Last mile delivery is an important component of supply chain management (SCM) that has been gathering more traction in recent years due to the increased demand for getting the right materials to the right places and at the right times.
With customer expectations growing thanks to the development of next-day delivery and new e-commerce models that permit increased parcel volumes and an expedited pace, ensuring a seamless and efficient last mile delivery is crucial for all companies regardless of the industry.
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What does last mile delivery mean?
Last mile delivery refers to a parcel’s shipment from warehouse, manufacturer, or retail store to the final customer in a product’s journey. The final customer may be located at their doorstep, jobsite, at another retail store, or at a local carrier’s pickup station.
In addition to being a key factor in ensuring customer satisfaction, last mile delivery is both the most expensive and time-consuming part of the shipping process.
It should come as no surprise that supply chain disruptions have long been one of the construction industry’s biggest headaches. Yet, in post-pandemic times, a shift has been made towards a more online-driven way of buying, even for construction, which up until a few years ago was still operating by “pen and paper”.
With built professionals wanting to get their products and materials to the jobsite faster and on time to avoid project delays, last mile delivery has become a priority in supply chain management and the logistics value chain, greatly due to the increase in digital platforms that optimize delivery processes.
Not to be taken literally, the term itself does not refer to the exact last mile of the delivery process, but rather the final leg, which can include trips up to 100 miles in distance.
Last mile logistics focuses on local carriers delivering products as quickly as possible to create a seamless, full-service experience for customers.
The global last mile delivery market size is expected to increase by $146 billion USD by 2025 at an accelerated 15% CAGR, with North America contributing to 39% of this exponential growth.
In the construction industry, SCM startups were responsible for 15% of the total investment in Contech during 2021, with last mile delivery solutions being strongly supported by investors in the ecosystem.
Why is it important in logistics?
The cost of providing last mile services across multiple industries accounts for 41% of overall supply chain costs, which is almost double the amount in other categories in the delivery process like parceling and warehousing.
Last mile logistics is undoubtedly a crucial challenge for society and companies that work and operate mainly in large cities. Deloitte gathers its significance on:
- Environmental sustainability, where freight transport represents approximately 25% of contaminating gas emissions. Worsening air quality may jeopardize the health of the increasing population living in urban areas.
- Urban traffic congestion, where 20% of urban traffic is caused by freight traffic.
- Logistic efficiency and the costs associated with freight transport and distribution, which erodes the net profit of many companies in the transport industry to negligible levels.
So, it’s safe to say that last mile delivery has become a “rising star” amongst the main supply chain solutions that are piquing the interest of hordes of investors. More than a trend, it’s a need that is finally being properly addressed.
“The construction industry is ripe for more innovation and more disruption in this area, since the opportunity areas for it to cover, and the markets in which it is needed, are ample,” expressed Gonzalo Galindo, Head of Cemex Ventures. “We need to find a way to get more building materials into the jobsite, faster and more efficiently, which is why we are actively looking for startups with digital solutions that can improve construction’s supply chain.”
What are the main challenges?
Besides the basic inefficiencies that occur during a lastmile delivery, the construction industry also faces some additional challenges due to its complex nature.
Oftentimes new projects don’t have clear addresses yet, the jobsite can be difficult to route, and drivers are not entirely sure where to drop off the resources requested. Likewise, delivery suppliers may not have the capacity for large and bulky items, often resulting in the delay of bigger materials due to the lack of proper transportation.
These miscommunications cause delays, which increase a project’s costs and adversely affect the end-consumer. Moreso, suppliers often also need to deliver fragile items (like crystal windows) or hazardous goods that a regular courier or delivery partner may not be certified to transport. Not to mention that delivery without proper care may result in damaged property, adding up in more expenses and delays.
Nonetheless, one of the biggest challenges that professionals face is that in some cases, they need specific construction materials to be delivered within a 2-to-3-hour timeframe. That kind of timing can be difficult and tremendously expensive for suppliers to achieve unless they have available solutions that help tackle this challenge.
Types of last mile delivery
When you’re hungry and don’t want to cook or leave the house, you grab your phone and quickly swipe through your favorite food delivery app to choose your next meal. Typically, you’re confronted with two options: get it delivered ASAP or schedule it for a specific time of the day.
Last mile delivery in the construction industry works the same way, but instead of ordering pizza, you can select the materials needed to finish a specific task in your current project.
Through logistic platforms, a contractor or jobsite manager can arrange the delivery of the materials needed in two ways:
- Scheduled: by setting up his order through an app or software that allows him to select a specific time and date in advance for the delivery of materials.
- On demand: by ordering a driver to pick up and drop off the materials required at the exact moment of the request.
In the future, more solutions that integrate product marketplaces and delivery services within the same app or software will be available to benefit professionals on the jobsite who run out of materials or need to place a quick order before a certain timeframe.
How can it be improved?
