November 27, 2023
The logistics business is a never-ending balancing act. On one side, organizations strive for on-time delivery and service excellence. On the other, they effort to keep costs in check so that timeliness and industry-leading service don’t cut too far into margins.
The middle mile, which is the bridge between the first and last mile of delivery, can quickly turn into a significant cost center because disruptions or failures in this segment have far-reaching repercussions. The expensive nature of middle mile failures is even more pronounced given the modern surge in e-commerce. This article outlines eight of the most common costs associated with inefficient, unoptimized middle mile delivery services.
Continue reading to learn more about the costs of middle mile failures, and get in touch with FRAYT if you’re searching for a partner to help you streamline the middle mile.
One of the most tangible consequences of inefficiencies in middle mile logistics is the escalation of operational costs. When this segment of the supply chain falters, it often results in increased transportation and logistics expenses.
This can manifest in various forms, including higher freight charges necessitated by expedited shipping to make up for delays. Inefficiencies can also lead to additional handling and storage costs. These emerge when goods are not moved through the supply chain efficiently, requiring unplanned stops or extended storage periods.
These incremental costs strain logistics budgets and also create a ripple effect, impacting the overall pricing strategies and market competitiveness of businesses reliant on these supply chains.
Middle mile failures can also impact the delicate balance of inventory management. The two critical issues are overstocking and stockouts, both of which carry considerable financial consequences.
Overstocking, caused by delays or mismanagement in middle mile delivery, leads to excessive capital being tied up in unsold goods. This strains storage resources while also affecting cash flow and inventory turnover. Conversely, stockouts are a direct outcome of interrupted or delayed supply chains, leading to missed sales opportunities and, critically, customer dissatisfaction.
As alluded to above, delays in middle mile logistics can negatively impact customer satisfaction. In today’s dynamic, sometimes chaotic retail environment, customers have grown to expect quick and reliable service. Any lag in middle mile delivery services can lead to late fulfillment, either to retail stores or directly to end customers. This lapse in service naturally erodes customer trust and satisfaction.
The precision-timed nature of modern supply chains means that if goods fail to arrive at distribution centers on schedule, it’s not just an isolated delay.
This misstep can disrupt meticulously planned supply chain schedules, impacting multiple businesses that rely on these distribution centers. Such disruptions can lead to broader inefficiencies, as each affected entity scrambles to realign its operations, often resulting in further delays and compounded logistical challenges.
In today’s fiercely competitive retail landscape, efficiency and reliability in logistics are key differentiators that define a brand’s standing in the market. Retailers grappling with middle mile failures face significant challenges in maintaining their competitive edge. Such inefficiencies can place them at a notable disadvantage, especially when competing against entities that have optimized their supply chains for speed and dependability.
The ability to quickly and reliably move goods from point A to point B is the essence of logistical success. It’s also an important factor that customers consider when choosing where to shop. Retailers with less efficient middle mile logistics may find themselves losing ground to competitors who can promise and deliver faster and more reliable service.
middle mile failures also pose significant compliance and regulatory risks, particularly when dealing with perishable goods or regulated items. Delays or improper handling during this critical phase of transportation can lead to severe consequences. For perishable goods, even a slight delay can render products unsuitable for sale, leading to significant losses and waste.
For items under strict regulatory oversight, any deviation from required transportation standards or timelines can result in legal penalties and reputational damage. These risks highlight the necessity of stringent adherence to compliance standards in middle mile logistics.
Inefficiencies in middle mile logistics can also expand an organization’s environmental footprint. Unnecessary transportation, extended routes, and increased fuel consumption are direct consequences of such inefficiencies, each contributing to a retailer’s overall environmental impact.
Environmental consciousness is growing in demand by consumers and other stakeholders, which places the ecological implications of logistical operations under close scrutiny. By optimizing middle mile logistics, retailers increase operational efficiency while improving environmental sustainability. This helps align their operations with the growing global emphasis on reducing environmental impact.
Middle mile failures are a significant driver of wasted resources. Inefficient utilization of labor, transportation, and warehousing are some of the most prominent consequences of these failures.
When middle mile delivery service does not function optimally, it often necessitates additional labor for handling and managing disrupted goods. Similarly, transportation resources are underutilized or overextended, leading to increased operational costs and lower transportation efficiency. Also, warehousing inefficiencies, such as prolonged storage or handling of goods due to delays, further strain the resources.
This cascade of inefficiencies culminates in reduced overall efficiency of the retail supply chain, impacting the bottom line of businesses.
Combatting the costs of middle mile failures demands strategic solutions. Those solutions may include investing in inventory management systems, achieving real-time visibility, improving inventory forecasts, and using cross-docking techniques — plus others.
Strategic partnerships also offer a path toward optimized middle mile delivery services. At FRAYT, we partner with shippers to ensure that, rather than incurring the costs of middle mile failures, their middle mile delivery programs help delight customers and create a competitive advantage. We ensure that your business navigates the middle mile in a way that promotes efficiency, reliability, and compliance.
Are you ready to optimize your middle mile? Ship with us.
