The ‘last mile’ in logistics is no longer just about delivery

This piece is an article that appeared in the June issue of ITwiz magazine.

According to estimates by logistics market experts, last-mile delivery often accounts for as much as 50 per cent of the costs of the entire supply chain. Where does this burden come from? The problem stems from the high fragmentation of collection points – customers want to collect their parcels at home, from a parcel locker, at collection points (PUDO) or directly in-store (the Click & Collect model). It is therefore necessary to ensure the efficient handling of several delivery channels.

The transport of parcels itself also poses a challenge, especially in urban areas – contrary to what one might think, it is not just about traffic jams. Problems include, for example, unforeseen incidents on the roads or difficulties with parking, as well as various regulations restricting unloading. Added to this is the increase in the number of delivery addresses, the number of priority deliveries, the transport of perishable goods with short shelf lives (food and medicines), the seasonal nature of deliveries (sales, public holidays, etc.), overcrowded parcel lockers (or a lack of space for parcels of specific dimensions), and even multiple delivery attempts for direct collections, and so on. All of this causes delays, can lead to mistakes and, above all, generates further costs.

Finally, there is also direct contact – with the driver, or a sales assistant at a newsagent’s or a nearby shop – and this acts as a sort of ‘seal of approval’ marking the end of the delivery, whether successful or not. As can be seen, this entire, rather complex stage is of particular importance for the customer’s ultimate satisfaction with the service received and for shaping their future loyalty and attachment to the brand.

Modern technological solutions come to the rescue

To remain competitive in the market, therefore, companies must keep their finger on the pulse and constantly work to ensure the appropriate efficiency and quality of the ‘last mile’ process, so as to meet the growing demands of e-commerce customers. In order to streamline the final stage of parcel delivery to the customer, logistics companies, distribution centres, courier firms, postal operators, as well as retail and service chains, are increasingly turning to modern technological solutions.

Thus, at the stationary level – that is, in a warehouse or distribution centre – the time elapsed from the moment a customer places an order with a retailer to the moment the goods are delivered to the buyer (lead time), can be achieved by implementing a system that supports the comprehensive management of warehouse processes, as well as loading and unloading. However, this is not the end of the story – the smooth running of logistics processes today requires integration with many other areas. Of critical importance here is the so-called ‘last mile’, i.e. the process involved in delivering goods from the logistics centre to the recipient.

“The key function of solutions supporting the so-called ‘last mile’ today is to ensure efficient real-time communication between individual delivery drivers and the dispatcher responsible for the efficient running of the process, and often also direct contact with the recipients of the parcels. However, for such large-scale coordination to be possible, the solution used by drivers must, amongst other things, support the registration of orders to be fulfilled, provide access to the route plan and its ongoing management, and assist in planning the optimal route. All of this – in real time and on a scale of thousands of simultaneous users,” says Paweł Garbacz, Director of Development at Omecon.

On-the-spot support for deliveries

It is clear that applications running on mobile devices used by those responsible for the final delivery of parcels cannot operate in isolation from the central IT infrastructure. Efficient, two-way integration of ‘last-mile’ solutions with systems supporting logistics processes – both at the operational level and in delivery planning – is therefore of paramount importance here.

“The central system remains the most crucial element of solutions supporting the final stages of logistics processes. It is within the central system that complex operations are carried out on the data used and collected during transport processes. The mobile app therefore serves as the drivers’ primary working tool, but also as a source of data regarding the registration of consignments collected from senders or loaded onto the vehicle, and the progress of order fulfilment,” adds Paweł Garbacz.

An increasingly important element of such solutions is the ability to process cash payments for parcels on delivery, and, ever more frequently, electronic payments as well. It is worth noting that the entire system must ensure a high degree of flexibility in the processes it supports, which becomes essential, for example, if a parcel needs to be redirected to a different address or the delivery date needs to be changed.

Apps drive efficiency gains

Thus, one example of solutions that we ‘deploy’ directly from the warehouse or distribution centre are applications running on various types of mobile devices. Equipped with such solutions, drivers have comprehensive tools at their disposal to support them in their day-to-day work. Importantly, in many cases, a standard smartphone is now all that is needed to run them. Such apps enable real-time communication – via mobile terminals – between the aforementioned staff in the field and the dispatcher. These devices support operational activities such as planning and generating the optimal delivery route, carrying out delivery, collection and return orders; the registration of consignments for delivery, returns and collections, as well as the updating of statuses and the ongoing monitoring of delivery progress. Solutions of this type increase the efficiency of operational activities, improve on-time delivery rates and enhance the quality of process control.

More than just delivery

The demand for solutions supporting the so-called ‘last mile’ within logistics processes is growing – all the more so as the final stage of delivery creates many new opportunities in terms of sales, service provision and delivering added value to customers. It is worth noting that this does not apply solely to the e-commerce sector. This model is currently being successfully utilised, for example, by large retail chains selling consumer electronics, which – in addition to simply delivering the goods to the customer – require additional expertise and materials for installation or configuration.

“The growing demand for additional services is limiting the ability of courier companies to handle deliveries directly, which means that more and more organisations are deciding to set up their own teams responsible for delivering goods and services directly in the field. However, providing additional services alongside the delivery itself requires a different approach to order planning, order fulfilment and customer communication than that used in typical freight forwarding operations. Our solutions can also be successfully utilised in this context. What’s more, they also provide effective support for all kinds of field operations, including servicing and installation processes,” says Paweł Garbacz.

As consumers, we are becoming increasingly accustomed to convenience – and willing to pay extra for it. This means that all sorts of processes involved in providing various services directly at a location specified by the customer will take on added significance. It is also to be expected that the logistical infrastructure for such operations will become even more complex than it is at present, and the need for IT solutions will increase further.