Why Firms Can’t Afford to Neglect Last-Mile Sustainability

The last mile in supply chain and logistics is, without question, critically important – and there are a great many reasons for this.
Traditionally, customer satisfaction has ranked highly in this regard given an effective last mile-delivery has the potential to make or break the shopping experience and, therefore, the customer’s long-term loyalty.
On the flip side, delays or other issues inevitably lead to unhappy customers, negative reviews and, ultimately, a detrimental impact on revenue.
The need to manage costs and achieve operational efficiency also goes some way towards explaining why the last mile is so crucial to the delivery process.
This final stretch is often the most expensive element and accounts for a substantial proportion of shipping costs, while fine-tuning last-mile logistics can streamline operations and reduce delivery times – leaving businesses better placed to respond more quickly to customer demands and market changes.
However, what has come to the fore in recent years is a growing expectation among consumers for their favoured retailers and delivery firms to run their operations in a more sustainable fashion.
The challenge for businesses is to find new and innovative ways to reduce their greenhouse gas emissions without compromising on speed or capacity.
Sustainability becomes a priority for consumers
Today’s environmentally-conscious consumers believe the responsibility for sustainable shipping and delivery falls on retailers, marketplaces and carriers – to the extent that they are more likely to support brands that actively incorporate eco-friendly practices into their shipping operations.
In fact, a recent study carried out by UPS Capital, the fintech and insurtech division of UPS, revealed that 64% of consumers – particularly younger generations like Gen Z and Millennials – prioritise sustainability when making purchasing decisions.
With this in mind, it has surely become crucial for firms to balance the growing demand for same-day and next-day deliveries with their ability to adapt to and meet evolving expectations for greater sustainability.
Archita Prasad, Vice President of Strategy and New Product Development at UPS Capital, is steadfast in her belief that companies have little choice but to adapt.
“With Millennials and Gen Z gaining more purchasing power and demonstrating a strong preference for sustainable practices, businesses must prioritise sustainability within their shipping operations to remain competitive and attract these environmentally-conscious consumers,” says Archita.
“Failure to adapt to these changing demands could result in lost market share and decreased customer loyalty.”
UPS Capital’s commitment
Of course, there are a great many ESG initiatives that logistics and retail companies can incorporate to make their business operations more sustainable – each with varying degrees of difficulty.
One useful place for merchants to start is by using recyclable shipping and packaging materials and encouraging shipment consolidation and slower shipping timelines to optimise delivery density.
Meanwhile, Archita suggests implementing green and renewable energy sources for warehouses and establishing carbon offset programmes, which can significantly reduce a company’s carbon footprint.
She adds: “Collaborating with shipping carriers who are committed to eco-friendly shipping practices plays a crucial role in promoting sustainability across the supply chain.”
UPS Capital is itself promoting sustainability in logistics and harnessing the power of artificial intelligence to do so.
Its DeliveryDefense Address Confidence solution leverages advanced AI technology to predict the likelihood of successful deliveries, enabling merchants to optimise their operations.
By minimising failed attempts, reshipments and return shipments, these firms can significantly reduce costs as well as their carbon footprint.
“UPS Capital is committed to promoting sustainability in the last-mile delivery industry through its innovative AI-driven solutions,” Archita continues.
“Furthermore, UPS leverages AI for fleet management, inventory distribution and orchestration, ensuring its own last-mile operations are as sustainable and efficient as possible.”
AI ensures a sustainable last mile
As Archita alludes to, the power of AI can already be seen in various elements within the supply chain ecosystem, including fleet management.
Firstly, these AI-driven systems have the ability to optimise vehicle routing by analysing real-time data, such as traffic patterns, weather conditions and vehicle performance, to determine the most efficient routes for delivery vehicles.
What’s more, by considering factors like road condition, speed limits and potential obstacles, AI can help drivers avoid congested areas and minimise idling time, thus reducing fuel consumption and cutting down on CO2 emissions output. Ultimately, this ensures a more sustainable, cost-effective last-mile delivery process.
“Additionally,” Archita goes on, “AI can monitor vehicle health and predict maintenance needs, ensuring vehicles operate at peak efficiency and reducing the risk of breakdowns that could lead to delivery delays and increased emissions.
“AI-powered systems can lead to better orchestration and provide real-time optimisation of resources, such as assigning the most appropriate delivery vehicle based on order size, destination and vehicle capacity.”
When it comes to optimising inventory management, AI has a crucial part to play.
For example, across warehouses and fulfilment centres, it helps reduce the need for long-distance transportation and minimises the carbon footprint of last-mile deliveries.
Archita explains: “By analysing historical sales data, consumer trends and demand forecasting, AI algorithms can predict which products will be in high demand in specific regions.”
UPS leads on greener delivery
Elsewhere, UPS is using Access Points in a bid to make its operations greener, amongst a host of other benefits.
In a survey conducted by UPS Capital, four out of every five consumers said they were open to using alternative delivery locations – including UPS Access Points, lockers or retail stores – to help increase security, convenience and speed.
Delivery Intercept, meanwhile, allows customers to request a cancellation or reroute of their package following shipment but prior to delivery.
“Tools like DeliveryDefense and Delivery Intercept enable the option to ‘ship to an Access Point’ and provide additional delivery addresses,” Archita concludes.
“Enabling tactics like this provides customers with more choice while also reducing the number of failed deliveries – which can add to both costs and emissions.”
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