Last Mile Delivery – Challenges and Strategies

While the supply chain consists of several stages, the last mile delivery (LMD) is one of its most crucial steps. In light of the recent eCommerce boom, last mile delivery has gained more attention and importance from companies and customers alike. Supply chain managers are implementing new strategies to enhance last mile delivery and improve overall efficiency.

Last mile delivery involves the movement of products from the warehouse to the customer’s doorstep. LMD consists of three steps: delivery assignment, product scanning, and final delivery. After products arrive in the warehouse, they are categorized and divided into distinct task assignments based on delivery routes.

During the product scanning step, warehouse staff ensures that all products are trackable, reducing the risk of lost shipments. Warehouse staff scan outgoing products then load them onto delivery trucks. Finally, delivery personnel follow their task assignment and deliver the specified products to the customer.

In 2020, eCommerce sales increased by 55 percent during the first seven months of the year. The eCommerce boom engendered a spike in online shopping exceeding $400 billion. This increase in online shopping altered customer expectations about delivery dates.

Customers typically look for a fast, safe, trackable delivery system. On the other hand, companies approach LMD as a costly challenge. Today, many customers expect their orders to be delivered within three days while others search for same-day delivery options.

However, companies struggle to meet the overwhelming demand, especially since LMD can comprise up to 50 percent of total delivery cost. LMD is an expensive part of every company’s shipping costs because it includes delivery vehicles, fuel, and human labor costs.

Furthermore, companies face issues related to LMD efficiency and transparency. With innumerable orders made every minute, companies tackle the challenge of delivering an immense volume of deliveries without wasting human and financial resources. Additionally, customers keenly follow their shipment’s tracking status, requiring companies to be completely transparent about delivery status.

Supply chain managers pursue the latest LMD strategies to improve the speed and efficiency of their operations. For example, some companies are resorting to a crowdsourced delivery model. Instead of being responsible for LMD from start to finish, retailers can now shift to driver-based ventures such as Uber to reduce their shipping costs. Crowdsourced delivery also benefits customers who can now flexibly schedule deliveries and rely on GPS technology to precisely track their orders in real-time.

Smart technology is another major game-changer for LMD. Radiofrequency identification (RFID) tags enable companies to offer customers a more precise tracking system for shipments. The tags transmit data in radio waves to RFID readers in warehouses to notify retailers of shipment location.

The power of technology can also improve other aspects of the LMD process. Robotic delivery is a promising approach that can solve labor issues. Companies spend the bulk of their LMD costs on labor. Companies can now rely on drones and delivery bots to save money with robotic technology entering the scene. Amazon has already invested millions in self-driving cars as an alternative for the delivery personnel. The investment would not only be a cost-effective LMD strategy, but it can also make deliveries safer, especially instead of the current coronavirus pandemic.

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CSCMP Collaborates with MIT on 2021 Sustainability Report

The Council of Supply Chain Management Professionals (CSCMP) is a membership organization dedicated to advancing supply chain management. Its efforts focus on important aspects of the profession, including certification, education, and research.

Founded in 1963, the Council of Supply Chain Management Professionals provides professional development opportunities for its members. For example, its annual EDGE conference brings together supply chain experts from all over the world to explore the latest business practices.

SCPro certification is CSCMP’s official certification program which examines an individual’s skill to assess business challenges and develop the appropriate supply chain improvements. The program consists of three levels. Level One is a multiple-choice exam focusing on the eight elements of supply chain management. Meanwhile, Levels Two and Three evaluate practical skills through case studies and a capstone project, respectively.

Additionally, the CSCMP offers members e-learning courses covering key topics in supply chain management. Members can access the courses on the organization’s official website. Current courses include an introduction to the supply chain risk mitigation process, international sourcing, and export preparations. Upon completing e-learning courses, members are eligible to earn continuing education (CE) credits.

The CSCMP complements its certification and education pillars with intensive research initiatives. The organization’s Research Strategies Committee considers research proposals that aim to enhance supply chain management.

Sustainability is one of CSCMP’s core values. The organization advocates for sustainable supply chain management (SSC) based on environmental and socially responsible decisions. Its own SSC Committee educates professionals on the importance of sustainable approaches to supply chain decision-making. The CSCMP partnered with the MIT Center for Transportation and Logistics on a 2021 State of Supply Chain Sustainability research project. The project includes an international survey tackling company commitment to sustainability efforts in supply chain strategies during the pandemic.

The 2021 CSCMP-MIT report showed that most companies maintained their commitment to supply chain sustainability despite the COVID pandemic. The researchers surveyed a total of 2,400 supply chain professionals in late 2020. Survey questions addressed specific key areas related to sustainability investment, such as employee welfare, climate mitigation, and renewable energy.

For instance, researchers found a 10 percent rise in survey participants who disclosed that their companies invested in human rights protection and employee safety. Similarly, the number of respondents who highlighted their company’s focus on supplier diversity, equity, and inclusion increased by 5 percent. Other survey questions emphasized company efforts regarding climate mitigation and renewable energy. While the latter scored 6 percent higher than in 2019, the former suffered a 6 percent decrease.

Published in July of 2021, the report demonstrated that around 80 percent of survey participants stated that their company’s sustainability efforts stayed the same or increased since the preceding year. Conversely, 9 percent stated their firms reduced sustainability-forward investment in 2020.

These findings differed based on company size. Large companies with over 1,000 employees prioritized their sustainability goals, whereas most smaller companies scaled back their financial investment in green initiatives during the pandemic. The report discusses this discrepancy, emphasizing that financial resources, which were largely strained due to the pandemic, determined a company’s commitment to sustainability.

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