Counting the last mile costs
One of the biggest challenges in the express delivery industry is the last mile of same-day delivery.
Defined as the last stage of the delivery journey, the last mile is often the most expensive and time-consuming part of the supply chain journey despite being the shortest part of the delivery process. It’s also, however, the key to customer satisfaction.
Last mile delivery is particularly challenging in rural areas where delivery points along a particular route can be several kilometres apart. In SA, challenges such as loadshedding and potholed roads make the last mile delivery in cities just as challenging, negating the gains in proximity. Increasing the costs of the last mile delivery are failed deliveries, returns and replacements. Incorrect address details, unforeseen delivery incidents, traffic congestion and unpredictable weather all increase operational costs and impact the ability of logistics providers to make a profit.
Keeping up with rising consumer expectations is becoming increasingly challenging. While customers want fast delivery of their online purchases, they’re less enthusiastic about paying for that delivery with many likely to abandon their online shopping cart if they’re faced with additional expenses they didn’t expect at checkout. As a result, many online retailers choose to absorb the cost of delivery.
Customers also want realtime visibility of their packages which requires that logistics providers invest in real-time tracking technology to provide customers with transparency.
The challenge for express logistics providers is that the cost of the last mile part of the supply chain process accounts for more than half of the total shipping cost.
Optimising routes and implementing best-in-breed technologies are regarded as some of the most effective ways to cut down on operating costs for last mile delivery.
David Lazarus, RAM’s executive chairman, reveals that the business has invested in a logistics IT solution specialising in courier and express parcel distribution and which includes a last mile delivery solution. The fully integrated and transparent platform provides customers with real-time information and visibility of their supply chain.
The company has also implemented other solutions to address the last mile challenge, including 42 hubs across southern Africa and a sophisticated address capturing tool to ensure every shipment has a valid delivery address. Fully integrated handheld mobile devices allow for proactive decision-making by providing real-time, accurate and reliable information while a self-service digital solution called RAM Smart Track allows the receiver to engage seamlessly with RAM throughout the delivery process.
In addition, the company has implemented state-of-the-art track and trace technology while a workflow solution ensures the timeous resolution of issues and requests.
“Ultimately, increased volume has provided for denser delivery routes and better efficiencies,” says Lazarus.