Review of Related Literature

Last Mile Delivery Logistics

Last mile delivery is the final stage of delivery from a transportation hub to the customer's
destination (Simchi-Levi et al., 2007). It is a vital part of supply chains and e-commerce, but it
also poses many challenges, such as high costs.Delivery experience often determines repeat
purchase and loyalty, with research showing satisfaction with last mile delivery performance
having a significant positive effect on overall customer satisfaction (Punakivi & Saranen, 2001).
Therefore, last mile delivery is a key factor for the success of e-retailers and other businesses
that rely on delivery services.

Last mile delivery has been studied in various contexts, such as urban areas (Ducret, 2014), and
omni-channel retail (Hübner et al., 2016). The last-mile segment also accounts for a
disproportionate amount of total supply chain costs, constituting up to 50% of the total delivery
expenditure because of unique economic and operational constraints (Maniatis, 2022). What
makes efficiently executing last mile delivery a modern challenge includes factors like urban
density creating traffic congestion, infrastructure limitations including road networks, zoning
policies restricting options, lack of logistics facilities, and technological constraints like restricted
cargo vehicle capacity and battery range issues (El Moussaoui et al., 2022). These challenges
add complexity and cost to the delivery process and affect the customer experience and
satisfaction.

Last mile delivery is not only a challenge, but also an opportunity for e-retailers and logistics
providers to create value and gain competitive advantage. Last mile delivery can enhance the
customer experience and satisfaction by offering fast, reliable, convenient, and personalized
delivery services (Vakulenko et al., 2019). Last mile delivery can also improve the environmental
and social impacts of delivery by reducing emissions, noise, and congestion, and by creating
jobs and social inclusion (Maniatis, 2022). To achieve these benefits, last mile delivery requires
innovative strategies, tactics, and technologies that can address the challenges and meet the
customer needs.

Last Mile Delivery Logistics in Rural and Remote Areas

Most of the existing research on delivering goods to the final destination or the last mile
focuses on urban settings, while rural and remote areas are often overlooked (Punakivi &
Saranen, 2001). However, people living in these areas face unique difficulties and limitations in
receiving goods that they order online or from different channels. Some of the problems
include poor transport infrastructure, long distances between customers, low population
density that increases the cost per unit, and natural obstacles like forests or mountains that
make delivery more complex (Hübner et al., 2016).

For people in rural areas, the quality and speed of delivery can also affect their access and
equality in terms of e-commerce and modern distribution networks. Those who live in isolated
locations may have fewer options of carriers and logistics providers that are willing to reach
them. Lack of technological capability such as weak internet connection or low digital literacy
among older groups may also pose more challenges to online shopping (Vakulenko et al., 2019).

Nevertheless, enhancing the delivery of goods to rural areas has both economic and ethical
benefits, such as ensuring fair access and social responsibility. Researchers suggest some ways
to collaborate, such as public entities investing together in improving transport infrastructure,
private logistics players sharing resources or joining forces under one rural delivery network,
and e-retailers covering the losses of unprofitable routes to stimulate rural spending (Punakivi
& Saranen, 2001). Technological innovations in managing inventory, planning routes, and
delivering automatically also offer potential solutions to overcome distance barriers. In the end,
addressing the last mile issue for people living far away promotes economic and social
inclusion.

The Link Between Customer and Driver Satisfaction

Building loyal customers is critical for service-based companies, with research showing
customer satisfaction drives key outcomes like repurchase intention, positive word-of-mouth,
and loyalty (Anderson & Mittal, 2000; Hellier, Geursen, Carr, & Rickard, 2003). Customer
satisfaction is a key performance indicator for last mile delivery (Punel & Stathopoulos, 2017). It
is influenced by timeliness, condition upon delivery, ease of process, and communication
(Bakogianni, M. A. et. al., 2021). Meeting customer expectations for convenience, speed,
reliability, and transparency increases satisfaction (Joerss et al., 2016). Dissatisfiers include
damaged goods, missed deliveries, lack of delivery options, and discourteous staff (Baxter et al.,
2017). As customer expectations rise across industries, providing a superior customer
experience has become a key competitive advantage (Reichheld & Schefter, 2000). Yet many
companies overlook a critical driver of customer satisfaction – the experience and satisfaction
of their own frontline employees.

