Last-mile delivery: Optimizing the final step in the supply chain 

Last-mile delivery has become a decisive element of modern logistics, especially in a world where customers increasingly expect speed, convenience, and transparency. The challenge lies not only in reducing costs but in doing so without compromising service quality or the level of flexibility the market demands.

Demand is increasingly volatile. Therefore, it is necessary to design logistics models that constantly adapt, with operations capable of scaling quickly during peak periods and adjusting during times of lower volume. This responsiveness is often constrained by consistency issues, particularly the difficulty in maintaining the same performance levels across different regions, teams, or logistics partners.

Another sensitive aspect is delivery efficiency, which depends not just on speed but on the intelligent use of resources, reliable processes, and seamless integration between digital and physical systems. In addition to these factors, there are also external constraints: urban restrictions, increasingly stringent environmental requirements, and pressure to reconcile convenience with sustainability.

Ultimately, the true last-mile challenge isn’t about solving an isolated problem. It’s about orchestrating and reconciling multiple dimensions such as cost, flexibility, consistency, efficiency, and environmental impact, in a balanced and sustainable way.

Understanding the concept of last-mile delivery

Last-mile delivery refers to the final stage of the supply chain, when goods are transported from a warehouse, distribution center, or last-mile delivery hub to the end customer. As the closest link to the consumer, this stage is one of the most critical, given its direct impact on both customer experience and the company’s operating costs.

What is last-mile delivery?

Last-mile delivery is the process that covers the “last mile,” the final stage of a product’s journey to the customer. This stage is typically marked by small-scale operations, wide geographical dispersion, and high variability in delivery destinations and time windows. This fragmentation introduces a significant level of operational complexity.

This stage requires precision, speed, and flexibility, especially in contexts where services such as same-day or next-day delivery are offered.

Why last-mile delivery matters

Last-mile delivery is one of the most critical points in the entire logistics process. It’s during this stage that the customer experience is truly defined: a delay or failure can compromise brand perception, while fast and efficient delivery reinforces customer trust and loyalty.

Beyond its direct impact on customer satisfaction, last-mile delivery is also one of the most expensive components in logistics, accounting for more than 50% of total transportation costs. Its importance goes beyond operational efficiency, influencing a company’s competitiveness, its ability to meet expectations around speed and convenience, and even its sustainability performance, considering the environmental impact of urban deliveries.

Key technologies in last-mile delivery

Technological advances have fundamentally transformed how companies manage the final stage of delivery. The use of digital tools and optimized processes not only enhances operational efficiency but also significantly improves customer experience.

Last-mile delivery tracking and visibility

Real-time tracking has become a critical competitive advantage. Last-mile delivery tracking systems provide continuous monitoring of order flow, enabling end-to-end visibility across the process. For customers, this means accurate delivery estimates; for companies, it means greater control, early deviation detection, and improved On-Time Delivery (OTD) rates.

Route optimization

Route planning powered by optimization algorithms plays a key role in reducing mileage, fuel consumption, and cycle times. These tools account for variables such as traffic restrictions, weather conditions, time windows, and customer profiles, enabling dynamic and adaptive planning. Address validation also plays a crucial role by minimizing geolocation errors that hinder efficiency and generate additional costs.

Proof of Delivery (POD)

Proof of Delivery (POD) serves as formal confirmation that a delivery has been completed. The shift toward digital solutions (ePOD) has introduced greater accuracy and reliability, enabling the collection of electronic signatures, photo capture, or geolocation coordinates. These mechanisms increase document traceability, reduce customer disputes, and strengthen customer confidence, while simplifying internal administrative flows.

Infrastructure and models supporting last-mile delivery

The design of logistics infrastructure and the selection of appropriate operating models are critical for ensuring last-mile efficiency. Adopting differentiated solutions enables companies to meet rising consumer expectations while striking a balance between speed, convenience, and cost.

Cross-docking

The cross-docking model involves the direct transfer of goods from inbound to outbound transportation, without intermediate storage. This practice reduces warehouse dwell time, lowers stock costs, and significantly speeds up the distribution flow. It’s particularly effective in fast-moving supply chains or operations requiring fast deliveries.

Dark Stores: warehouses dedicated to e-commerce

Dark stores are dedicated facilities designed exclusively for fulfilling online orders, without face-to-face customer service. Typically located in high-density urban areas, they reduce order preparation time and shorten delivery distances. This model increases responsiveness in same-day delivery services and contributes to more efficient inventory management for e-commerce operations.

Parcel lockers and alternative delivery options

Parcel lockers are automated collection points that offer customers flexibility and convenience, allowing them to pick up orders at extended hours and strategic locations. For businesses, they reduce the rate of failed deliveries and the costs associated with multiple delivery attempts. Other alternative delivery options include collection points at partner establishments, which are increasingly used in proximity strategies.

Specialized and premium services

Beyond standard delivery solutions, some companies differentiate themselves with high-value-added services.  Among these, premium delivery with assembly or installation, commonly referred to as white glove delivery, stands out, particularly for large, fragile, or high-value items. This model ensures not only delivery but also the correct installation of the product at the customer’s home, adding convenience and reinforcing the perception of service quality.

