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Closing Last Mile Transportation Gaps

Used to describe the movement of goods from a transportation hub (i.e., a warehouse or DC) to the final destination (usually a customer’s home or business), the “last mile” plays an important part of any company’s transportation strategy in today’s competitive business environment.

“The final mile of delivery presents a unique set of challenges compared to the rest of the supply chain,” writes VDC Research’s Richa Gupta in From the Last Mile to the Last Meter. “Packages often do not reach their intended recipient on the first delivery attempt, resulting in items being returned to distribution center hubs. This translates into increased costs for delivery service providers and reflects poorly on sellers, resulting in pronounced consumer dissatisfaction.”

Gaining Competitive Advantage

Six years ago, Inbound Logistics called the last mile the “key to competing in the retail race.” At the time, this crucial part of logistics—which accounts for the majority of a shipment’s cost and complexity—was becoming increasingly difficult for retailers to manage. Fast-forward to 2016 and the task has become even more difficult thanks to changing customer preferences, the proliferation of next-day and two-day delivery options, and the growth of e-commerce and omni-channel distribution.

“This burden will become more troubling to retailers, according to trade forecasts,” Francis Walsh III wrote in Last Mile Logistics: Key to Competing in the Retail Race. “Inbound container traffic will continue to grow, congestion at and around ports will pose larger delays, and transporting product—and ultimately, revenue—from the ports to the shelf will be increasingly difficult, particularly during peak season. How well retailers manage the last mile inside the U.S. plays a critical role in their ability to compete.”

Tasked with managing the flow of goods between a point of origin and a destination, logistics includes everything from production ,to warehousing, to transportation, to information flow. It also incorporates security, material handling, packaging, and other steps along the supply chain. As the literal “last leg” in this process, the last mile is playing an increasingly important role in fulfilling end user requests for faster deliveries, more accurate information regarding those deliveries, and better oversight across the entire supply chain.

The growth of e-commerce has exacerbated the last mile challenge. Timing the home delivery that takes place when no one is actually “home”—but when a consumer is expecting a delivery on a certain day (or even within a specific timeframe)—can be difficult for shippers to manage. Where in the past the focus may have been on shipping pallets of goods to retail stores and other outlets, for example, companies are being asked to manage the fine details of getting individual packages to those consumers’ doorsteps.

“Behind [the] e-commerce conundrum lies a mass of fulfillment, inventory deployment, supply chain network design, and omni-channel distribution challenges,” writes Chainalytics’ Burton White in Last Mile: The New Frontier in the Retail Supply Chain. “Even gargantuan high-profile e-tailers—while having succeeded in offering customers inexpensive and same-day delivery options—are still struggling to maintain efficient last-mile solutions in a cost-effective and profitable manner.”

According to White, the last mile presents both uncertainties and opportunities, the latter of which often lies in “the nuts and bolts of how a product/package’s chain of custody is outsourced and moved” across the last mile. “This is truly where we see total cost-to-deliver dynamics and innovative approaches make the most sense. New, small experimental entrants like Uber, Instacart and Deliv are emerging at the forefront. However, as we move away from traditional carrier delivery models there is a need to provide more extensive tracking and beefed-up package security to meet customer expectations, perception, consistency, and quality.”

Meeting Last Mile Challenges Head-On

No company can afford to have “pronounced consumer dissatisfaction” in today’s competitive business world, where bridging the last-mile gap has become a top-of-mind concern for any company involved with delivering products to end users. Logistics providers are taking the necessary steps to help customers fill those gaps. Last year, for example, DB Schenker introduced its new Last Mile Tracking offering for fair logistics at the International Consumer Electronics Fair (IFA) in Berlin, Germany.

As the official fair logistician of the Messe Berlin, DB Schenker developed a new software solution for active shipment tracking within the exhibition grounds. Using this new solution, exhibitors were able to track the arrival of their shipments from origin to destination. With this new offering, DB Schenker became the only fair logistics provider to implement last mile tracking of shipments weighing 31.5 kilograms or more.

Active Last Mile Tracking also relieves stand personnel and shippers who no longer have to “actively report” the receipt of a shipment or track the shipping process via the tracking function. Once the shipment is delivered to the fair stand, the acknowledgment of receipt is automatically sent via email or text message from the handheld device of the DB Schenker courier to the shipper.

Previously unattainable, this level of last mile visibility puts the power into the hands of the shipper that needs maximum oversight over high-value shipments.

“Selected exhibits, such as those shown at IFA, sometimes have a considerable material asset. Accurate tracking to the hands of the recipient – is thus a response to security issues,” said Ulrich Kasimir, Head of Product Management Fairs/Special Transports Schenker Deutschland AG. “The new solution provides the sender with maximum transparency on the status of the shipment.”

Expect to see more logistics providers taking the steps necessary to help their customers bridge the gap in their last-mile logistics operations. This year, for example, DB Schenker opened its largest warehouse in India at Bhiwandi near Mumbai in the western region. The 172,841-square-foot facility provides state-of-the-art warehousing operations for palletized and non-palletized cargo to the city and nearby areas. This new facility gives customers in the western region of India shorter response times, better product availability, and seamless last mile deliveries to the destinations.

“The new warehouse will allow us to consolidate a smart distribution system for customers in the western region,” said Shrichand Chimnani, Schenker India’s director logistics. “The tactical location and modern infrastructure ensures the high efficiency level in our operations even in case of anticipated increase in product volumes in the next few years.”

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