Expert George Kochumman of Chainalytics explains how the industry is solving the last leg problem to the Deccan Herald:
When you order something on an eCommerce website, have you ever wondered about the processes and technology that companies use to deliver the product at your doorstep?
Delivering a single product to you might seem trivial. Still, this last-mile delivery from the nearest distribution center to your doorstep is one of the most challenging problems faced by logistics professionals today.
Addressing a session on ‘Transportation Strategy for Last Mile Delivery’ at the ninth edition of SCPC (Supply Chain Practitioners’ Council) at JDA Software, Chainalytics Senior Manager George Kochumman said, “The challenge in solving the last-mile problem is threefold. First, customers have an option to select a time delivery window that suits their convenience.
“There are usually four-to-five time windows in a day, each with a duration of three to four hours. Imagine, if two next-door neighbors select two different time windows and the delivery person has to visit the same location twice in the same day.”
Kochumman added, “Second, customers expect to be serviced within the same day. This does not give companies much time to do detailed planning. It actually requires planning in real-time.
Finally, there are thousands of customers that have to be serviced with the available resources in terms of vehicles and workforce.”
Costs up to 30%
A recent survey by major corporations revealed that 30 percent of overall transportation costs is spent on last-mile delivery.
This is significant when we think that the distance covered in the last mile is significantly low. Are there any strategies that companies use to reduce the spend and effort in the last mile?
The answer is yes, and companies are using the following strategies to control the last-mile challenge:
- Build their own fleet of vehicles to ensure high service levels
- Invest a lot of money in technology, for instance, a transport management system that enables complete visibility over each shipment
- Adopt smarter strategies like multi-drop, where multiple shipments are delivered by a truck in a single trip rather than deliver shipments individually.
“Companies which have adopted the above strategies have seen their service levels go up, empty distance traveled come down, and vehicle utilization goes up,” Kochumman said. “By adopting the above strategies, companies typically save about 5 percent to 10 percent of their net transportation costs.”
In nutshell
In summary, last-mile delivery is a challenging problem that has to be solved in real time.
There have been many developments in this area in recent times with the availability of better algorithms and more computing power.
So the next time you receive a product at your door, please take a moment and think about the technology and resources that went into making it possible.
Last-mile delivery challenges and solutions
Challenges:
Customers have an option to select a time delivery window that suits their convenience.
Customers expect to be serviced within the same day
This does not give companies much time to do detailed planning
Solutions:
Build their own fleet of vehicles to ensure high service levels
Invest a lot of money in technology
Adopt smarter strategies like multi-drop
