Last Mile Delivery and Technology

What are the challenges involved in Last Mile Delivery?

Few business transformations have had a long-lasting impact on Supply-Chain, as e-commerce. Rise in e-commerce has prompted competitors to achieve faster responsiveness at lower costs to differentiate themselves in the market. The new battleground in e-commerce is in Last-mile delivery and with the majority of the e-commerce customers nestled in cities consisting of huge populations, last mile delivery has become one of the most important challenges for e-commerce and 3PL companies.

– Last Mile Delivery in the urban areas is delayed by unexpected interruptions such as Road Closures, Traffic Congestion and sometimes even Parking space constraints. Anomalies include absence of a customer at home, which forces the driver to plan the route according to the availability of the customers. Missed deliveries due to these disruptions and  customers returning the packages, have increased the costs of last mile delivery. 

– Delivery in Rural Areas has its own problems such as, accessibility, connectivity and added fuel costs. Research by Datex shows that, the modern-day cost sensitive customer, demands more choice of products without the willingness to pay for greater convenience. The answer  to solving this complex problem lies in the appropriate and innovative application of technology at our disposal. 

Source: Datex

How could these challenges be eased by the use of technology?

  • Autonomous Delivery Robots: Low capacity Robot are already making their way to the fore. Numerous companies in the US have implemented mobile robots that deliver Food and other low volume products to their customers. Robots equipped with 360-degree view cameras and customer activated delivery have prevented thefts and marginally solved the last mile complication for labor constrained 3PL companies. From a research conducted by Mckinsey and Company, cost savings achieved by the implementation of Autonomous Delivery Bots are significantly higher than semi-autonomous EVs or traditional Delivery trucks. Cost savings achieved by Autonomous Delivery Robots are markedly higher than their equipment costs. Mass adaptation of these robots will only result in lowered vehicle costs, thereby increasing the overall profits in last mile delivery.

Mode of Delivery

Cost Per Delivery in $

Internal combustion engine




Partial Autonomous EV


Autonomous Robots


Source: Mckinsey & Company


  • IoT Technologies: The secret to solving supply chain woes lies with Internet of Things. Visibility in Supply Chains has been a long unsolved problem in businesses across the world. The underlying principle of IoT in last mile delivery involves collecting, analyzing and using data to understand customer behaviors, business operations and working habits. This data is collected by infinite new connections between devices and entities across the last mile value chain. This does however can mean these new connections are susceptible to data breaches and increase the magnitude of supply chain risk. Use of IoT can particularly help in providing real time visibility for consumers and improve the last mile delivery experience. Start-ups such as Instacart, Zookal, and Postmates have been providing consumers with Uber-like delivery experience of their packages. The secret of these companies is using IoT and Big Data to unleash an army of personal shoppers that complete the delivery. But this does not come without operational difficulties and difficulties at scale. 
  • Artificial Intelligence and Big Data: Gartner projects that 80% of the IoT projects in 2022 will include an AI component, up from 10% presently. AI and IoT are two sides of the same coin and with the inevitable that is faced by Global Supply Chains, businesses are playing catch up to stay relevant in the market. Reinforced Learning and Artificial Intelligence models are providing alternate last mile delivery solutions that can enable optimization of limited resources and costs. Gone are those days when technological iterations were focused on transactional automation. Today, innovation in last mile delivery focuses on cognitive automation, which involves impacting the ways and execution of decisions being made. AI softwares can use the knowledge of the working of the business and make recommendations real time, facilitating autonomous action. Utilizing the potential of Big data, Data Intelligence softwares can enable predictions and simulation, useful to logistics handlers. Arrival times, confidence intervals and accurate risk metrics are usable outputs from AI models that are instrumental in dealing with challenges in last mile logistics. 

In addition to AI, IoT and Autonomous Delivery Robots, RFID sensors and Drones offer useful solutions in reducing the challenges in achieving a hassle-free delivery experience. The inherent advantages of the aforementioned technologies are without a doubt going to revolutionize last mile delivery amongst e-commerce and third-party logistics companies. Striking the right chord with these technologies can play a huge party in deciding a business’ fortune. There is an undoubted need for the use of such technologies, but the profitability and operational difficulties of these solutions are in ‘human’ aspects of the supply chain. Localization delivery models and application of technology will inevitably revolutionize last mile logistics. 

Written by:

Gokul Pankaj

Web Content Manager at SupplyTech Insights

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