What is last mile delivery in supply chain?

Last mile delivery is the final stage of the supply chain where goods are transported from a distribution center, warehouse, or retail location directly to the end customer. It is the most visible part of logistics for consumers, as it determines how and when products actually arrive at their doorstep.

In supply chain management, last mile delivery is often the most expensive and challenging segment due to customer expectations for speed, flexibility, and real-time visibility. It directly impacts customer satisfaction and brand reputation.

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How last mile delivery works in the supply chain

• Origin point: Goods start from fulfillment centers, retail locations, or local hubs.
• Delivery methods: Shipments may be delivered by parcel carriers, local couriers, in-house fleets, or even gig-economy drivers.
• Technology enablement: Route optimization software, delivery apps, and real-time tracking tools ensure efficiency and transparency.
• Customer interaction: Last mile involves direct engagement with customers, including delivery notifications, proof of delivery, and options for flexible scheduling.
• Returns handling: Reverse logistics is often part of last mile, enabling customers to return products efficiently.

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Why it matters

• Customer experience: Timely, transparent deliveries directly shape how customers perceive a brand.
• High costs: Last mile can account for more than 50% of total shipping costs, making optimization critical.
• Complexity of scale: Managing diverse addresses, delivery windows, and unpredictable traffic or weather makes last mile particularly challenging.
• Competitive advantage: Fast, reliable, and flexible delivery options (same-day, next-day) differentiate companies in e-commerce and retail.
• Sustainability: Optimized routes and green delivery methods (EVs, bikes, lockers) reduce emissions and improve ESG performance.

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Common questions about last mile delivery in supply chain

Why is last mile delivery so expensive?
It requires many individual stops, short routes, and high labor involvement — all of which drive up costs compared to consolidated shipments in earlier stages of the supply chain.

What technologies improve last mile delivery?
Tools like route optimization software, GPS tracking, delivery management platforms, and AI-powered demand forecasting improve efficiency and reduce costs.

What are common last mile delivery models?
Traditional parcel carriers (UPS, FedEx), third-party logistics providers, in-house delivery fleets, and crowdsourced gig-driver networks all serve last mile functions.

How does last mile affect customer satisfaction?
Delivery speed, accuracy, and transparency are often the most memorable parts of a shopping experience. Delays or poor communication can erode customer trust.

Can last mile delivery be sustainable?
Yes. Many companies are investing in electric delivery vehicles, bicycle couriers, parcel lockers, and load consolidation to reduce emissions.

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Putting it all together

Last mile delivery is where the supply chain meets the customer — and where expectations are highest. Although it represents a smaller geographic leg, it is often the most complex and costly. Optimizing last mile delivery through technology, flexible networks, and sustainable practices can reduce costs while improving customer satisfaction.

For businesses, mastering last mile delivery is no longer optional — it’s a key driver of brand loyalty and competitive differentiation.

In short: last mile delivery is the crucial final step that determines how effectively supply chains deliver on customer promises.