In the parcel delivery industry in particular, drivers are one of the main contact points impacting
customer perceptions and attitudes. Delivery riders are frontline service staff representing the
brand. Their job satisfaction and engagement affect service quality and customer satisfaction
(Harter et al., 2002). Key determinants of rider performance and wellbeing include
compensation, training, technology support, and relationship with management (Morgeson &
Humphrey, 2006). Safety and health issues among riders also impact performance (Fang et al.,
2015). Efforts to improve rider experience reap benefits for customers too (Glasbergen, 2019).

A 2021 survey of delivery executives found nearly 90% agreeing there is a direct connection
between driver satisfaction and meeting customer expectations (RouteSmart Technologies,
2022). With retaining customers long-term hinging on consistently meeting their expectations
at every touchpoint, drivers become the face of the brand whose experience getting the job
done right matters.

At the same time, high driver turnover due to shortages and low job satisfaction carries its own
risks. As leaders in last-mile delivery struggle with ongoing recruitment and retention issues,
losing existing drivers means losing built-up organizational knowledge and customer
relationships (Hill, 2022). Experienced drivers familiar with routes and delivery locations are
more productive, safe, and able to provide quality service consistently. When it comes to
satisfying customers, veteran drivers who know their preferences and habits offer advantages
new hires cannot immediately replace.

In essence, taking care of drivers equates to better serving customers in the parcel delivery
space. To build loyalty on both sides of the employee-customer equation, companies must
focus on driver satisfaction just as much as the end-user experience. Measuring and
benchmarking metrics like driver retention rates, satisfaction survey results, and customer
complaints connected to newer drivers allows organizations to quantify this connection. From
compensation policies to technology investments to training priorities, viewing programs
through the lens of both driver experience and customer impact is key. Because loyal
customers start with happy drivers willing and empowered to deliver 5-star service every time.

Service Quality Models for Last-Mile Delivery

Service quality is a crucial factor for the success of last-mile delivery, which refers to the final
stage of delivering goods to customers, especially in rural and remote areas. One of the most
widely used models for measuring and improving service quality is the SERVQUAL model,
developed by Parasuraman et al. (1985). The SERVQUAL model evaluates service quality based
on five dimensions: tangibles (physical facilities and equipment), reliability (ability to perform
the service dependably and accurately), responsiveness (willingness to help customers and
provide prompt service), assurance (knowledge and courtesy of employees and their ability to
inspire trust and confidence), and empathy (caring and individualized attention to customers).
Among these dimensions, reliability and responsiveness are considered the most important for
customer satisfaction (Parasuraman et al., 1991). However, some researchers have suggested
that convenience is another important dimension of service quality, especially for online and e-
commerce services (Seiders et al., 2007). Convenience is defined as the degree to which a
service is easy to use, accessible, and flexible for customers (Collier & Bienstock, 2006).

The SERVQUAL model can be applied to various contexts, including logistics and last-mile
delivery services. Zhu Yi (2023) suggested that the SERVQUAL model can help define and
evaluate the quality of last-mile delivery services, which face many challenges such as long
distances, low population density, poor infrastructure, and geographic barriers in rural and
remote areas. The model can help identify the gaps between customer expectations and
perceptions of service quality, which can affect customer loyalty and retention. By closing these
gaps, logistics companies can enhance customer satisfaction and improve their competitive
advantage in the market. The SERVQUAL model provides a comprehensive, structured, and
adaptable framework for assessing and improving service quality in last-mile delivery.

Delivery Rider Dynamics and Strategies Affecting the Overall Last Mile Delivery Service
Performance

Delivery riders are critical for excellent last mile service, yet companies often overlook strategic
factors affecting rider motivation, communication, problem-solving and other key areas that
drives performance (Liman et al., 2022). Examining recent scholarship on optimizing rider
experience provides insights applicable to Philippine contexts like J&T Express, Ninjavan and
Flash.

a. Motivation Through Compensation and Wellbeing

Research shows perceptions of fair compensation and financial security are top predictors of
rider motivation levels (Abro, A. A., et. al., 2018). Platforms integrating performance-based
bonuses on top of living wages and providing safety nets encourages retention and
performance amidst a labor-intensive job (Ofreneo & Samonte, 2021). Rider esteem needs
likewise benefit from cultural branding and community building initiatives (Abro, A. A., et. al.,
2018).

b. Clear Communication Channels

Rider communication heavily depends on the platform interface, from order instructions to
routing assistance to coordinating support issues. Studies show conversational dialog via
messaging enables inquiry efficiency while avoiding confusion from poor user interface designs
(Buncaras, Z., et. al., 2022). Digitized proof of delivery also strengthens confirmation clarity.
c. Decision Support Resources for Problem Solving

