Why Last-Mile Delivery Logistics Solutions Are Critical for the Pharmaceutical Industry
Fast or overnight delivery is no longer just a nice thing to have. Customers now expect it as a given part of a good online delivery experience. And while it will still take some time for most companies to start shipping goods overnight to win the hearts of their customers, for one industry, it's a necessity:
The pharmaceutical industry.
Pharmaceutical supply chain failure is a $35 billion problem. From cold-chain to last-mile delivery, the industry has continually faced supply chain management and logistics challenges. During COVID-19, some of the issues were amplified as vaccinations weren’t being distributed fast enough.
While modern supply chain software is embedding intelligent models into overall management, last-mile delivery operations still pose a critical challenge in the pharmaceutical industry.
Why is that, and what type of last-mile delivery process can solve it? In this blog, we’re going to discuss the solution. But before we get into that, allow us to reroute the conversation back to what last-mile delivery is.
What is Last-Mile Delivery?
As the name suggests, last-mile delivery is the last leg of any product's journey. A product journey usually begins in a warehouse, goes to a vehicle, and moves around multiple stops before reaching its final delivery destination. The last step of this journey from the back of a delivery vehicle to a customer's doorstep is called last-mile delivery or last-mile logistics.
Last-mile delivery is usually the most critical, time-consuming, and expensive part of the full e-commerce cycle. Last-mile delivery alone makes up 53% of the shipping costs that companies charge their customers.
The goal for any last-mile delivery solution isn't only to get the product in the hands of the customer faster but also in good quality and at par with their delivery expectations.
Steps Involved in Last-Mile Delivery Logistics Solutions
Any last-mile delivery begins with the following steps:
- The logistics company is notified of the order number, the items of the shipment, and the schedule of its delivery.
- The logistics company generates a tracking link with the packed order and dispatches it for delivery. The customer can track the delivery in real time.
- Routes are optimized based on the number of packages and their expected delivery times.
- Order gets dispatched, scanned, and routed to the final delivery destination through international or regional storage facilities.
- The package is delivered to the final destination and the order is marked complete.
Why is Last-mile Delivery Tricky?
The steps we discussed above seem pretty straightforward. But in real life, it's not as easy as it may seem. Here's why:
Multi-stop and Multi-stage Processes
In last-mile delivery, each delivery stop can be miles apart. With traffic, this soon turns into a long journey and delivery delays with only one or two packages making their way to customers’ doorsteps. This makes the process of delivering goods very slow and unpredictable.
In 2020, the Global Last-Mile Delivery Market size was worth $108.10 billion and was expected to reach $200.42 billion in 2027, growing at a CAGR of 9.29%.
Soon after, the global surge in fuel costs took a severe toll on this prediction. As last-mile delivery continues to boom after COVID-19 and fuel prices are at a global high, the question of 'who will eat the cost' is imminent.
In the war of customer satisfaction, companies will end up bearing the extra cost of an already expensive leg of the logistics–the last mile.
Speaking of 'war to win the customers,' 84% of shoppers say that they wouldn't use a service again after only one bad delivery experience. This isn't all. 73% of customers are likely to purchase an item if it provides free shipping.
In this tug of war, providing a first-class experience through last-mile delivery isn't only important to retain current customers but also to get new ones and receive shining feedback.
Failed Delivery Attempts
1 in 20 orders don’t make it to their intended final destinations. Reasons? Theft, unavailability of the recipient to sign the order, wrong address, etc.
This is another added expense for businesses, which they must bear to send the package again or refund the amount to the customer.
In Canada, driver vacancies rose to 8% in the third quarter of 2021, compared to 5.4% across the economy. It's the second highest vacancy rate in the Canadian economy after the hospitality and food sector, which sits at 12.9%.
As of now, the total number of vacancies for transport truck drivers in Canada is 22,990. With the severe human capital shortage, companies are forced to pay better wages to drivers who do this for a living.
The business model most last-mile delivery companies follow is 'pay on mileage' or 'per delivery,' which results in an extremely high turnover ratio as most drivers in the city spend their working hours in traffic jams, construction zones, or being stuck in bad weather. This poses a high risk to last-mile delivery logistics solutions because, without workers, operations slow down and cost businesses a huge loss of money and contracts.
When it comes to the pharmaceutical industry, apart from all the challenges mentioned above, it deals with the risk of wasted goods due to long transit hours, wrong vehicles, and improper temperatures. All of this leads to extremely poor customer experiences.
Main Last-Mile Problems in the Pharmaceutical Industry
Now that we've discussed what last-mile delivery is and why it's tricky, let's take a step further and discuss the main last-mile problems in the pharmaceutical industry.
The pharmaceutical industry's supply chain deals with products designed for certain atmospheres and temperatures. Most medicines and goods are required to be stored and kept in a certain light, temperature, and humidity. All these things are well taken care of during production due to being in a controlled environment.
The main problem occurs when these stored products are shipped to their final customers. Most pharmaceutical products in the last-mile delivery sit in coolers with active cooling. With the help of PCMs, they can be stored for several days, but due to not having a constant power connection to provide accurate temperature and humidity, temperature excursions become a huge problem.
This results in a compromised efficacy of the medication.
During COVID-19, the delivery of vaccination to the remotest of remote areas became a huge challenge, even for big companies. It was extremely vital for companies to strike a complete balance in the temperature of vaccines.
Delivering vaccines from a manufacturing facility into hospitals, especially rural hospitals and clinics, without degradation was one of the biggest challenges last-mile delivery has faced.
Vehicles had to be designed to protect vaccines from becoming too warm or too cold. Some companies also used a vehicle device monitor for logging the temperature every 60 seconds.