Reverse logistics

Reverse logistics plays a strategic role in supply chain management, especially in e-commerce and omnichannel environments with high return rates. When well-structured, reverse logistics eliminates non-value-adding activities, reduces times, and optimizes resource use in product collection, sorting, and reintegration into the operational flow.

A well-structured approach significantly reduces operational losses, enhances value recovery, and contributes to sustainability goals. At the same time, it ensures customers experience a fast, simple, and transparent return process—key factors for building trust and encouraging repeat purchases.

Meeting customer expectations and reducing costs

Increasing consumer demands have placed last-mile delivery at the core of a company’s value proposition. The challenge lies in aligning these expectations with the need to maintain operations that are both sustainable and financially viable.

Balancing speed and cost to serve

Delivery speed has become a key driver of the customer experience. However, accelerating processes increases costs in transportation, resources, and technology. The solution lies in defining service levels that match the value of each customer or order, using segmentation and profitability analysis to decide when it makes sense to offer premium deliveries and when a more economical solution is sufficient.

Omnichannel fulfillment and flexibility

A customer-centric approach requires seamless integration across all sales channels. This model supports more agile logistics networks that are closer to the customer and capable of responding to demand fluctuations in real time.

Strategies such as in-store pickup (click & collect), deliveries from dedicated urban warehouses, or leveraging specialized logistics partners enhance operational flexibility and help reduce transportation costs.

In addition to improving customer convenience, omnichannel fulfillment optimizes inventory management, balances flows across channels, and significantly reduces the risk of stockouts, boosting both operational efficiency and customer loyalty.

Impact of last-mile on different sectors

The impact of last-mile delivery varies across industries, but in every case, it plays a critical role in differentiation:

• Online retail: For online retailers, last-mile delivery is often the main competitive driver, as customers value speed, tracking visibility, and flexibility.
• Food industry: Food logistics requires strict cold chain control, fast delivery times, and high reliability.
• Healthcare sector: Medicines and medical equipment require time-sensitive deliveries, continuous temperature monitoring, and full traceability to ensure safety and regulatory compliance.
• Fashion industry: With high return rates, reverse logistics becomes a fundamental component of customer experience.
• Consumer electronics and technology: Due to the high value of products, this sector requires enhanced security, strict traceability, and, in many cases, premium services such as in-home installation or configuration.

Adapting last-mile strategies to the specific needs of each industry is crucial for achieving operational efficiency, sustainability, and delivering an exceptional customer experience.

Last-mile as a competitive differentiator 

Last-mile deliveries have become a decisive step in optimizing the supply chain and are now a key competitive differentiator. Efficiency in this segment translates not only into fast and convenient deliveries but also into lower operating costs, greater sustainability, and a superior customer experience.

Adopting solutions such as real-time tracking, route optimization, flexible infrastructure, and value-added services allows organizations to strike the right balance between speed, quality, and profitability. At the same time, developing omnichannel logistics models and implementing structured reverse logistics strengthens a company’s ability to respond to an increasingly demanding market.

In a landscape where consumers value convenience and transparency, and where logistics costs account for a significant portion of total expenses, investing in logistics excellence and last-mile optimization is more than an operational necessity; it is a strategic lever for competitiveness and building lasting customer relationships.

Still have questions about last-mile?

Why does the last-mile represent such a high part of logistics costs?

Last-mile delivery costs are driven by the geographic dispersion of delivery points, the time required for each trip, and the low-volume consolidation. Each individual delivery requires specific resources—time, fuel, labor—and comes with a high likelihood of failure (due to incorrect addresses, recipient absences, or access issues). In addition, the growing demand for fast deliveries increases pressure on operations and, consequently, on costs.

It’s estimated that the last mile can account for up to 50% of total logistics costs, making it the most expensive and complex stage to optimize within the entire supply chain.

What performance indicators should be monitored in last-mile management?

Monitoring performance metrics is essential for ensuring operational efficiency, service quality, and sustainability. These indicators help identify deviations, measure costs, and assess customer perception, serving as the foundation for continuous improvement:

• On-Time Delivery (OTD): Percentage of deliveries made within the agreed timeframe.
• Productivity per vehicle/driver: Average number of deliveries completed per shift or per kilometer driven.
• Cost per delivery: Average cost per individual delivery, including fuel, labor, maintenance, and infrastructure.
• Total last-mile cost as a percentage of logistics costs: Measures the weight of last-mile in the overall logistics cost structure.
• Customer service level (SLA Compliance): Measures compliance with contracted delivery times and conditions.
• Customer satisfaction (NPS or service surveys): Evaluates perceived quality and confidence in the delivery experience.
• CO₂ emissions per delivery: An increasingly relevant indicator for assessing the environmental impact of last-mile operations.

What is the importance of last-mile for retail?

In retail logistics, last-mile is decisive in linking the brand promise to real customer experience. Fast, flexible, and reliable delivery can be the determining factor between customer loyalty and loss. In addition, the use of agile retail solutions, such as same-day deliveries, in-store pickups, or convenience points, enables a response to growing customer demand without compromising profitability.