Logistics is the facilitation of moving goods from a source to the end-user, in other words, the supply chain. Forwarding involves a number of steps including, multimodal transport, a combination of road, rail, air freight, and water freight – ocean and river. In the case of perishable foodstuffs, cold chain logistics solutions will provide refrigeration every mile of the way.
First Mile Versus Last-Mile Logistics
In the logistics industry, first-mile means transporting goods from a farmer, manufacturer, or retailer to a hub. A hub is a central or regional logistics warehouse. Oftentimes, a hub refers to a fulfillment center. At fulfillment centers, workers consolidate stock and orders. Optimizing first-mile logistics starts with the people, the process, and the tools used to manage processes. The ramifications of poorly optimized first mile logistics can be catastrophic for the entire downstream supply chain operations.
On the other end, last-mile refers to the step in the chain when the logistics company will pick, pack and dispatch orders from the fulfillment center to a local retail store or to a customer’s home. Last-mile delivery processes can be a significant competitive differentiator. The use of modern technologies to enable real-time tracking and help decipher valuable data allows companies to achieve efficient last-mile delivery.
Forwarding goods also means forwarding the paperwork. When forwarding requires crossing an international border, a shipment will have to be cleared. As a result, approval of paperwork by customs officials must happen at both the exit and entry points of a country. This step ensures goods are legal and in compliance with tax and tariff/excise regulations. These days the paperwork is forwarded and usually cleared through customs before the goods arrive at the exit or entry point. This speeds up the logistics process unless officials want to inspect a container.
For every movement along the supply chain, the shipment will experience a handling fee. This is a cost charged by each party involved in the movement of goods. Handling fees are built into the selling price of a product for business-to-business deliveries from a supplier to a reseller. The handling fee in international trade will depend on who is responsible for the transport costs. In the case of a business delivering directly to a domestic consumer, the consumer will sometimes have to pay a delivery fee. In the case of an international order, they might have to pay import duties and a delivery fee before the logistics company will release a package.
Just in time delivery
To preserve cash flows, manufacturers no longer have warehouses full of parts they need to make products. This is especially true when customization is available for a product. In the case of customization, that means money is tied up on a shelf. Manufacturers can have hundreds of suppliers supplying different parts. This is where logistics becomes a science.
Logistics managers use Just in Time Delivery (JIT), and only order from suppliers shortly before they need the parts. If one part experiences even a slight delay, it can cause havoc on an assembly line. Delays cost manufacturers money, as they still need to pay their staff and overheads. In turn, a manufacturer might then have to delay delivering to their customer who has also ordered from the manufacturer on a JIT basis. They in turn have made delivery promises to their clients. Thus, first-mile suppliers to manufacturers, and last-mile suppliers to customers, can face financial penalties for late delivery. As you can see, one late first-mile delivery has a cascading effect for the last-mile delivery.
First mile versus last-mile logistics
Which mile is more important depends on where a supplier is positioned in the supply chain. To be successful it is best for each party to act as if they are part of the last mile and act accordingly with urgency. This is the best way to ensure customer satisfaction in order to boost customer lifetime value.
Additional Reading: Consumers Expected to Face Higher Prices this Holiday Season — Salesforce Digital Forecast
The Junction LLC | Truckload Shipping
As a leader in the transportation industry, we demand excellence from our entire team. Our team at The Junction LLC strives to deliver the best possible customer service and by a desire to solve our customer’s toughest transportation and supply chain needs.
Our team is dedicated to serving our customers and will take the necessary action to deliver our customers’ products safely, efficiently, and on time. In fact, this is our promise to you!
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Trucking & Freight Shipping Services:
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- Our sister companies can also provide warehousing in our food-grade facilities, cross-docking, and contract warehousing.