In supply chains, the Last Mile refers to the section of the supply chain when the product moves from a distribution center to the end customer (either directly to their homes, or to a retail location where they will buy the products). This section of a supply chain can consist of as little as 1% of the distance that a product will move, but can account for more than 30% of the total cost of that supply chain. What makes the last mile so inefficient, and where do the challenges of last-mile-delivery arise?
As products move from a manufacturer to a distribution center, trucks are generally traveling with a full load to a single destination. Often, these deliveries are made on a relatively consistent schedule and can be prepared for well in advance. In the last mile, products are delivered in smaller quantities to a number of locations which may or may not remain consistent. Here, delivery is sporadic and rarely involves a full truckload for a single customer. The inconsistency of the last-mile makes it difficult to find a solution that works for all deliveries and can create challenges in preparation and planning.
Often the delivery destinations in the last-mile are spread out throughout an area, rather than side by side. However, since orders in the last mile are generally less-than-load (LTL), it is more efficient to have many deliveries on the same truck. This means the truck will have to travel further distance and make more frequent stops than would a truck in another section of the supply chain.
When a customer orders a product, it has traveled a long distance and passed through many hands to reach them. However, consumers don't see the vast majority of the supply chain - the last mile is the most visible portion of the supply chain. For this reason, the last mile requires high levels of reliability and customer service. This service-oriented delivery can mean that drivers spend significantly longer on deliveries than they normally would, increasing the time that a route may take.