The Final Mile: Challenge or Opportunity?

final mileFinal mile logistics is attracting a lot of interest for many reasons, but the most obvious is the growth in e-commerce markets. While companies have opportunities to gain new customers by offering more buying and delivery options, these often same-day home deliveries do not come without challenges.

In fact, final mile deliveries can be among the most expensive transportation segments in a supply chain. There are costs associated with scheduling times for appointments. If a delivery requiring a signature is missed because the recipient is not home, it can result in extra trips, more driver time, and additional administrative tasks.

Not only is final mile logistics costly in terms of assets and providers, but a poor home delivery experience can also have a negative impact on a company’s brand. In some instances, the final mile delivery is the first personal contact between the consumer and the product. Myriad situations can turn a positive perception into a negative. Is the driver late? Does he get mud on a consumer’s rug or trip over the family dog? Is the product packaging damaged? Any one of these scenarios can degrade the buyer experience.

Clearly, home delivery is not a new concept. Door-to-door delivery is as old as commerce itself. What is new is the expectation for faster and faster deliveries from the point of purchase. And, indications are that accelerated demands will become normalized. In fact, a recent report shows that 50 percent of millennials desire even quicker deliveries.

While companies are beginning to look at emerging, less traditional final mile options, such as Uber-type delivery services or crowdsourcing, most are just “kicking the tires,” rather than making major changes. There are a number of reasons for this wait-and-see approach. In the meantime, an advanced transportation management system (TMS) can help you conquer the challenges of final mile delivery as you leverage the opportunities of e-commerce sales.

Optimize modes across the entire transportation process

A TMS that provides a single platform to manage all modes of transportation, including parcel, allows shippers or 3PLs to make more informed decisions, with all modal options under consideration. It may be possible to offset final mile costs by consolidating middle mile shipments from less-than-truckload (LTL) to a single truckload. Additionally, a TMS with strong parcel capabilities can expedite the rating and preparation of parcel shipments automatically, driving efficiency and reducing the need for labor to do these routine tasks.

Gain visibility throughout the life of the shipment

In order for the flat screen television to arrive on time at a consumer’s doorstep, the manufacturing process must be on track as well as the warehouse or distribution center receiving the products. The success of a final mile delivery often begins with the first mile, from a manufacturing facility to a warehouse or distribution center. That is why it is critical that you have full control tower visibility throughout the supply chain.

A TMS with the ability to integrate with other systems, like a Warehouse Management System (WMS), provides end-to-end visibility. This allows you to take proactive steps to correct a potential disruption before it becomes a service failure. With exception management workflows, you may be able to get an order back on schedule or make alternate plans, such as sourcing the product from another location close to the end consumer.

Use business intelligence to drive improvements

One of the greatest benefits of having an advanced TMS to assist with final mile deliveries is a business intelligence (BI) component. If your TMS has strong BI capabilities, you can begin to strategically drive efficiencies early in the shipping process, from identifying cross-docking and zone-skipping opportunities to considering multi-move line hauls. You can also build models that leverage demand patterns to maximize high-density areas with low-density regions. Find ways to combine internal, B2B, and B2C last mile freight. Since statistics tell us that 30 percent of all goods ordered online are returned, build a delivery process with patterns to support reverse logistics needs.

There is an old expression – in order to get where you want to go, you need to know where you are. With regard to final mile deliveries, the path to process improvement begins with an assessment of the tools you already have and plans to make the most of them as you evaluate other evolving solutions.

Karen Sage is MercuryGate’s Chief Marketing Officer (CMO) responsible for the company’s global marketing, communications, sales enablement, and go-to-market efforts. She is a veteran with 20+ years of experience in business-to-business marketing and communications helping several industry leaders launch disruptive new categories, accelerate revenue growth, build leadership brands, and establish marketing organizations that scale globally. She comes to MercuryGate most recently from spend management solution provider, SciQuest. Prior to SciQuest, she was at CA Technologies where she served as vice president of marketing leading rapid growth initiatives. Her experiences leading growth also include multiple leadership roles during a 15-year stint at Cisco. Karen started her career having invented the NETSYS Performance tools at NETSYS Technologies, Inc., which was acquired by Cisco in 1996.