Thought Leadership - Going the ‘Extra Mile’ in ‘Last Mile Delivery’

July 2006

By Doug Easley, Vice President of Business Development, Distribution Solutions International, Inc.

Rising fuel costs, driver shortages and capacity constraints – these are the undisputable universal pain points that our industry is struggling with. How can we manage costs when fuel costs continue to rise to inconceivable levels? Drivers, lured by more attractive offers, are finding more predictable income sources and the resulting shortage further exacerbates our ability to manage costs. Even if we had the drivers we need with fuel costs we can afford, our infrastructure is tapped. Yet the demand to ship goods remains strong, if not growing.

Those of us charged with cost effective, efficient transportation of goods have no choice but to engage multiple business partners to share the risk and, ultimately, improve end-to-end service. Clearly one approach is to view this strictly as a cost-management and resource optimization tactic. Ultimately it should free internal resources to focus on core needs, and provide the flexibility you need to create a competitive advantage.

Take, as an example, residential delivery of ‘freight all kinds’ (FAK) – a hot tub, garden tractor, 400 lb outdoor exotic bird cage. Last Mile Delivery -- you name it, we deliver it, and it’s demanding. Special equipment, scheduled appointments and custom services are the norm. Freight sits on docks while attempting to reach a consignee. Smaller vehicles, often with lift gates, are required. Consignees don’t return calls, they aren’t at home when expected, or they ask you to store the freight while they finish remodeling the house or return from vacation. When the driver arrives they are often asked to bring the freight indoors, wait while it’s inspected, help carry it to the back, or upstairs. Each consignee is a unique and, often, one-time experience; you can’t develop a relationship with them, but you had best meet their needs to, ultimately, satisfy your customer. This is Last Mile Delivery, and you always have to go the ‘extra mile.’

Given current market pressures, establishing a cost effective way to provide Last Mile services can yield tremendous bottom line results. Companies are either creating their own specialized transportation divisions, or they are outsourcing that portion of the business. By outsourcing those high maintenance shipments, warehouse space can be optimized for high turnover freight. Routes can be redefined so that drivers and their equipment can focus on higher production, high yield shipments. And, perhaps most importantly, sales can pursue a broader range of business because there is a profitable way to meet customer needs.

Diversifying any supply chain through 3rd party relationships isn’t without its own set of challenges. You need partners that extend your organization in a seamless way. They must provide you with vital information to meet internal and external needs for everything from shipment status, to long range planning. You need end-to-end visibility throughout your supply chain, regardless of whether that is in-house or externally managed. Ideally partners will anticipate your needs, while maintaining flexibility to respond to changing demands.

Establishing the ‘right’ partnership begins with finding people who take the time to understand your current needs and future goals. If there’s a gap, they should be willing to bridge it by building the service, procuring the resource, or identifying a qualified source. Their experience should have established best practices that can be applied to your operations, eliminating costly learning curves while yielding immediate results. And they need to be supported by technology, the invisible glue that binds you together, capturing and creating information you need to satisfy client inquiries, improve the end-to-end process and evolve the business.

It is impossible for any one organization to do it all, but through a collaborative partnership, we can create powerful solutions that yield tremendous results.