Overcoming the Top 5 Last Mile Challenges

In 2023, last mile delivery accounted for 53% of total logistics costs. Not only is that number fairly staggering, it also represents an increase of 12 percentage points for 41% in 2018. The cost pressures on last mile logistics operators aren’t even beginning to relent.

For anyone who grapples with last mile logistics on a daily basis, it’s not hard to see why. It’s a complicated process that only gets more complicated as expectations from customers increase and global supply chains become more volatile.

It’s never been more important to find a way to overcome last mile challenges—but, luckily, there have never been better tools for the job available to logistics businesses either 

The Importance of Overcoming Last Mile Supply Chain Challenges

You can’t ignore last mile delivery challenges for the simple reason that the final mile directly affects customer satisfaction. To wit, one survey showed that 61 percent of buyers said they would be less likely to buy from the same store or brand again if it failed to provide them with a reliable shipping service. 

In this way, failing to address the problems in the last mile of the supply chain can impact your bottom line. Inefficient workflows in the last mile cause businesses to lose money while missing out on opportunities to delight customers and boost customer retention and repeat business. In order to fight that inefficiency, you need to find a way to overcome a number of supply chain challenges.  

5 Last Mile Challenges Businesses Need to Overcome

1. Opaque Customer Experience

By default, the delivery customer has an experience that’s like a black box. They place an order, and then in the absence of any communication they hope against hope that their order will show up… one day. 

The consumers of a decade ago might have put up with that—but now your customers have more choices right at their fingertips, and they’re not afraid to take their business elsewhere if they can’t get the kind of predictable, reliable delivery service that they’re used to. 

That doesn’t change the fact providing a great customer experience is no mean feat. To get it right, you need to keep the customer informed early and often, provide live delivery tracking, and show up on time. This means you have to have a high degree of visibility within your own operation, as well as the ability to make the right information transparent to customers at the right time. 

Customers also need the ability to reach out to you if something goes awry. Here, an AI-powered chat agent can be a huge help for managing the frontline of customer queries (where’s my order, what time is delivery scheduled for, etc.).

2. Lack of Visibility

Again, dealing with the realities of the pandemic remains a top supply chain challenge. But beneath that challenge, most businesses are grappling with the same issues that have plagued the last mile for many years. For instance, ensuring consumer loyalty these days means allowing customers to track their orders on their own. Shoppers want to feel empowered by having the ability to trace the status of their orders without having to call the customer service team.

But many businesses lack the capabilities to gain this level of visibility into the last mile for their own purposes, let alone provide it to their customers. Too often, the last mile remains a black box and no one can accurately say what’s going on in the field on the day of delivery.  

3. Inaccurate ETAs and Late Deliveries

Even before any of the most recent high-profile supply chain disruptions, many businesses were struggling with timely deliveries.It was all too common for businesses to provide their customers with inaccurate expected time of arrivals (ETAs) and miss their promised delivery times. 

Sadly, late deliveries hurt one's brand. Failing to deliver at the promised times means losing customers to competitors and ultimately hurting the business' profitability. And this supply chain challenge has only gotten more difficult as customers’ tolerance for hours-long delivery windows has diminished. 

4. Poor Route Planning

Inefficient route planning is often the cause of inaccurate ETAs and late deliveries. Even the most seasoned human route planners can never account for the multiple variables that must be considered in finding the quickest routes. Manually planning routes is inefficient, time-consuming, and often unreliable. Plus, manually plotted routes can’t be rapidly adjusted for real-time and unpredictable elements like a sudden downpour, vehicle breakdown, unexpected road congestion, or last minute order changes. 

These sorts of route planning challenges have a big impact on costs—e.g. fuel costs, labor costs related to drive time and manual planning effort, etc. But, again, they also impact the accuracy of your ETAs and your ability to deliver on time. This means that by addressing route optimization, you can effectively kill two birds with one stone and create accurate, cost-effective routes all at once. 

5. Controlling Total Logistics Costs

Driver hours, fuel costs, damage from returned items, fleet maintenance and warehousing costs, technology spend, back-office labor and personnel. They add up quickly, and they can spiral out of control faster than you can reroute a delivery. 

Controlling your logistics costs is particularly challenging because each of the major cost factors feed into one another. Damaged items mean unplanned returns, which mean increased driver hours, extra warehouse, and even additional wear and tear on your vehicles—all while your cost of customer acquisition potentially goes up. 

This extends beyond the last mile. Your logistics processes are de facto connected, even if your processes and software solutions aren’t. 

Businesses that take a holistic approach to their connected logistics processes can put themselves in a position to measure, analyze, and ultimately reduce their delivery costs. How? By optimizing both individual processes like route optimization and warehouse picking and the ways that those processes connect. 

Why Delivery Management Software Is Key

Companies that are still having the above-mentioned difficulties can easily overcome them by investing in the right technological solutions, particularly delivery management software. Simply put, if you have the tools to address these last mile challenges head on, you can stay agile and improve your operational efficiency over time. 

For instance, a robust delivery management solution might have route optimization capabilities, allowing route planners to find the best routes in a matter of minutes. Optimizing routes enables the company to factor in the various elements and their unique constraints and anything else that might affect delivery times, resulting in accurate ETAs and ensure timely deliveries.

This functionality allows you to make the most of their resources and handle higher delivery volumes and last minute changes. It lets you save on last mile delivery costs via lower fuel and vehicle maintenance bills, as well as decreased labor hours.

At the same time, the right delivery management software will also offer customers greater visibility over their orders, with the ability to track them on their own at any time. Likewise, the software should enable fleet managers to locate and find out where their drivers are and what they're doing while on the road.

There’s no denying that the last mile delivery is the most challenging and expensive part of the order fulfillment process. But with the right tools, businesses can improve their final mile operations and overcome their most pressing supply chain challenges.