With over 74% of riders lacking formal training, decision support tools facilitates learning-by-
doing for navigating issues from delays to cancellations to disputes (Ofreneo & Samonte, 2021).
Research indicates cultivating online knowledge bases, rider-to-rider forums for advice sharing
and on-demand expert assistance develops problem-solving capabilities over time through
institutional scaffolding (Liman et al., 2022).

d. Performance Feedback Loops

Catered data analytics on individual rider metrics enables growth opportunities through insight.
Survey findings reveal 71% interest in receiving detailed performance statistics to catalyze
improvement (Ofreneo & Samonte, 2021). Building customized dashboards tracking key
indicators tied to incentives provides a feedback channel motivating progress.

e. Ongoing Training for Income Mobility

Even with road experience, further skills development enables career growth aligned to
financial goals. Studies propose subsidized training programs focused on language proficiency,
digital literacy, vehicle maintenance and coordination roles facilitates upward mobility
pathways within logistics ecosystems (Buncaras, Z., et. al., 2022, 2022). Opportunity incentives
boosts capability advancement.

Operational Factor Affecting Last Mile Delivery

Customer satisfaction and loyalty depend on efficient last mile delivery, especially in rural and
remote areas where infrastructure and geographic challenges exist (Punakivi & Saranen, 2001;
Hübner et al., 2016). However, there is a lack of studies on rural contexts, and recent calls
emphasize the need for more research on last mile delivery problems faced by populations in
isolated areas (Vakulenko et al., 2019). This literature review examines the key operational
factors and constraints that affect the last mile and influence rural customer and rider
satisfaction.

a Infrastructure Limitations

Last mile delivery in rural areas is hindered by insufficient transport infrastructure such as roads
and distribution hubs. Morganti et al. (2014) reported that limited road networks resulted in
longer travel times and more complex route planning. Remote cross-docking stations or micro-
fulfillment centers can address infrastructure gaps (Boyabatlı et al., 2021). Investing in rural
transport infrastructure can bring economic and social benefits in terms of access and delivery
efficiency (Pamucar et al., 2021).

b Technological Constraints

Rural areas face multiple technology barriers, such as poor internet connectivity that limits e-
commerce adoption and battery range limitations on electric vehicles (Punakivi & Saranen,
2001). Bucsky (2020) suggested IT platforms that integrate order tracking and dynamic routing
to improve transparency. Emerging solutions such as drone delivery offer potential to reduce
cost and time issues in transporting to remote areas (Ha et al., 2018).

c. Adoption and Demand Issues

Geographic barriers and aging populations that are less inclined to online retail and e-
commerce restrict rural last mile delivery growth (Hübner et al., 2016). Vakulenko et al. (2019)
found that positive delivery experiences increased customer satisfaction and reduced adoption
challenges. Public co-investments in rural transport infrastructure can stimulate demand
(Pamucar et al., 2021).

d. Route Optimization Difficulties

Low drop density spread over large distances creates difficulties in optimizing last mile routing
and vehicle loads (Morganti et al., 2014). E-retailers face tradeoffs between cost, sustainability
and service levels (Hübner et al., 2016). Emerging crowdshipping concepts use civic
participation to transport parcels along frequently travelled rural routes (Qiu et al., 2021).

e. Driver Shortages and Turnover

Attracting and retaining last mile drivers who are willing to serve remote, unprofitable routes is
an issue that limits customer choice and reliability (Punakivi & Saranen, 2001). Van Duin et al.
(2020) proposed contractual incentives and exploring self-employed driver models as rural
recruitment solutions. Investment in advanced logistics facilities also motivated driver
participation in transporting to outlying communities (Pamucar et al., 2021).

Rural last mile delivery faces various challenges - from infrastructure gaps to technology
barriers to driver shortages. Yet research indicates emerging solutions such as use of routing
optimization (Lin et al., 2014) and technological solutions like real-time tracking (Pang et al.,
2021) to help overcome operational challenges. Adoption of electric vehicles can reduce
environmental impact (Yildiz et al., 2021). Flexible delivery options and visibility give customers
convenience and control (Xiao et al., 2021).
Best Practices to Improve Last Mile Delivery

Achieving excellent last mile delivery has become imperative in the era of ecommerce and
online retail, yet the Philippine context poses unique obstacles related to geography,
infrastructure gaps, socioeconomic barriers and vulnerability to weather risks (Lu, 2022;
Regilme, 2021). Many researchers are now conducted study to elevate customer experience
while empowering local riders in order to offer insights into boosting provincial delivery
effectiveness amidst the challenges in last mile delivery.

