Today's companies must deliver their products as quickly as possible to meet consumer demand, which has put more pressure on having a stellar last mile -- a stage of the supply chain that is notoriously difficult to do well.
Last-mile delivery encompasses the movement from the transportation hub to the final customer, which today often means home delivery. In between the warehouse or other transportation hub and dropping off the package lies a minefield, and that's important for leaders to understand.
Last-mile delivery challenges can mean losses in both customers and revenue. The increase in online shopping, driven by the COVID-19 pandemic, has only intensified these problems. Company leaders must first understand why last-mile delivery challenges occur so they can then create strategies to improve their delivery operations.
Here are five of the most common challenges.
1. Difficulty meeting delivery deadlines
A major last-mile delivery challenge is meeting customer expectations. Disappointed customers may return items or take their business elsewhere.
Consumers don't care if a company's truck breaks down or if there's bad weather, said Dave Holloman, partner in advisory at EY in Chicago who advises clients on business and technology.
Meeting delivery expectations is more important than the shipping speed, he said. Offering five-day shipping and meeting that deadline is preferable to promising one-day delivery and failing to meet it.
2. Dealing with unpredictable factors
Multiple unexpected issues can derail the best-laid last-mile delivery plans.
Traffic problems are particularly common in metropolitan areas, said Chris Bell, CEO of Perch, a consumer goods company located in Boston that sells via Amazon and other channels. Unexpected one-way streets and a lack of parking can delay delivery times.
A newer traffic factor that could prevent timely delivery is the number of trucks on the road.
The recent increase in e-commerce sales has led to an increase in the amount of parcels being delivered, said Christopher Davenport, CEO of AutoParts4Less.com, an auto parts seller in Las Vegas. He believes street congestion will worsen as more e-commerce platforms debut.
Other factors can also postpone successful delivery.
Sometimes, the driver can't leave an item at an empty house because it's raining or snowing and the item will get wet, Bell said. In addition, trucks can break down or drivers can become ill.
3. Treating drivers in a fair way
Treating drivers in a fair manner may not seem like it should be a last-mile delivery challenge. However, in the war between humane treatment on the one hand and fast deliveries and profits on the other, many leaders are choosing the latter. Too often, companies treat delivery drivers in unfair ways. Aggressive quotas and deadlines can translate into delivery drivers making unsafe or difficult choices.
For example, delivery deadlines often mean drivers don't have time to use a restroom and are forced to urinate in bottles, said Sucharita Kodali, analyst at Forrester Research Inc.
COVID-19 exacerbated this issue because many public restrooms have been closed, she said. But, even before the pandemic, time pressures meant that drivers couldn't afford 20 minutes to take a break.
4. Solving the single-delivery issue
Customers have gotten increasingly demanding about what they want delivered and how quickly they want it delivered. Companies have sprouted up to fulfill their desires, and deliveries to a single customer -- with all the transportation issues that entails -- are now common. But those come with inherent inefficiency.
For example, food delivery companies, like DoorDash and Uber Eats, carry out on-demand deliveries for restaurants and convenience stores, so they mostly do single deliveries in one area at one time, Kodali said.
5. Delivering to the correct location
Five percent to 10% of all last-mile deliveries fail, and every failed delivery costs about $5, according to "The Sustainable Last Mile" report by Accenture -- a number that can add up quickly.
Many failed deliveries occur because the driver delivers to the wrong address, Bell said. Sometimes, the consumer inadvertently entered the wrong address or the truck driver misread it because of the pressure to meet deadlines.
Once a delivery fails, a company must ship out a replacement item and, sometimes, retrieve the incorrect item. The additional steps increase costs to the company and have major environmental costs as well.
Misdelivered packages can also damage a brand's reputation. Customers may decide to purchase items from a more dependable company.