B2B Last-Mile Delivery Challenges That Still Exist
Tags: Business Strategy, Logistics, B2B, Last Mile Logistics, Supply Chain

A piece by our CEO Geoffrey Michener featured in Future Sourcing Digital

The phrase “last-mile logistics” refers to the process of moving products from the last transit stop to the final destination, which may be anywhere from one to one thousand miles. Last-mile logistics does not involve transporting goods from a single route to a single destination like port-to-port or terminal-to-terminal logistics. Instead, it involves road transportation primarily to complete the final delivery stage. It is also one of the biggest logistics challenges that businesses face.

Consumers have come to expect the same or next-day delivery. Expectations on the B2B side are also rising, with buyers demanding the same convenient experience they are used to as consumers. 55% of those surveyed in a Capgemini Research Institute report claimed they would switch to a competing brand if it offers a faster delivery service. However, the complexities and costs of B2B logistics still make meeting accelerated delivery demands difficult.

On the B2B side, shippers deal with much larger purchase orders and deliveries that are more consistent over an extended period due to customer contracts. Handling these deliveries poorly can result in damaged relationships. B2B sellers must monitor the delivery process closely; however, it can be difficult for small-to-midsize companies to monitor their operations and deliveries efficiently and cost-effectively. And while there are too many factors involved in last-mile delivery for a single solution to address, new logistics approaches backed by technology are helping businesses improve their B2B delivery processes and gain a competitive edge, especially during this challenging time.

The ‘Amazon effect’ is nothing new in the logistics industry and many consumers now value the speed of delivery over any savings on orders. In the B2C world, the additional cost that consumers pay to receive their goods faster provides shippers with a big incentive to optimize their last-mile logistics as much as they can.

For B2B shippers, providing faster deliveries can mean a significant competitive advantage. One strategy being used to get products closer to end customers is establishing local warehouses in densely populated areas. These smaller delivery hubs help decrease last-mile delivery times and improve delivery efficiency.

Many B2B sellers have also decreased order size minimums so they can balance out the added costs of managing more warehouses. 74% of customers who said they were satisfied with their delivery experience intended to increase their purchase levels by 12% with their preferred seller. Furthermore, 55% of consumers said that a two-hour delivery option would increase their loyalty. Still, only 19% of companies provide two-hour or faster delivery options.

Consumers located in rural areas have become accustomed to receiving goods with same or next-day delivery, and local businesses are no exception. B2B sellers must be able to deliver anywhere and at any time to remain competitive.

The sharing model has become popular in the B2C last-mile delivery space, with companies like Uber, Glovo, Postmates and many others now competing alongside UPS, FedEx, DHL and the USPS. This relatively new delivery model is starting to gain traction in the B2B logistics space as well. Companies like uShip, Uber Freight, Freightos and CargoX have developed new models to share resources and to optimize and reduce the costs involved with making larger B2B shipments.

For one, the traditional delivery business models that involve trucking companies owning their entire fleets are changing. By bringing in contract truck drivers, local companies have more flexibility when it comes to fleet size and can scale fleets up or down easily depending on demand. Hybrid fleet models are also emerging, allowing companies to create fleets through a mix of contracts, third-party partners and their own workers.

Route optimization software solutions are also playing substantial roles in helping businesses forecast future demands, consolidate orders and identify new opportunities for improvement. Route optimization technology can create the best combination of routes and deliveries in order to minimize the miles per delivery and total miles driven. Driver shortages are common and route optimization software can also help businesses gain more visibility into the schedules of contractors, employees and other partners.

Big data is also having a real impact on daily operations in the B2B last-mile delivery industry. The use of data can help pinpoint weaknesses in last-mile operations, such as communication problems during delivery providing the ability to solve any unexpected issues in real-time. Several external factors can affect last-mile operations — such as traffic, changes in fuel prices, etc. — and businesses need to be able to analyze these factors in real-time to make decisions.

Though many B2B last-mile delivery challenges still exist, technology companies are addressing them with innovative new solutions every day. As more businesses turn to technology to optimize their operations during this surge in delivery demand, the B2B last-mile delivery experience is steadily becoming more like the B2C experience consumers have come to expect.