Resources › FAQ • Jan 19th 2022

How To Optimize Last-Mile Delivery

Wise Systems

Wise Systems

What Is Last-Mile Delivery?

Last-mile delivery refers to the final mile between a distribution hub and the delivery destination. This short distance has become one of the largest contributors to delivery overhead. Many of the top retailers and businesses in the country look at last-mile logistics as one of the key areas they need to optimize to decrease overall costs and increase customer satisfaction. In fact, more than half of shipping costs are often attributed to this last mile of delivery. Investments in technology and optimization strategies can simplify and reduce the costs of this final leg of the delivery process.

What Causes Issues With Last-Mile Delivery?

Delivery Costs

It has been estimated that more than half of the total transportation cost for a shipment is spent on the last mile. When shipping a large number of goods from one port to another, or one hub to another, the infrastructure is already there. However, when shipments need to be broken down into small, individualized packages and disseminated to various customers and clients, it becomes much more complicated.

Delivery vehicles have little to worry about when driving on the highway; this network is designed for efficiency and has existed for decades. Leaving the highway is when problems arise. Navigation, local traffic, multiple stops, weather, gate codes, and similar issues can all lead to an increase in mileage and time on the road. The only way to solve this is with expert routing, which requires immense amounts of data, mobile and cloud infrastructure, and analysis via machine learning.

Time Constraints

Another challenge in last-mile delivery operations is late deliveries. A business’s reputation with its customers is influenced by its ability to meet delivery timing commitments. Customers have become accustomed to rapid delivery for just about anything they may need or want. Because of this, businesses have adopted numerous process and technology improvements — both within their warehouses and in their delivery operations — to meet these expectations, including JIT (just in time) or drop-shipping models, as well as waveless operations and numerous other innovations. In this new environment, customers expect clear and accurate ETAs. Everything up to the last mile is relatively easy to predict, but the processes and technology that many teams use for shipping are decades old now and don’t meet the demands of last-mile consumers. In order to improve on-time performance for last-mile deliveries and meet customer time constraints, modern cloud-based technology is required.

Communication

Client communication in last-mile delivery is paramount. Regardless of the purchase price, when customers order from a retailer or a local pizza chain, they now expect automated updates or a live feed of where their delivery is geographically. While that has become the norm for people in their personal lives, it is only starting to be adopted by many business-to-business and business-to-consumer operations.

Knowing exactly where a shipment is and/or when it will arrive is the emerging standard for customer communication and improves customer service significantly for last-mile delivery.

What Businesses Are Most Affected By Last-Mile Delivery Issues?

Food & Beverage

The food & beverage industry relies on last-mile delivery optimization to maximize efficiency and manage costs. Many distributors in this industry distinguish themselves from their competitors with customer service. Ensuring that clients receive goods on time and have clear communication along the way is vital to the food & beverage industry. For a food & beverage fleet to be successful it must:

  • Use highly optimized delivery routes that maximize fleet utilization
  • Consistently meet customer’s estimated delivery time windows
  • Minimize refusals
  • Provide delivery visibility and clear communication to customers
  • Decrease fleet miles
  • Accommodate both planned and on-demand orders

Learn more on how this can be achieved through last-mile route optimization.

Parcel & Courier

Companies in the parcel & courier industry rely on last-mile delivery software and route optimization to decrease late arrivals and reduce fleet miles. Parcel and courier businesses are the heart of our modern economy and handle everything from the pharmaceutical industry to e-commerce sites. These businesses must have the following in order to be successful:

  • Optimized multi-stop route planning including both customers and return trips to warehouses
  • Clear communication and visibility for customers to ensure client satisfaction
  • Consistent ETAs that prevent late arrivals and refusals
  • Flexible routes that can handle sudden changes in orders and delivery needs

Learn more on how this can be achieved through last-mile route optimization.

Retail

The retail industry and its delivery partners have been pillars in the efforts to optimize last-mile delivery. Retail continues to see growth every year in sales volume across both brick and mortar shops as well as online. Retail distributors need a system that provides:

  • Responsive routing that can be updated in real-time to handle the ever-changing nature of delivery schedules.
  • Clear communication with both customers and businesses that are receiving deliveries.
  • A customer portal that provides seamless communication and automated messaging.
  • Integration options for existing third-party systems

Learn more on how this can be achieved through last-mile route optimization.

