How to Develop a Last Mile Distribution Center? – 6 Effective Tips

keyKey Takeaways:

  • If you have decided to develop a last-mile distribution center, it requires careful planning, analysis of the local market, and consideration of logistics & transportation infrastructure.
  • Efficient inventory management and order fulfillment processes are essential to meeting customer demands and ensuring timely delivery.
  • Location is crucial when developing a distribution center, and proximity to major transportation routes and urban centers can help reduce delivery times and costs.

The international market of last mile delivery is expected to rise from $108.1 billion in 2020 to around $200 billion by 2027. The significant growth factor of this is the increasing number of online shoppers. However, the last mile delivery process is the most challenging part of the supply chain. 

The growing demand for same-day delivery has increased the demand for last mile distribution centers and the issues that come with that. So, businesses seeking to get a competitive advantage are focusing on creating these centers strategically. Although businesses running last mile delivery are able to find a center near their customers, they need planning to surpass challenges.

If you’re wondering how to create a last mile distribution center to fulfill orders in a proper way, this blog will guide you.

What is a Last Mile Distribution Center?

Last mile distribution centers are facilities used to directly deliver packages to a customer’s doorstep. They are the closest hubs from a customer’s address, set up to ensure customer satisfaction. The process is known as last mile delivery that can help reduce a lot of inventory carrying cost in the entire supply chain. 

These facilities store final products before they’re packed and collected to fulfill customer orders. They can also be referred to as fulfillment centers or specialized last mile warehouses. Last mile distribution centers are essential parts of the supply chain as they help deliver orders with accuracy and at low costs. Many retailers create and manage their own distribution centers, whereas others tie-up with third-party logistics (3PL) providers. 

6 Tips to Create Last Mile Distribution Center 

When thinking about ways to reduce last mile delivery costs and improve efficiency, you need to start from site selection. If you wish to construct new distribution centers, you must know specific design requirements. Here are the tips to develop last mile distribution centers for a faster and efficient package delivery:

1. Zoning code interpretations

Last mile centers are placed between an optimum delivery range of 7 to 9 miles. Many companies are facing difficulties with finding warehouse spaces near customer centric areas and traffic-friendly routes. Most distribution centers require 3x more logistics space. 

Hence, many e-commerce giants are purchasing properties near urban areas and remote suburban industrial regions. With dim chances of getting suitable sites, business owners are taking numerous building sites, types, and sizes into consideration.

When you are deciding on visiting with local officials, ensure that due diligence is carried out before that. You must have your own interpretation of zoning codes to get the right deal. Although distribution or industrial zones are mostly beneficial, commercial zones can be viable too.

You can also look at the locations where last mile facilities like FedEx or USPS are located at present, and how they are zoned. To mitigate parking space design issues, tag areas for delivery vehicles as fleet parking, vehicle storage, or loading area.

2. Location-market association

Location-market association

Even if you find an available site, it may not be suitable for a specific market. For instance, courier service delivery is different from food delivery. Retailers are keeping branch markets such as grocery, medical supplies, and other products/services. The more they specialize, the more they need to tailor site selection to:

  • Specific demographics
  • Customer incomes 
  • Accessibility
  • Delivery turn-around time 
  • Delivery vehicles
  • Delivery methods

3. Seeking advice from experts and officials 

E-commerce is experiencing attraction from more retailers due to a snowballing growth in current e-commerce sales. Hence, the newbies are meant to face the pressure of making a faster delivery from their last mile facilities. 

A team of expert consultants can help make successful deliveries as they can evaluate ideal sites before commitment. When considering material handling in these centers, many packages may not fit properly into a zoning district or an occupancy use category. 

Communicating with local officials is essential to give a clear idea about your operations and concepts. There is no better way of handling a project than seeking advice/approval from local government authorities.

4. Constraints integration and operational layout

Constraints integration and operational layout - last mile distribution center

It is vital to know the development constraints that exist on the site you have selected. A last mile project is always under a lot of schedule pressure. Confirming how you can accommodate the site’s operational needs will reduce costs and time taken.

Choose the site layout as per the anticipated constraints like:

  • Drainage
  • Access
  • Floodplains
  • Wetlands 
  • Complications
  • Grading

A distribution facility catering to last mile deliveries must have a proper movement of vehicles back and forth the site. So, a planned vehicle flow mapped with frequencies of moving in and out of the hub will help avoid traffic conflicts.

