Is Your Organization’s Last Mile Strategy Working For or Against You?

The term “last mile” has become synonymous with the transportation industry, but in truth, the term originated within telecommunications and refers to the installation and delivery of communication services to the end client. However, in the transportation world, last-mile delivery refers to a product’s final destination in the supply chain (for e-commerce deliveries, that mostly means to the customer’s home, office, or preferred delivery point).

In the early days of ecommerce, customers simply expected to order parcel-size items online. But now that ecommerce has fully established itself as the primary option of consumerism, shoppers expect online availability for anything and everything—from shoes and clothes to a new dishwasher or that shiny new riding lawn mower they’ve been coveting for years. Now, their shipping expectations extend far beyond item availability and now includes shipping costs, shipment method, and expedited delivery.

Why It’s Important to Establish a Best-in-Class Last-Mile Operation with the Right Carriers

Only a few years ago, online parcel orders were limited to what the U.S. Postal Service, UPS, or FedEx could handle. With large or oversized item shipments, the best a customer could hope for was the item being shipped to the store closest to them. Then, the customer would have to figure out how to get the item from the store to their home, across the threshold, and then into a garage or in-home area.

With white-glove delivery with in-home setup or installation options included in last-mile delivery these days, the ongoing last-mile irony gets even more complicated. Last-mile delivery has the very same logistical challenges it did years ago: finding the best way to transport a large item, unload it from a truck, and get it to the final destination. Only now, the last-mile delivery onus is on the retailer, including scheduling delivery at the customer’s preferred time while having the product delivered at the cheapest cost possible, often for “free.” Given the operational and financial constraints for retailers, it’s imperative to optimize last-mile delivery.

To succeed, we advise that retailers start by selecting the right carrier for the job

You’ll want to start the process by first matching your freight demands to the carrier or carriers who can manage your last-mile deliveries effectively. But selecting the right carrier goes well beyond finding a company that can properly transport freight. Your carrier must handle it the same way you would if delivering via your own private or branded fleet to ensure you retain customers as well as protect your company’s reputation and brand.

Keep in mind the carrier’s driver is the last person interacting with consumers before the transaction is complete and that experience leaves a lasting impression. What’s more, social media pretty much guarantees dissatisfied clients will share any negative experience with a whole multitude of existing and potential customers, so choosing the right carrier remains critical to keeping customers satisfied and loyal.

You’ll need to think first about how you need the freight delivered and what additional services your customers are expecting, which can vary enormously. For example:

If you are a retailer selling faucets, do you offer installation services? If so, this requires far more than successful delivery; you’ll need to schedule a qualified installer–requiring multi-step coordination with a technician–all while considering customer availability. In these instances, shippers track the delivery of the parcel to the installer, not to the customer. Once the package arrives, the installer would arrive at the customer’s home at a predetermined time and day and install the new faucet.
What if it’s a larger item such as a riding lawn mower? These products can’t be moved through a traditional parcel network and require a more hands-on approach, like one provided by a home delivery carrier that specializes in large equipment. In this case, you need a carrier who can not only handle large items efficiently through their network but also deliver to a variety of customers’ homes via a lift gate truck and most likely a pallet jack. Additionally, the driver may need to be trained to address questions–or even start the mower or provide a product demonstration–to reassure the customer the product is in proper working order.

When selecting a carrier, it’s important to think not only about the current requirements for your freight, but also future customers’ expectations and needs. At the same time, it’s also important to step back, be honest with ourselves, and realize we can’t anticipate everything. What’s more critical is developing a solid partnership with one or more reliable carriers who will provide continuous feedback so you’re aware of changing customer demands.

Your carrier needs to be agile and provide on-site services as the customer requests them. And you’ll need to give them the flexibility to charge for those extra services to keep customers happy. A driver that says, “we don’t do that” is a red flag and a sure step to losing future sales. In many cases, carriers already provide extra services to keep customers happy. However, expecting carriers to continually absorb these costs is short sighted. As an industry, we expect a transfer of these charges to the shipper, either through increased base rates or new accessorial charges. As this shift occurs, shippers must be able to trust their carriers and feel confident they will not abuse the arrangement by charging for services not rendered.

Last-mile delivery is constantly evolving, and only effective partnerships can allow shippers and carriers to build the right infrastructure for the future. I’ll be writing more about optimizing last-mile strategies in future blogs and articles–addressing the different transportation modes common to last-mile delivery and the operational challenges each presents.

A senior manager in the Chainalytics’ Transportation competency, Bryan Wyatt has over 20 years of experience and expertise in transportation operations, strategic sourcing, data analysis and logistics planning, as well as logistics/supply chain change management.

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Is Your Organization’s Last Mile Strategy Working For or Against You?

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