over the last leg. Deliveries of different companies are collected at this hub – often in a green way. Due to more deliveries a more efficient routing can be done and above all the number of vehicles entering the city is limited.


3. Delivery aids

There are solutions available which help to enable deliveries without direct contact with the customer. The customer does not need to be at home at time of delivery. Just think about temperature-controlled lockers or pick up points. This gives more flexibility in transport planning as no specific time window has to be met. The fewer constraints, the more efficient the transport planning can be. Also, delivery during the night becomes possible. 


Depending on the type of products, some technological possibilities are more applicable to one company then to another. White goods, furniture but also groceries are often preferred to be delivered at a specific time window where somebody needs to be at home. Lockers are often not an option for the customer. 

When talking about smaller goods, the customer mostly prefers a quick delivery and accepts a more flexible handling. Nearby pick up points and lockers could be an option.

Zero emission is becoming more and more important in cities, where in rural areas these limitations are lower. When distances are far, cargo bikes are simply no option