Lower Last Mile Costs by Optimizing the Entire Supply Chain
Managing Complexity for Maximum Value: Getting more value out of your supply chain
April 24, 2023
Welcome back to our series, Managing Complexity for Maximum Value, where we explore transportation strategies that can help you optimize your supply chain for greater efficiency and profitability. Previously, we discussed how leveraging the right transportation modes, adding rail to the mix and utilizing advanced data modeling can help you reduce costs and enhance your network. This week, we're focusing on how to optimize your entire supply chain by identifying and lowering last mile costs.
As e-commerce continues to grow and evolve, so does the demand for last mile delivery. The last mile is the final leg of transportation in the supply chain and typically accounts for 40% of total cold chain logistics costs in the food service industry. It's not hard to see why this segment is so expensive, as it requires significant manpower and resources to ensure that the product is delivered safely and on time.
Focus On the Middle Mile
Many food service customers are looking for ways to lower their overall delivery costs, and the last mile is an easy target. However, the reasons last mile delivery is so expensive, including the cost of labor and fuel, inefficient routes, delivery delays and lack of transparency, are often out of the customer's control.
An effective strategy to reduce transportation costs is to focus on the middle mile first. While this may seem counterintuitive, there are often hidden costs throughout the journey of your food. At Lineage, we take a holistic view of the entire cold chain, using data science to enhance transparency and implement incremental changes in the middle mile that reveal hidden savings that can offset last mile costs.
One of the biggest challenges in the middle mile is coordinating transportation. This involves ensuring that the product is transported efficiently and cost-effectively from the supplier to the warehouse. Small changes, such as using nontraditional modes of transportation or arranging ride-sharing for less-than-truckload (LTL) shipments, can have a major impact on the bottom line. Additionally, rethinking redistribution can also result in significant savings.
By focusing on the middle mile, cost savings and efficiencies ripple through your entire supply chain. For example, by improving the coordination of transportation in the middle mile, you can reduce the number of times the product needs to be handled, which decreases the risk of damage and spoilage. This, in turn, reduces the amount of waste and results in cost savings and improved sustainability.
Simplify Last Mile Delivery
When it comes to the crucial last mile, it's important to have a flexible and cost-effective solution. Lineage has more than 420 temperature-controlled warehouses, allowing us to offer customized solutions that meet the unique needs of each customer. By leveraging our extensive network, we can find the most efficient and cost-effective solution for each delivery, whether it's a small parcel or a full truckload.
One of the biggest benefits of working with Lineage is the transparency and visibility we provide throughout the entire supply chain. With real-time tracking and data analytics, you can monitor the progress of your shipment at every stage of the journey, from the supplier to the dinner table. This increased visibility allows you to make informed decisions and identify areas for improvement, resulting in further cost savings and increased efficiency.
While the last mile is a critical component, focusing on the middle mile can result in significant cost savings and increased efficiency. By taking a holistic view of the entire supply chain and leveraging data science, companies can identify hidden costs and make incremental changes that result in big savings throughout the supply chain. Additionally, by working with a provider like Lineage, our partners benefit from a flexible and cost-effective solution that provides transparency and visibility throughout the entire supply chain.
Don’t miss our upcoming article: Transform Redistribution from a Headache to a Competitive Advantage.