The last mile. Maybe it doesn’t sound important, but think how long that last mile in your commute seems until you finally arrive home.
The last mile refers to both transportation and package delivery, and both have their issues.
For many people in cities last (or first) mile transport may be a bus or metro, but not everyone lives on a bus or subway route and not every bus stops in front of your home. Some cities are tackling the problem by using smaller buses on circulator routes to reach roads prohibited to large vehicles, are offering ride-share shuttles or bikes, car-pools to transit or all of the above.
A parcel’s final delivery mile to destination is always the least efficient, can be anywhere from a couple of blocks to 100 miles, and cost up to 28 percent of the shipping total.
Retailers have been trying to differentiate themselves to gain market share and build brand loyalty by offering personalized experiences and an expanded array of products and services, complete with fast (and in many cases free) delivery to your front door. They know that customers have a lot of options when choosing where to spend their dollars. But the cost of shipping isn’t really “free”, it’s built into the price you end up paying in some way, shape or form and keeping that cost down is key to a retailer’s margins and the prices they end up charging for their goods.
Another way last mile delivery is being disrupted is via home delivered meal-kit services. Take Gobble for instance. “Gobble and companies like Gobble didn’t exist five years ago,” says Steve Robinson, Gobble’s vice president of Operations and Supply Chain. “Food delivered to your door is now a thing, it’s a really big, hot growing segment. We’re always looking for those on-demand businesses that do local transport.”
It’s not just meal-kits delivering food to your door either. Lots of chains have gotten into the game including grocery stores and fast food like ubiquitous pizza shops, Panera, Taco Bell, Chipotle, even McDonald’s depending on your location. There’s also Grub-Hub and competitors which aggregate local takeout and chain restaurants to offer a wide selection of costs and cuisines, bagels to Venezuelan, with front door delivery.
And don’t forget medications, home goods, cosmetics, apparel – you name it, pretty much anything can be ordered online and arrive at your home.
For many – think the elderly, the disabled and the time-crunched – these are boons.
Each and every order relies on getting your purchase, shoes, food and everything in between, to your door quickly, and shows no sign of abating as consumers want it all faster and cheaper than ever with price remaining a key decision criterion.
It’s important enough that for UPS, for example, a mile saved per route per day in the U.S. equates to $50 million in savings annually.
The way that organizations are dealing with last mile solutions varies. For UPS it involved the creation of a computer system, developed by industrial and systems engineers, called ORION or On-Road Integrated Optimization and Navigation. The system uses “route-optimization…that analyzes a collection of data points including the day’s package deliveries, pickup times, and past route performance to create the most efficient daily route for drivers,” according to the company.
You may have read recently that Amazon is rolling out a new business, Delivery Service Partners, in its bid to solve last mile deliveries. Open to entrepreneurs who want to start their own businesses hiring drivers and leasing vans from Amazon, if they wish, to deliver packages from the company’s ever-expanding number of warehouses to homes and businesses. Amazon estimates, with a lot of fine print, that successful operators with 20 to 40 vans can profit from $75,000 to $300,000 based on location and costs.
Not too shabby, and it illustrates the point of how important that last mile has become especially as more packages are delivered singularly and not as bulk inventory to stores.
There’s no one answer to the issues, but involve supply chain, logistics and delivery solutions using courier and delivery companies and probably crowdsourcing, autonomous vehicles, robots and drones in the future. As these and other new technologies emerge opportunity cost, regulations and public opinion will all weigh on whether or how successful any of these become.
Source: Lancaster Online, “The Last Mile“. (https://lancasteronline.com/jobs/the-last-mile/article_0aaf3130-807f-11e8-9523-d749ad5ba87b.html) . Karen Triano Golin, July 8, 2018.