Articles
5
min read
Extracting Financial Value From Last-Mile Delivery: Part One
The Dispatch Team
Published on:
May 20, 2024
Updated on:
Published on:
May 20, 2024
Updated on:
Last-mile, or final-mile delivery, is the last leg of the supply chain and arguably the most important and expensive part. In this three-part series, we ask Dispatch Chief Finance Officer, Serge De Bock, about the dynamic evolution of last-mile delivery, fleet economics, and environmental benefits related to the finance side of the business.
Serge was the financial leader at several mobility, technology, and insurance companies, including HyreCar, Ford Micromobility, Amazon, and Liberty Mutual. All these experiences touched on critical aspects of the last-mile delivery process at Dispatch and in the mobility tech industry. Let’s dive in!
A: Last-mile delivery has always been the most complex, time-intensive, customer-facing and costly leg of the delivery process. Over time, the problem evolved from moving packages from point A to point B to a strategic transformation of the supply chain landscape.
As a business leader, you must use your resources strategically to maintain profitability and support your customers. When considering your delivery solutions and building your business delivery plan, you should consider three main pillars: cost and complexity, customer expectations, and technology. We’ll briefly cover these three pillars and address the importance.
While businesses focus on the entire supply chain, the final stretch, or last-mile, is often the most complex and therefore expensive. With ever-increasing fast delivery options, this upward trend is continuing to increase over time. According to a 2022 FarEye survey, it accounts for 53% of total supply chain spending.
When considering the total miles a product travels from its inception until it reaches the hands of the final customer, and potentially across the globe, the cost associated with the last-mile delivery is disproportionate to the distance traveled. It highlights the stakes involved in optimizing the smaller but costly last-mile delivery segment which represents more than half of the total supply chain spend for companies on average.
Looking at the broader total last-mile delivery market spend, steadily more expedient last-mile delivery options provide a strategic advantage but drive the segment's cost up. According to Statista, the global last-mile delivery market is expected to pass $200B by 2027 (almost doubling over a span of seven years).
You can quickly infer that even a few percentage points reduction of spend in that segment would save billions of dollars to businesses worldwide, and some tailored solutions offered by logistics experts such as Dispatch have the potential to save you double-digit percentage points on your delivery costs with increased on-time deliveries and improved technology.
Because of these opportunities and the segment's outsized cost, outsourcing or optimizing your business deliveries becomes a strategic advantage. This ensures items reach their destination at an optimal balance between speed and cost. The savings achieved by outsourcing/optimizing can be reinvested directly into the business, fostering additional growth and continuous innovation.
While deliveries have been getting more efficient from a logistical viewpoint over time, substantial extra costs have been driven by customer expectations, so let’s briefly look at that aspect.
Over time, we’ve seen increased consumer expectations surrounding shipment tracking, delivery estimates, and service level agreements. That trend has both affected B2B and B2C customers. Customers want same or next-day delivery options, clear visibility into the status of their shipments, and notifications of any order changes. In short, like consumers, businesses want their and their customers' deliveries now (or yesterday).
Without optimizing that cost over time, these expectations will drive your business delivery expenses through the roof and drastically reduce margins. However, these options and features are critical not only to attract new business but also to retain your customers in this market environment where improved speed and expectations drive customer satisfaction. That’s where technology comes into play as a catalyst for effective solutions.
The last-mile delivery industry landscape is witnessing the rise of demand for data-driven insights, an increased need for visibility, tracking, and notifications, and flexible options for businesses such as B2B gig delivery networks.
Last-mile software solutions like Dispatch are staying ahead of these trends by offering a suite of solutions, including delivery management, API integrations, a fully flexible network of scheduled or on-demand drivers, order dashboards with data and insight reports, GPS tracking, shareable notifications, and real-time ETAs.
This allows businesses to optimize their own operations through data, expediency at lower cost, and increased on-time deliveries whether it’s a contracting business installing an HVAC unit, professional crews installing solar panels or just real-time re-balancing of inventory between retail locations and warehouses.
Dispatch, a B2B final-mile delivery company, tailors its tech-driven model for businesses and offers superior service and speed at an optimized cost. Our approach facilitates two-way communication, providing businesses with the tools to streamline operations and extend their market reach. These tools also help optimize routes for both internal and external fleets, reducing the cost burden while providing access to a large gig economy network of drivers across the US.
By infusing technology into the process, Dispatch focuses on efficiency and transparency, enabling businesses to concentrate on their core strengths while we handle the logistics. Another significant impact is the scalability technology affords. With automated processes in place, businesses can focus on growth. The right delivery partner should be able to scale seamlessly with your company as it expands, managing delivery efforts across locations nationwide.
Thanks for joining us on this exploration of the transformative effects of last-mile delivery technology on businesses. Here's to continued innovation and growth in the ever-evolving logistics landscape. Check out our next blog, which will cover the costs of fleets—in-house vs. outsourced. If you want to learn more in the meantime, head to dispatchit.com.
---
Thank you for reading this article! Click here to start a delivery, or click here to chat with a Delivery Expert today.
.webp)