This gives us a hint at the solution to this problem as well. The use of the right vehicles that are designed for the pharmaceutical industry requirements and the use of technology can fix this critical problem for a $1.42 trillion industry.
How to Increase Last-Mile Delivery Efficiency in the Pharmaceutical Industry
Here are some steps you can take to prevent the wastage of products and increase delivery efficiency in this industry:
Understand Geographical Conditions
To make your last-mile delivery more efficient, having a better understanding of the destination's geographical location is key. Many locations in the world are too cold and too warm for certain products, and if you aren't aware of those conditions, you're aiming for a shot in the dark.
For example, delivering a temperature-controlled vaccine like Pfizer to a country like Pakistan is a totally different ball game than delivering it to Canada.
Not just the temperatures, but some countries have better infrastructure in place to facilitate logistics. Accessing remote areas in those countries is much easier than in countries where vehicles can't even reach in time to deliver life-saving medicine.
Last-mile delivery looks different in different areas. As a company, always learn more about the destination and optimize your strategy based on all of these factors.
Understand Products Better
Just as understanding the location of your delivery destination is important, understanding what you're delivering is equally important. If you don't understand the products in transit, you won't be able to execute an efficient last-mile delivery process.
In the pharmaceutical supply chain, each product requires a different type of storage condition. Some products need to be stored and transported between 2°C to 8°C (36°F to 46°F), whereas some products only need a stable temperature.
Good knowledge of the product, its storage requirements, and handling instructions is a very important step in achieving a problem-free last mile.
Some manufacturers also release product stability data to share with logistic companies and customers. The data shares the number of hours the product can be kept outside the required temperatures without losing efficacy.
A better understanding of products in transit can save you money, time, and a lot of wasted resources.
The use of technology to fix the last-mile problem is very underrated.
The average lead time for delivery of groceries in Canada is 0.7 days, compared to electronics which take three days, and apparel which takes five days.
As of now, 60% of the cost of deliveries in North America is labor. The use of technology can bring this cost down dramatically. Delivery robots and drones can cut down this cost while keeping the operations going without the need to hire multiple human resources. There is still a lot that needs to be figured out before robots and drones can take over the entire last-mile delivery logistics, but we’re sure off to a good start.
Technology isn’t just limited to transit, either. For example, in the pharmaceutical industry, IoT-enabled delivery can be a great option. An IoT-powered mailbox can keep the temperature of mailboxes regulated and keep the delivery process smooth.
Technology can enable efficiency across the supply chain and last-mile delivery by providing the data and convenience of real-time information.
Work With a Flexible Delivery Partner
If a product goes bad on the shelf of a warehouse, the damage is reversible by shipping the customer the right product. If a product goes bad in transit, there is no way to find out until it reaches a customer's doorstep. This comparison reflects the complexities involved with last-mile delivery and why working with a partner who understands this nuance is critical.
The pharmaceutical industry relies heavily on the time and quality of the products, and spending time finding the right partner to work with you is the best decision you can make in this process.
Being the most expensive leg in the product's journey, the last mile can make or break your entire delivery process. It works directly with the end consumer, and the result affects their overall experience much more than any other step.
What to Look for in a Last-Mile Delivery Logistics Solution
Now that we've established that last-mile delivery in the pharmaceutical industry is much more than just 'finding the best route' for deliveries, let's discuss some of the indicators to look for in a last-mile delivery logistics solution:
Advanced and Sustainable Fleet
Having the right kind of fleet for your pharmaceutical last-mile delivery logistics is by far THE most important indicator to look for in a company. And not just the right type of vehicles that support the temperature and other requirements of pharmaceutical goods, but also the environmental aspect of it.
An average diesel delivery truck emits 18.7 tons of carbon dioxide annually. If the vehicle is more heavy-duty, it results in more tailpipe pollution, worsening air quality and increasing global warming emissions.
Always look for logistics companies that strive for sustainable operations and have electric vehicles in their fleet to reduce their carbon footprint and help protect the planet.
Efficient Operations and Route Planning
Another important indicator is to look for a company with efficient route planning and optimization processes.
Ask questions about vehicle configuration, upkeep, maintenance, and route optimization in case of emergency or overnight deliveries.
Powered by Technological Innovation and Data
Always look for a tech-first solution. A good last-mile delivery logistics solution has a strong foundation of technology, data, and innovation.
The use of technology and data can save you thousands of dollars in wasted medicines just by sharing real-time information on location, condition, count, timestamps, and temperatures.
The use of technology doesn't only protect you from losses; it also helps you remediate issues as they occur.
Transparent Workflows and Human Capital
Look for a last-mile solution with workflows and policies in place in case things go south. Transparent HR, training, and insurance policies are important to protect you in case of accidents, failed deliveries, and wasted goods.
Remember, when working with a last-mile delivery partner as a pharmaceutical company, you'll need to be protected by law and assured by workflows and policies. Accidents are imminent, but they aren't the end of the world if you aren't the one bearing huge losses.
The logistics needs of the pharmaceutical sector are unique and demanding, and you should always select a logistics partner who can meet these standards.
Here at Ziing, we provide vehicles with ambient temperature controls to ensure a constant temperature between 15 degrees and 25 degrees to meet the demands of government health regulations.
We offer a full chain of custody, covering collection and handover signatures, storage temperature, storage humidity, and the location at all stages of the pharmaceutical supply chain.
Work with us to sort out your routing, handling, and dispatching of pharmaceutical goods while maintaining consistent and reliable quality standards that deliver ROI.
Contact us to learn more about how we can help.