5. Material handling 

Retailers mostly know about store layout but they may overlook stocking analytics for systematic order grouping. There must be coordination between the internal material handling system and vehicle access points. So, you must understand your material handling workflow to design the layout of these frameworks.

A variety of iterations and evaluations are needed for the design layout to meet the standard metrics of the center. Moreover, areas including work stations, restrooms, lockers, and cafeterias must be created per the inventory or material handling space as required.

6. Automated machinery

Automated machinery for last mile distribution center

Businesses moving from online delivery services to their own delivery operations may face some difficulties. A traditional model, wherein the customer used to come for their purchase, must be shifted to an advanced one. As you need to deliver products from your hub, using automatic machinery can boost efficiency and reduce hassle. 

Automation helps save operational costs and also improve material handling within the center. It may be costly to have an automated material handling system (AHMS) initially, but the return will cover it in future. The key purpose of such systems is to reduce human errors and save money through damage prevention. 

Level up Your Last Mile Delivery Process with Upper Route Planner

Starting a new facility or running an existing one needs a tonne of operations, people, equipment and delivery management processes. You can have a team to handle all the in-house tasks or automate them with advanced technological solutions. But, if you are still using the age-old routing methods, you may have to bear additional supply chain costs.

Upper route planner makes route planning and related tasks smooth, so you can focus only on driving profits. Here are a few reasons why you must give it a try:

1. Optimizes routes in seconds

With Upper, you can let go of manual work and find cost-effective routes in a few minutes. In case a driver is unavailable, you can instantly assign the same route to another available driver. You can also organize route plans in advance and relax while your drivers are successfully delivering orders.

2. Plans multiple routes 

Do you have packages piled up for different routes and have no way to fulfill them? Worry no more. You can now schedule multiple delivery routes effortlessly. Upper helps you create effective routes that can be distributed among your delivery drivers. 

3. Fulfills additional orders

Whether you are running a meal delivery business or have a center to deliver medical supplies, Upper helps you deliver them faster. With optimized routes and faster deliveries, your drivers will have extra time to deliver more parcels. You can accommodate more stops with every route and fulfill more orders.

4. Boosts profits

If you are wasting a lot of fuel transporting products to crowded urban areas, you are reducing the chances of growth. Upper lets you assign optimized and cost-effective routes. As a result, you can ensure customer satisfaction and boost revenue at the same time. 

5. Proof of delivery 

Any last mile delivery company wants their customers to get timely deliveries. With the feature to collect delivery proof; drivers can take e-signatures, click photos, and make notes. It boosts accountability and customer experience as you remain informed about the task completion. 

Explore more about using Upper and make your last mile delivery operations automatic by signing up for a 7 days free trial today!

Make Superfast Last Mile Deliveries with Upper

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These are small fulfillment centers that can cater to online orders along with local store pickups. Many retailers, like those with grocery stores, are using such facilities as only a few people have time to visit the shop. Being near to their consumers aids them in delivering orders from stores. They also use automated systems and robots to manage micro fulfillment centers with ease.

The delivery of product from the closest distribution facility to the end user is known as last mile logistics. E-commerce giants like Amazon have already grown in the last mile logistics, small businesses are still taking a competitive advantage.

One of the problems is navigating through the traffic while making product deliveries to urban customers. Other challenges in last mile logistics include:

  • Driver shortage
  • Capacity of delivery vehicles in case of larger packages
  • Low availability of technicians for assembly or uninstallation
  • Lack of route planning and optimization
  • Inefficient business planning


With the growing demand for online orders, businesses can make the most out of this time and shoot up their revenue. So, if you are wondering whether to start your own facility, the above tips may help you start your journey. You may still need other tools and strategies to set it up. While you are stuck at making last minute deliveries, take the benefit of Upper Route Planner.

Features like one-click dispatch, route scheduling, proof of delivery, API integration, and more help take away the extra burden. Start using Upper Route Planner and enhance the customer experience in your business. Try the 7 days free trial today.

Author Bio
Rakesh Patel
Rakesh Patel

Rakesh Patel, author of two defining books on reverse geotagging, is a trusted authority in routing and logistics. His innovative solutions at Upper Route Planner have simplified logistics for businesses across the board. A thought leader in the field, Rakesh's insights are shaping the future of modern-day logistics, making him your go-to expert for all things route optimization. Read more.