What is Last Mile Delivery?

Written By Tyler Nelson

In the 1970’s just-in-time manufacturing transformed the consumer and industrial products industry. Instead of creating products in surplus before they were purchased, manufacturers started building items to meet a current demand. This revolutionized the manufacturing industry — transforming the underlying economic efficiency of building products.

The efficiencies captured by just-in-time manufacturing have since been applied to a variety of industries — including construction. Contractors, home builders, and developers are now using just-in-time methods to optimize their supply chain and reduce costs.

Enter the focus on last mile delivery.

Instead of bulk ordering supplies, many in the construction industry have started using a “just-in-time” approach to materials delivery. This has helped reduce excess material costs and avoid damaged or stolen materials.

However for just-in-time delivery to be effective, materials have to arrive on time at the job-site. Some building suppliers are starting to rise to the challenge — but many are struggling with (or unaware of) how they can efficiently and cost-effectively offer the delivery services their customers need.


The Last Mile Delivery Process

Before we look at optimizations, let’s look at what actually happens during the last mile delivery process.

The last mile is one of the most important parts of the delivery process. Even if it’s handled by a third party, it can have a huge impact on how consumers view your company — and whether they choose to buy from you again.

The last mile also accounts for around 53% of your total transport costs. That means last mile delivery savings can have a big impact on your total freight costs — but they need to be balanced with a focus on customer experience.

Here’s how the last mile delivery process works.

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Step 1: Order Request

At this stage, the end-consumer makes an order either through an e-commerce site or central order system. They’ve identified the materials they need – now it’s up to the supplier to deliver them in a timely manner.

Step 2: Pick and Pack

Next, the materials requested from a manufacturing line or supplier arrive at a transportation hub or warehouse for delivery. Here’s where the last mile delivery process truly begins.

Step 3: Route Optimization

Once the materials have arrived at the warehouse or transport hub, delivery assignments are given to drivers. The dispatch unit optimizes delivery routes based on drop-off locations, goods needed to be transported, and driver capabilities — all with an eye towards minimizing costs.

Step 4: Out for Delivery

Next it’s time to deliver the materials. Items are scanned and loaded onto delivery vehicles. Then drivers follow their routes to deliver packages in a timely manner.

Step 5: Proof of Delivery

After materials are dropped off, drivers submit proof of delivery. An automated text, email or digital image of the package is delivered to the sender once the package has reached its final destination.


How Can Suppliers Optimize the Last Mile Delivery Process?

As I mentioned earlier, expectations for last mile delivery are rising. With more construction professionals using just-in-time materials delivery methods, suppliers need to seriously look at how they can cost-effectively offer delivery within a few hours.

Here are four ways construction material suppliers can prepare for faster delivery.


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1. Increase in-house fleet capabilities

While many merchants are anxious to maintain control of their customer experience by keeping deliveries in-house, there are significant drawbacks to this method.

To handle last-minute deliveries with your fleet, you need to have capacity on hand at all times in case an order comes through. For many merchants, this means increasing fleet sizes to meet capacity needs. This can be incredibly expensive — skyrocketing both your CAPEX and OPEX costs as you scale up trucks and drivers.

Plus, last-minute deliveries are notoriously difficult to forecast, so you’ll be paying for trucks and drivers to sit on your lot just in case.


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2. Augment your existing fleet

If scaling up your fleet sounds cost-prohibitive (it should) there are other options. One is to supplement your existing fleet with an on-demand delivery partner.

When you partner with an on-demand delivery service you pay per use. So if a driver calls in sick, or a last-minute request comes in while your fleet is busy, you can rely on your partner for coverage.

This lets you scale up service while essentially maintaining operations as normal. The only downside is you aren’t realizing any cost-savings because you’re still paying for trucks and drivers.


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3. Outsource last-minute deliveries

Another way to scale up your delivery service is to simply outsource all your last-minute deliveries to an on-demand partner.

This allows you to optimize your existing fleet for scheduled deliveries, potentially reducing your CAPEX and OPEX costs by reducing the number of trucks you need in your fleet. Instead of running trucks that are only partially full, you can better optimize routes to complete more deliveries in less trips since you don’t need to worry about getting materials delivered in a tight time frame.

Anything that comes up last-minute or doesn’t fit in your routes you can get your on-demand partner to fulfil.


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4. Outsource all deliveries

The final option is to outsource all your deliveries. This is a great option for merchants without fleets who don’t want to eat the cost of buying trucks.

If you’re going to go the outsourced route, there are a few things to consider when looking for a last mile delivery partner.

Look for service partners who have the vehicles you need, are experienced in construction, and require drivers to wear proper PPE on deliveries. Also make sure they offer both on-demand and scheduled delivery so you can provide a variety of services to your customers. Finally, check out their pricing model — partners that charge by vehicle type not weight, size, or item are typically more cost effective for delivering construction materials.


The Bottom Line

Expectations for last mile delivery in construction are shifting. To meet these changing needs, you’ll need to re-evaluate your fleet and how you fulfil deliveries.

Regardless of if you plan to outsource some (or all) of your last-minute deliveries, the important thing is to find a partner (like GoFor) that can help you deliver materials faster — without compromising on customer experience or breaking the bank.

Remember, last mile delivery is the most important part of the delivery process. Make sure you’re ready to exceed customer expectations with an on-demand delivery partner.



Tags: construction