Procurement professionals have had their fair share of challenges since the first major supply disruptions hit in 2020. Never has it been more important than now to ensure the supply chain is fully secure and that the buyer has increased control over the supply chain.
While each stage is critical in its importance and indeed taken seriously, from manufacture right up until consumption, there is one stage that is doubtlessly where the difficulties often lie.
What is the Last Mile?
The Last Mile describes the final stage of supply chain usually involving domestic/inland freight to the consumer. Literally, it is from the forwarder’s transport hub to the buyer’s final storage facility. The goal of this stage is to transport it to the recipient in the quickest and safest way possible. This may be across any industry from cosmetics, to food, to raw material.
Why is it so important?
More effective delivery service has been significant in the need to create more confidence in the last mile. If you are a procurement professional you will know that this is usually out of the vendor’s hands – most commonly in the hands of a logistics company, for example FedEx, UPS et cetera. There are elements that make it so important, including:
- Precision of delivery
- Variation of distances
Often the last mile creates an important impression on the consumer – more in the case of low-volume retail where the retailer is judged on their delivery performance. Often the last mile is up to 50% of the total delivery costs.
Because you will most likely be managing large procurement categories with tens or hundreds of millions in spend, this may not be relevant to you. What is relevant is the risk associated with inland freight.
Providing goods into the hands of domestic freight forwarders in fact possesses a lot more risk than the ability to coordinate with boutique import logistics companies who specialise in handling one-off shipments. Because of the sheer volume of goods being processed by domestic forwarders, damage, loss of product and poor delivery performance are some of the risks associated.
What can be done to improve outcomes?
The last mile is often completely out of the hands of both the vendor and the buyer. It is a stage that predominantly affects general consumers in the retail market, however it can have the greatest impacts on bulk procurement. The Last Mile is often something that can make or break the delivery, and indeed bolster or damage a company’s reputation.
What we can do proactively to ensure longer term success might consist of
- Implementing supply chain efficiencies
- Prioritising transparency and communication
- Partnering with vendors who have a great reputation for speed and agility
- Keeping logistics options open and not using them contractually
- Accountability – reporting and frequent communication from the vendor
- Ensuring the vendor and their supply network are able to scale up