This article is an excerpt from: Last-Mile Delivery Excellence: Perfecting the Customer Delivery Experience
A copy of the full report can be downloaded here.
Bringing a single product from conception to production to delivery at the customer’s doorstep requires the combined efforts of hundreds to thousands of workers. What a waste it is if all that effort by all those people is undone by a single slip up in the very last step — the last-mile delivery of that product to the customer’s door. This is the first in a two-part series describing specific approaches to achieving excellence in last-mile delivery.
Last Mile Delivery Excellence: Key Pillar of Success for Retailers, and 3PLs
Last mile delivery is more important than ever. Customers’ expectations for delivery excellence continue to climb for faster error-free delivery, more granular visibility, more convenience, and increased flexibility. With inflation and the rising cost of inputs and labor constraining the ability of retailers and brands to compete on product price alone, service and delivery become ever more critical elements of success. Here we look at three pillars of achieving last mile delivery excellence: 1) Perfecting the Customer’s Experience, 2) Reducing Logistics Complexity, and 3) Maximizing the Bottom Line.
Perfecting the Customer’s Experience
First and foremost, last-mile delivery excellence is about satisfying and delighting the customer. This requires consistent, damage-free, on-time deliveries, excellent transparency and visibility throughout the process, and providing choice and control to the customer.
Timeliness and Reliability
Surveys and research have shown that customer expectations, as well as the average actual time it takes to deliver an order, have gotten progressively shorter, from an average 8-day delivery time 20 years ago, to 5.5 days a decade ago, to now slightly over two days from order to delivery.1 Continuous reduction in delivery time expectations and competition is driving retailers and 3PLs to make many changes such as:
- Micro-fulfillment centers and hyperlocal delivery — stocking items in locations in close proximity to the consumer, such as fulfilling from retail stores and small-scale urban warehouses, is a key strategy for shortening delivery times. These locations can be quite expensive, so some companies are partnering with existing retailers or third parties to increase the number of hyperlocal stocking locations.
- Adaptable workflows, systems, and processes — Disruptive events such as the pandemic, extreme weather events, unrest, regulatory changes, and competitors’ actions often drive the need to suddenly shift delivery methods and processes. For example, many retailers had to suddenly and massively start or ramp up their curbside pickup operations during the pandemic. Businesses that invested in systems that can be rapidly adjusted to accommodate new workflows and processes have been better able to maintain timely and reliable delivery in the face of new and varied disruptions.
- Cross-domain optimization — Leading companies have systems that can optimize logistics across different modes, timeframes, tiers, and types of delivery. This allows for smarter decisions about whether an order should be delivered via private fleet, courier, parcel, or crowdsourced delivery service. This can add capacity and lower costs while maintaining or improving the percentage of orders delivered within the promised delivery window.
- Dynamic dispatch and routing — On-time delivery rates can be improved by dynamic dispatching and routing capabilities — i.e., the ability to change routes and plans in response to changes in traffic, delivery and installation delays, and other factors. Amazon is able to reroute its drivers in real-time based on changing conditions. Retailers and 3PLs seeking to keep up with Amazon are obtaining similar capabilities.
- Dwell-time reduction/elimination — Dwell times at distribution centers can be reduced or eliminated altogether through methods such as cross-docking and/or drop-ship, as described further in the section on Streamlining Delivery Flows below.
Transparency and Visibility
Some orders are critical, where a whole project, production line, or someone’s health is depending on the timely delivery of a specific part, machine, or substance. In other cases, a consumer may have an intense emotional anticipation of receiving a particular fashion apparel item, technological device, food, or crafted item. Sometimes onsite preparation is needed to receive the delivery, such as at a construction site, where someone may need to clear an area, set out traffic cones, direct the delivery vehicle to the unloading area, and/or supervise the unloading process. In these types of cases, customers really want ongoing visibility and transparency about the precise, up-to-date status of their order and its delivery. Thus,last mile delivery excellence requires elements such as:
- Real-time visibility — The ability to track in real-time the location and precise ETA (estimated time of arrival) for an order can be critical for both the customer and the shipper. This requires the integration of many sources and types of data, such as shipment updates from carriers, ELD2/GPS location data, weather, traffic, and more. It requires software that can calculate precise ETA, based on factors such as traffic, weather, port congestion, and other factors impacting transport and delivery times. FarEye’s Intelligent Delivery Visibility is a good example of a visibility solution.
- Configurable alerts, early warning, and reminders — The customer and shipper both want the earliest possible warning when a delivery is running late. The early warning provides more chances for customers to adapt and change plans, such as altering their production sequence because the delivery of an input part or material is delayed. Logistics personnel can be more proactive about notifying their customers about any delays as soon as possible and then making the appropriate adjustments to their route plans to minimize delays of other deliveries. Many customers like to receive reminders about important deliveries. All of this should be configurable so that customers and shippers are able to receive the amount and type of information they want, in their preferred manner and medium, without being overloaded.
