Local Supply Chains Deserve Better

For companies that do B2B last-mile deliveries, the driver is ultimately getting more face time with the customer than anyone at the company. And the function they serve can be directly correlated with the profitability of that end customer. A business can’t deliver a product or service without receiving necessary supplies so the longer the wait, the less total throughput. Along with that, companies know the direct effect this part of their service can have on customer satisfaction, retention, and a host of other factors critical for survival in a competitive industry.

Positive and negative feedback from the day to day delivery operations signals to companies that they should hold this part of their business to a high standard. Contrarily there often isn't a lot of margin in most of these business models to spend a couple extra incremental opex dollars for a better delivery experience. So it's always a balance of managing the bottom line and risking the loss of a high LTV customer due to bad delivery experiences whatever they may be. Not to mention any lost top-line opportunities.

I believe this to be a key aspect of why new players are still having a lot of challenges in the third party last-mile delivery space (Uber, Lyft, DoorDash etc). Specifically for when they are providing a B2B service. Gig drivers are incentivized to treat every delivery as transactional. Its the nature of the business and easy to conclude if you follow the incentives. Therefor, why should they care to pay attention to those business OKRs listed above? This could be argued for drivers employed by companies as well which is why there isn’t an obvious answer to build out an internal fleet or even rely on tradition 3PLs. This customer/provider (or employee/employer) relationship, it’s incentive structure, and alignment of holistic business goals and outcomes becomes a direct contradiction to the ideal state of the customer (being low cost, high quality, high efficiency delivery service) . With the current options available today (in the majority of your typical U.S. towns and cities) being gig platforms, operating an internal fleet, traditional 3PLs, and a combination of all options— there isn’t an obvious outlier solution that is both the cheapest option and helps customers get to their desired state.

Keep in mind, this is a problem on a spectrum of severity with a lot of contributing and layered factors but something still has to give.

Drones and autonomous vehicles aside, the last-mile delivery industry would benefit from a serious change in the role of a last-mile delivery driver if companies truly want a lasting solution. Thinking completely outside of the box when it comes to how their compensated, what they’re responsible for, what business aspects they can impact, their relationship with the customer/end customer/employer, what tools they use, so on and so forth. Any other change is going to have a marginal impact and supply chains deserve more.