Inflation’s Effect on the Supply Chain: How to Reduce Last Mile Costs

We’ve all experienced the negative impact of COVID-19 on the supply chain. Now, the supply chain faces a new enemy: inflation. According to a recent McKinsey survey, senior business leaders now consider inflation an even bigger threat to growth than the COVID-19 pandemic. Last mile logistics are both a critical part of your supply chain and a notable cost center.

Let’s explore how a strategic approach to last mile delivery through outsourcing and partnering with an experienced national final mile provider can help you get your goods where they need to be on time and safely, and while also containing your delivery costs. 

The Supply Chain, Logistics, and Inflation

The annual inflation rate reached 8% this year, a sharp increase from the 2% rate in 2020, and the highest it’s been since the 1980s. 

Inflation affects every aspect of the supply chain. It’s becoming more expensive for businesses to operate at every level of their supply chain, from purchasing product components to paying drivers to keeping up with the gas and energy costs required to store and transport their goods.

Combatting rising logistics costs requires a strategy reset. Businesses can’t simply raise prices and expect buyers not to balk, buy at the same levels, or find an alternative. And if you have a contract with a buyer, your prices may already be locked in. Companies may first look to value-engineer for lower cost of goods or economize through automation or headcount reduction. But there is also another area where you can seamlessly and quickly reign in expenses: last mile delivery. 

Going From In-house to Outsourced for Final Mile Delivery 

Peloton, which has been rocked by an assortment of business challenges, recently made headlines with its decision to begin outsourcing all of its final mile deliveries. The company will also “close all 16 warehouses that have supported in-house delivery.” By taking these steps, Peloton is expected to cut delivery costs by a whopping 50%.

By taking a razor-sharp look at their supply chain and delivery model, Peloton is revamping how it operates and saving money big-time. Whether your company is traditional goods or a market disruptor, you’re being affected by inflation, and your final mile is one of the first places you can look to better manage costs. 

Outsourcing to an experienced last mile provider can help you contain costs, even in inflationary times. There  are three key areas where outsourcing can relieve the rising costs of in-house delivery: 

  1. The rising costs of labor, vehicles, and fuel. 

In-house delivery is expensive to operate. As inflation continues to cause rising labor costs, more and more companies — like Peloton — are discovering that employing drivers in-house is an untenable practice. Aside from the labor costs, there are the costs of vehicles, maintenance, and gas. Complicating the problem further: supply chain delays can cause companies to lose even more time and money while they wait weeks for their purchased vehicles to be delivered.

Partnering with a final mile provider gives you access to a fleet of reliable drivers and vehicles at a fraction of the cost of maintaining one in-house. USPack works with rigorously vetted, experienced drivers to provide your customers with high-quality, consistent deliveries — giving them real-time updates on delivery status. We also offer add-on options, such as white glove service, aimed to help you increase customer satisfaction.

  1. The increased administrative strain of handling logistics as the supply chain suffers. 

Reduce administrative strain by allowing a final mile partner to schedule your deliveries, organize routes, and recruit and onboard qualified drivers. Final mile companies handle these logistical tasks for you, so your administrative in-house team can focus on your products and growth. A tech-forward last mile provider, like USPack, even employs strategists to ensure maximum efficiency for your deliveries. 

USPack streamlines logistics with our team of experienced delivery professionals, available to take calls 24/7. Our Adaptive Delivery Driven Intelligence allows our partners even greater speed and organization. Simply input orders directly into the platform, then let us source the drivers and plan the routes. The platform also displays key metrics, real-time status updates, and driver tracking, so you can stay fully informed.

Tip: To further save time and money on logistics, choose a final mile partner with a national reach. Keeping up communications with individual local partners can cost you time. With our national network, USPack enables you to take care of all your markets at once, with the stroke of a single email.

  1. Scalability and flexibility are difficult to achieve in-house.

National final mile providers excel at economies of scale. It is much quicker and cheaper to add a new delivery order with your final mile partner than to source and train an extra fleet of drivers. On the reverse end, scaling down on deliveries with a final mile partner won’t burden you with unneeded drivers and maintaining unneeded vehicles.

USPack scales operations and modifies routes according to our clients’ evolving delivery needs. When it comes to changes, simply input your new delivery orders into our ADDI platform or speak with one of our delivery professionals to determine the best solution for your business. 

The USPack Solution

Looking to curb the costs of inflation? Look to outsource your final mile deliveries. As a well-established national final mile provider, USPack can help you cut final mile delivery costs while ensuring quality, timeliness, and safety. Contact us to learn more.