There has been an increase in the number of companies offering third party logistics services (3PLs), which are now competing with shipping carriers for last mile delivery. In many cases, a third party logistics company stores the products in a warehouse that serves a particular area of customers. Final transportation and last-mile delivery are the responsibility of the 3PL when an order is placed.
1. High Costs
The entire supply chain and last mile delivery operations are the most expensive because of several challenges. There are numerous obstacles to its implementation, including antiquated IT infrastructure, limited logistics visibility, and a constantly growing demand for same-day delivery. Total shipment costs can be reduced by optimizing last mile delivery solutions.
A lack of efficient routing techniques, manual task allocation, and poorly managed third-party logistics providers threaten the shipping process and prolong delivery turn-around times. It is difficult to maximize vehicle capacity with same-day delivery due to the limited product inventory, reducing the savings for logistics firms. As a result, the associated costs increase accordingly.
2. Rigid processes resulting in inadequacy
With instant fulfillment and constantly changing market dynamics, rigid delivery systems, which are considered to be one of the most significant supply chain inefficiencies, are becoming increasingly obsolete. Customer dissatisfaction increases when traditional processes rely on manual involvement and fail to meet consumer expectations. Nowadays, consumers prefer brands that let them choose how and when to receive deliveries based on their convenience.
3. Poor Supply Chain Visibility
A lack of visibility in logistics operations has many contributing factors, including outdated supply chain architectures, outdated delivery methods, and inadequate system integration. In the absence of synchronization between an order management system and a third-party logistics provider's system, it is extremely difficult for logistics managers to track and trace a truck's precise location. There are numerous inefficiencies as a result of this. Visibility problems result in delays, false ETAs, route diverts, idled vehicles, and increased fuel consumption. They also obscure deliveries to customers, which exacerbates last-mile delivery problems.