A recent publication by Agatz et al. provides an overview of key characteristics and challenges of last-mile operations (LMO):
- Final Stage of Supply Networks
- LMO processes occur at the last stage of supply chains, directly fulfilling individual agent demand.
- Operations and resources (people, equipment, inventory) are widely dispersed.
- Diverse geographical areas create specific challenges:
- Urban areas: Narrow roads, traffic unpredictability, parking restrictions.
- Rural areas: Low population density, long travel distances.
- Errors in execution become immediately apparent to the agent, leading to perceived service failures.
- Increasing consumer expectations and reduced local inventory drive the need for rapid response, including same-day and on-demand services.
- High Agent-Induced Variability
- LMO must accommodate the unique demands of geographically dispersed agents.
- Agents define key service requirements such as delivery location, time, and product assortment.
- As co-creators of the service, agents introduce operational uncertainty (e.g., failed deliveries, returns, and the use of personal resources).
- Effective management requires balancing efficiency and service quality while actively engaging with agents.
- Labor-Intensive Operations Enhanced by Technology
- Labor shortages create constraints, particularly for drivers and workers handling heavy items.
- Low scalability due to high labor dependency.
- Behavioral factors affecting workforce performance (drivers, pickers, crowdsourced labor, and agents) add complexity.
- Growing emphasis on automation and human-machine collaboration (e.g., soft automation for handling heavy goods).
- Operations in Public Spaces
- LMOs rely on public infrastructure and involve multiple stakeholders (local authorities, urban planners, and environmental agencies).
- Subject to external factors beyond the provider’s control (traffic, weather, public events).
- High visibility increases reputational risks (e.g., vehicle accidents, labor rights concerns).
- Legal and safety restrictions limit the adoption of new technologies (e.g., autonomous vehicles, drones).
- Requires an understanding of local public-space dynamics, especially in developing regions.
- Negative Externalities
- Energy-intensive transportation contributes to emissions (CO₂, NOx, particulate matter), noise pollution, congestion, and accidents.
- Urban logistics hubs (e.g., dark stores) create land-use conflicts and safety concerns.
- Strict agent requirements reduce flexibility in planning, limiting opportunities to optimize travel schedules.
- Individual deliveries often require excessive packaging, increasing waste.
- Economic and Operational Complexity
- High marginal costs due to labor-intensive processes.
- Demand variability and low operational flexibility lead to labor, fleet, and infrastructure inefficiencies.
- Dependence on multiple independent resources (subcontractors, crowdsourced labor, third-party platforms) raises challenges:
- Competition over data ownership among retailers and service providers.
- Aligning incentives and contracts across networked operations is crucial for efficiency.
Expanding LMO Research:
- Agent-Focused LMO: Emerging services, such as home-based vehicle repairs and elderly care, require more research. Decentralized manufacturing (e.g., on-demand 3D printing) also blends goods- and agent-focused LMO.
- B2B LMO: Manufacturers increasingly integrate services into their offerings, requiring rapid technician and spare-part deployment across dispersed industrial locations.
- Global Research Scope: Studies should explore LMO beyond North America, considering regulatory shifts (e.g., EU sustainability laws) and infrastructure challenges in emerging markets.
- Systems-Thinking Approach: Instead of optimizing isolated components, research should analyze interdependencies within the broader LMO ecosystem (e.g., unintended emissions from consumer pickup points).
- Empirical Research Needs: Operations Research models must complement real-world studies to capture LMO complexities and inform policy and practice.