a. Optimizing Delivery Routes and Loads

With over 7,000 islands and limited road networks making inter-island transport difficult, route
optimization emerges as a priority for Philippine last mile operations (Lu, 2022). platforms
incorporating AI and machine learning facilitate batching and sequencing deliveries based on
proximity, priority classification and vehicle capacity constraints (Crisostomo, 2022). These
algorithms can reduce miles driven while improving vehicle utilization, sustainability and
income potential for motorcycle riders servicing more remote villages (Regilme, 2021).

b. Alternative Payment and Distribution Models

As a predominantly cash-based society with low credit card penetration, ecommerce adoption
stagnates among unbanked and uninsured rural citizens. Enabling alternative payment options
like cash-on-delivery or centralized “pasabuy” services encourages participation from these
demographics (Demeterio, 2020). Tie-ups with local shops, churches and neighborhood
associations as makeshift collection points likewise smooths last mile handoffs given the lack of
formal addresses (Crisostomo, 2022).

c. Establishing Local Hubs and Way Stations

The severe absence of logistics facilities across far-flung archipelagic communities obstructs
inventory staging, transport optimization and delivery. Recent initiatives leverage schools,
churches and home garages as temporary storage depots and consolidation waypoints to
alleviate infrastructure deficiencies (Lu, 2022). These decentralized micro-hubs staffed by locals
also create economic opportunities and anchors for route planning.

d. Boosting Visibility and Communication

Between typhoons, flooding and other disasters, Philippine supply chains contend with external
shocks that stresses last mile re-routing and customer expectation management (Regilme,
2021). Platforms providing digitized proof of delivery and real-time tracking mitigate
uncertainty by enhancing visibility, while automated notifications and responsive call support
curbs frustration over delays (Crisostomo, 2022). Multilingual interfaces also aid dialogue for
less digitally literate rural groups.

e. Prioritizing Customer and Rider Experience

At its core, last mile optimization relies on customers and frontline riders. Supportive policies
boosting experience for both groups enhances service and satisfaction. Rider programs
expanding healthcare, protective gear, skills training and community engagement cultivates
loyalty and effectiveness over the long-term (Crisostomo, 2022). Consumer promotions,
personalized interactions and localized content likewise strengthens ties with provincial buyers.

f. The Human Factor in Technology Adoption

Last mile innovations rely on user acceptance and adoption behavior to scale impact. Research
found social influences, performance expectancy, nasal experience and appropriate training
programs all positively affected e-commerce platform uptake in the Philippine countryside
(Tandoc Jr & Paño, 2021). This highlights the need for grassroots community engagement
facilitating technology diffusion.

g. Public-Private Sector Collaboration

Government infrastructure investments coupled with policy reforms and incentives that
encourage private logistics enterprises to cooperate under a consolidated provincial delivery
network promises optimization (Regilme, 2021). Improvements in inter-island transport links
alongside bonded logistics zones and uniform regulation smooths last mile execution to benefit
rural citizens.

h. Enabling Sharing Economy Logistics

Crowdsourced models leveraging excess capacity mobilizes ad-hoc groups of riders to facilitate
deliveries to zones lacking route density or facing driver shortages (Limba et al., 2021). By
granting local motorcycle and mini-van drivers access to connect directly with retailers via apps,
platforms unlock underutilized transport supply while generating income in unprofitable areas
often overlooked.

i. Future Outlook with Emerging Technologies

Ongoing experiments in automated delivery devices, from small ground robots to drones, can
offset geographic hurdles and high labor costs over the long run (Chow et al., 2021). Route
planning algorithms also continues to advance via machine learning and simulation modeling
for ever greater optimization (Crisostomo, 2022). Broadband infrastructure buildout initiatives
likewise expands rural visibility and digitization.
Many researches also suggest some solution to provide grounds for optimism balancing
localization needs with global supply chain integration to uplift rural regions. These involve
flexible delivery models, dynamic routing, and order batching (Joerss et al., 2016). Using
algorithms optimizes routes and load planning (Wang et al., 2016). Crowdsourcing and
automated pickup points reduce failed deliveries (Punel & Stathopoulos, 2017). Real-time
tracking provides visibility (Bakogianni, M. A. et. al., 2021). Digital proof of delivery improves
security (Qiu et al., 2015). Customer-focused policies like responsive complaint handling and
flexible delivery timing enhance satisfaction (Baxter et al., 2017). Investing in rider training and
engagement fosters loyalty and tenure (Wood et al., 2021).

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