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Last Mile: The Most Crucial Part of the Supply Chain.
22 de December de 2021
Christmas is all about traditions, family reunions, company dinners and presents. Every year, there’s the same increase in sales during these days and, every year, clients make the same choices: colognes, socks, winter coats, video games and scarfs are the most common gifts in most of the stores according to Deloitte. But, even though we repeat the same presents every year, nothing’s like it used to be, because online shopping is on the rise. In Spain, e-commerce made up for 24% of the total shopping last year.
The reasons for having more and more people shopping online are quite diverse: it can be done from any place in the world and we can visit hundreds of shops without having to leave the sofa; it’s easier to find what we’re looking for and, among many other benefits, we can get it delivered to our homes in record time thanks to the advanced logistic systems. Regarding this last point, there’s a key component of the supply chain: the last mile. Laura Bolaños, MBA Graduates and Senior Project Manager at eComJungle,explains to us what this key point in the supply chain is and how it works.
What’s the Last Mile?
Once inside the cities, products are distributed from a particular zone or warehouse to different destinations. This is known as ‘last mile delivery’, although it’s also known as proximity logistics or capillary distribution. This is the last movement of products, going from the transportation centre to their final destination.The main goal is to make deliveries as efficient as possible.
In a supply chain that’s focused on the final consumer —business to consumer (B2C)— the last mile corresponds to the final delivery of the product to the client, whether it’s in a collection point, like automated locker (as the ones we see in service stations or in the metro), drop/collection points (other shops act as receptionists for the products of companies like Amazon, UPS, etc.) or in their own homes.
This type of transportation is useful for everyone involved in the process of buying and selling products but, especially for eCommerce.
Fast… But Also Sustainable
We’re becoming increasingly aware of the need to take care of the planet and, more and more, we’re trying to live accordingly. This also has an effect on shopping decisions, a lot of which are made based on the level of social responsibility that companies show, prioritising it even above prices or product quality. For companies, social responsibility, besides being a matter of environmental awareness, is also a market imposition. That’s why more and more logistics and eCommerce companies have chosen to use electric vehicles (cars, motorcycles, scooters, bicycles, tuk-tuks) or on-foot delivery.
The Challenges Ahead
A well implemented Last-Mile process is fundamental for the successful operation of any business but, in order to achieve this, one must be aware of the different challenges that lie ahead:
Traffic: One of the biggest challenges for last mile logistics is the increasing number of megacities in the world — when they reach a physical limit for their geographical expansion, they experience an increase in population density, which gives place to a more complex transportation situation: traffic jams, uncertainty and random events (like accidents) that alter the logistic process.
The Demands of eCommerce: From a user’s point of view, we see eCommerce as something positive… and logistic services are an extension of customer service. However, the fact that it’s so convenient, that it lets us choose the day, the hour and the speed of the delivery or even separate the orders into individual deliveries when we shop in different platforms, causes a lot of small parcels to be delivered to logistic centres in the cities, which makes it difficult for companies to plan efficient routes.
Competing with the Big Ones: The problem for small and medium eCommerces is that big corporations educate consumers to be used to amazingly fast delivery times without charging them (free delivery in the same day). This increases the price of logistic companies, which means that small eCommerces have to lower their margins or make an effort to educate consumers on understanding that logistics is a separate industry.
Success Stories
Most logistic companies use the centralised distribution method — taking every parcel that’s destined to a particular area to the same nearest location. The most famous ones are, of course, the biggest: Amazon, Corte Inglés, UPS, SEUR and Correos.
Having warehouses in major cities and lockers in places with a lot of traffic, like the metro or bus stations, makes the delivery service even more agile. That’s why more and more companies are choosing to embrace this method.
Article written in collaboration with: Laura Bolaños, MBA Graduate and Senior Project Manager at eComJungle.