- Proof-of-Delivery — For critical deliveries, the appropriate proof-of-delivery (PoD) is needed, typically some combination of a recipient signature3 and/or photos of the packages dropped off at the point of delivery. The PoD should be integrated into the alerting/status system and indicate the number of packages, order number with a link to more order details, signature, delivery address, and additional location information as needed (e.g., ‘side door,’ ‘at front desk concierge,’ GPS coordinates on a large campus). If the customer knows the package has arrived, they are more likely to bring it into their house or office in a timely manner, thereby reducing the chances of theft. Images may also provide some degree of evidence that the exterior of packages was undamaged when delivered. The system should minimize the amount of extra time spent by drivers creating these PoDs, such as auto-filling the data, having algorithms that determine when it is or is not necessary to take a picture, and automatically attaching the image or signature to the PoD for the shipment being currently delivered.
- Damage reporting, return status, feedback — It should be made as easy as possible for customers to report damage, check on the status of returned items, and provide both positive and critical feedback. This provides ‘reverse transparency,’ from customer to provider. This includes providing multiple opportunities and methods (e.g., via phone, packing slip form/checkboxes, email, website, etc.) for customers to provide feedback or report on the damage. For important deliveries (e.g., high-value, over-the-threshold, installed deliveries) and important customers, feedback should be actively solicited via automated phone- or email-based survey/outreach.
Choice and Control
In addition to timely delivery and visibility, customers expect to have a range of choices and degree of control over their delivery experience, such as:
- Range of delivery windows, timeframes, and costs — For deliveries that require the customer to be home, customers want the ability to specify narrow windows of delivery, such as a specific hour. Most customers understand they may need to pay extra for a narrow delivery window or ultra-rapid delivery.
- Range of delivery locations and options — Customers expect a wide range of choices in the manner and location of delivery, such as at home, in office, curbside, kiosk, and at pickup lockers that may be at an apartment or partners’ locations. Some retailers can deliver unattended (i.e., when no one is home) into the home or attached garage or into the trunk of the customer’s car anywhere it is parked, provided that the customer has the appropriate technology.4 A last-mile delivery system that can deliver from anywhere to anywhere is required to provide this sort of flexibility.
- ‘Green’ delivery – a growing segment of consumers is concerned about climate change and seeking ways to reduce their carbon footprint. This demographic appreciates the chance to select delivery slots that are greener, i.e., that have a lower carbon footprint. This can be enabled by continuous route optimization software that can identify delivery slots that minimize the amount of extra driving required. Effective capabilities for sustainable delivery can be found in FarEye.
- Last-minute scheduling and rescheduling — Customers are getting used to being able to order items at the last minute or change their order at any time. This should include showing the customer what kind of changes to their delivery slot are feasible, including changes on the day of delivery. This requires a system that can do dynamic
dispatching, routing, and re-routing.
- Customer feedback and response mechanisms — Most customers want a chance to express their frustrations when service expectations are not met. It is much better to have them express that frustration directly to the seller/service provider, rather than posting a rant on social media. Conversely, some customers like to show appreciation for an employee who goes above and beyond. Others want to share their ideas for how a service or product can be improved. At each step throughout the buying and delivery process, customers should be presented with opportunities to easily and instantly provide feedback — particularly at those key moments, they are most likely to be ready to provide feedback, such as just after ordering and just after receiving the product.
- For high-touch services, such as white glove delivery and installation, some service providers automatically survey their customers about their experience, either via phone, text, or email as preferred by the customer.
- The company should immediately acknowledge receipt of any feedback and a real person should respond in a timely manner. This not only lets the customer know you care, but also potentially allows for a real dialog to gain further insights.
- A process for digesting and incorporating this feedback into a continual improvement program can be powerful. Implementing these feedback follow-up processes may seem expensive, but that expense can be more than offset by the savings enabled by reducing mistakes and returns, and by the incremental revenue and profit generated by increasing customer satisfaction and loyalty.
In Part Two of this series, we examine how companies are reducing logistics complexity and increasing efficiency, while improving the customer experience, thereby maximizing their bottom line.
1 Sources for these statistics include McKinsey: Retail’s need for speed (September 2021), University of Washington: America’s Addiction to Absurdly Fast Shipping has a Hidden Cost (July, 2019), and Clutch Research: How Consumer Hunger for Two-Day Delivery Impacts Businesses (September, 2019). — Return to article text above
2 Amazon partners with retailers and service providers to offer their Amazon Hub Counter and Amazon Hub Locker services. Various 3PLs are starting to offer micro-fulfillment center services as well, such as Fabric, Warehouse Anywhere, and others. — Return to article text above
3 A Bill of Lading signed by the recipient may also serve as the proof of delivery. — Return to article text above
4 This requires a smart lock that supports the use of a single-use entry code or token. Once the delivery has been made, the entry code or token is no longer valid. These technologies may also incorporate door cameras that let the customer see who is requesting entry before letting them into the house, garage, or vehicle. — Return to article text above
To view other articles from this issue of the brief, click here.