The rockstars working at startup GoFor, part of our investment portfolio, have summed the top 3 ways in which the last mile delivery problem can be addressed in the construction industry with the help of last mile delivery platforms.
1. Manage expectations
Although all facets that make up supply chain management are important, last mile delivery takes front & center because it involves the end-consumer, who oftentimes has no clear idea of the entire process that comes before he places his or her order.
So, how can you avoid overpromising and ensure you manage critical client expectations? By promoting transparency and clarity throughout the entire process. This includes giving customers upfront estimates about delivery time and costs, as well as providing updates along the way.
Last mile logistics platforms make it easy to manage expectations with live estimates and automatic updates for the end customer.
2. Optimize routes
Just like taking a cab in the city, the routes a driver chooses to follow when delivering goods can have a significant impact on the time and cost of the delivery of materials. Yet, manually optimizing routes is very challenging when it comes to driver availability and pickup location, traffic, weather conditions, delivery timeframes, and load and weight capacity.
Algorithms and auto-dispatch technology can help optimize a driver’s routes. These technologies reduce (or eliminate) the need for manual intervention when assigning deliveries to drivers, helping ensure drivers are making the most efficient trip possible every time.
3. Last mile logistics data analysis
Too often delivery costs are considered a difficult to determine line item. You may wonder why it’s costing so much and how it can be reduced in future orders. The answer: because of a lack of access to data that helps determine where the inefficiencies are.
Logistics data, mostly provided by digital platforms that are already available, can be a goldmine of information. It can optimize fleet management, find cost savings, and generally make the last mile delivery process more efficient.
Companies & startups focused on the last mile and tracking services
The Canadians who are changing last mile delivery services for good! GoFor is a last-minute and last mile logistics partner that matches the delivery requirements of distributors, retailers, and contractors with the appropriate lightweight to heavy-duty vehicles of its driver community inventory.
GoFor’s platform helps craft a better customer experience, allowing users to track their orders and costs, integrate their own tools, and carry out the contactless delivery of materials to ensure safety on both ends. Likewise, they are now leading the renewable delivery model for the industry by adding electric vehicles, carbon removal offsets, empowered drivers, and smart packaging to their service offering.
The startup was founded in Canada in 2016 and is quickly expanding amongst the biggest cities in United States, offering their services to multiple industries by supplementing their busy fleets or choosing them as an out-sourced logistics partner for deliveries.
LINKX is a cloud-based logistics software company for the delivery of goods in Mexico. The company’s software solution allows control of deliveries and vehicles in real time thanks to its data-based decision-making. It facilitates communication and information among all involved parties: shipper, carrier, and receiver.
Within the increasingly busy technological world of logistics, LINKX stands out for its user-friendly interface, robustness and convenient integration, and customer-centric focus.
The US-based startup has developed an on-demand delivery platform for the construction and industrial sectors that addresses a critical pain point within a complicated supply chain, especially for small and medium size projects.
By offering a multi-size fleet variety, suitable for any kind of order, Partrunner’s platform integrates warehouses, retail locations and contractor jobsites, helping match the best delivery option based on the material requested, timing, location and type of vehicle needed, while ensuring significant savings in delivery costs. It also allows its users to manage their requests in real-time, review order details and delivery routes, and manage invoices and documentation.
Voyage Control is a UK-based leading software solution provider for construction, ports, and events clients around the world. The startup’s end-to-end solution helps reduce delays, waste, and cost overruns caused by inefficiencies in the construction materials delivery process through optimized scheduling of deliveries and an overview of all transactions in real-time.
Voyage Control is in use in over 200 customer sites, coordinating between 100,000 players and scheduling more than 6 million deliveries. Their customer base includes industry leaders and general contracting firms in North America, Europe, the Middle East, and Asia Pacific. Large multinationals have become the startup’s core customers thanks to their easy-to-scale ‘land-and-expand’ approach since the platform was launched in 2013.
Anywhere there are trucks queuing up to drop off or load inventory, their platform is a best-in-class option for driving efficiency of the site and the team members who run it.
Cemex Ventures is at the forefront of the future
At Cemex Ventures, we know the challenges that must be addressed in the construction industry in order to drive the construction revolution. As far as supply chain management goes, the proper delivery of materials in the jobsite plays a key role in driving this revolution.
“It’s not simply a supply chain issue for us in the sector; material delivery directly affects all aspects of the industry’s productivity as well,” said Galindo. “If we aim at bettering all processes across the construction value chain, including and most importantly that final stretch within the delivery, we can see a direct benefit in a project’s time and cost, two of the biggest challenges in the industry nowadays”.
Our mission is to continue being a driving force in the sector and finding the most promising SCM solutions and startups. Does your startup have what we’re looking for? Do you have a solution that improves the agility of our sector?
Get in touch with us and let’s foster the construction industry revolution together!