Auto Parts

The auto parts industry operates with high demand and quick turnaround. Parts are ordered as needed, often daily, which makes predicting deliveries and route planning a challenge. Auto part distributors need a system that can:

  • Seamlessly manage and plan on-demand orders
  • Provide real-time route optimization to help drivers accommodate on-the-fly orders
  • Provide visibility to customers and clients and ensure that they have accurate ETAs
  • Integrate with existing third-party systems

Learn more on how this can be achieved through last-mile route optimization.

What Is Last-Mile Delivery Software?

With last-mile delivery software, routes can be optimized to decrease inefficiencies that drive up the cost of last-mile delivery. Beyond that, software can help drivers navigate their routes, help teams better communicate, and improve the overall customer experience by providing tools to both the fleet and the customer. There are a variety of last-mile delivery software programs on the market, each with different features. A fleet needs to consider which features will best help their team optimize and improve their ability to meet client expectations for deliveries.

Route optimization software and apps from Wise Systems

Last-Mile Delivery Driver App Features

Navigation

The first and most important tool for your drivers is access to a navigation system that can keep them on track. Providing your team with easy access to their favorite turn-by-turn navigation tools like Google Maps, Apple Maps, and Waze right in their Driver app from Wise Systems helps drivers react in real-time to various route changes.

Real-Time Tracking

For dispatchers and managers in last-mile delivery operations, visibility is critical. They want to know drivers’ locations in real-time. Having an interactive map that shows where drivers are, and that also shows the delivery status of all stops, lets dispatchers know where issues may arise and helps them make informed decisions about additional stops, as well. Additionally, real-time updates, including accurate delivery times, can be shared with the delivery recipient through a customer portal to improve customer service.

Communication

Using technology with the right communication tools built-in helps both your drivers and customers in last-mile delivery operations. For instance, automated updates let recipients know their estimated delivery windows, enabling them to plan accordingly. Driver notes are a powerful tool for sharing vital customer information across your entire fleet like optimal parking locations or door codes for deliveries. Driver feedback gathers your drivers’ knowledge and can inform future routes.

Improving the Last-Mile Delivery Customer Experience

There are a variety of ways that last-mile delivery software can be leveraged to improve relationships between a business and its customers.

  • Real-Time Visibility: A simple customer portal that provides updates and real-time tracking information is vital to the customer experience. For some customers, early deliveries can be as inconvenient as a late one, so accurate ETAs help customers prepare for their deliveries.
  • Consistent Results: With automated routing, different drivers may need to make deliveries to the same customer. Last-mile delivery software can help leverage your team’s knowledge to share important client details with your entire team. This way, a new driver knows where to park and can easily recall client’s preferences.
  • Flexibility: Being able to adjust delivery schedules to meet your clients’ needs without sacrificing efficiency can greatly improve the customer experience.

What Causes High Costs For Last-Mile Delivery?

Complex Routes

Route complexity can quickly decrease efficiency in last-mile fleets. Drivers can get off track if there are too many stops on their route or if their route is exceedingly complex. Creating routes that keep drivers in areas they’re familiar with can also be helpful. Additionally, a mobile driver application also keep drivers on plan and on time as they handle complex routes.

Frequent Stops

Frequent stops are the name of the game for last-mile delivery fleets, but minimizing any additional, unnecessary stops or wasteful behaviors is key. For example, an idling truck can waste almost a gallon of gas per hour. The main sources of unnecessary stops are traffic lights, complex traffic patterns, navigation issues, and difficulties contacting a customer or client. When you optimize for these factors you can keep your team on the road and moving on to the next stage in their delivery.

Refusals & Failed Deliveries

It has been estimated that around 5% of all last-mile deliveries fail. A failed delivery can cost a business around $17 per delivery. There are a variety of reasons a delivery could fail. These include:

  • Delivering to an incorrect address
  • Customer not expecting the delivery due to issues with communication
  • Late delivery caused by delays
  • No available time windows to deliver to that customer

What Options Are There For Route Optimization?

Static Routing

Many traditional delivery fleets either currently use or have used static routing. Static routes can either be created manually by dispatchers or designed using legacy routing software. Static routes offer little in terms of flexibility and are built around data forecasts for various regions.

Static routing best serves businesses that have consistent customers with predictable deliveries and order volumes. Unfortunately, this routing strategy is usually not optimized for last-mile delivery with growing volumes or fluctuations in daily volume. Without factoring in real-time data or being able to adjust delivery schedules due to customer needs, it is very common for these routes to become inefficient, especially in the last-mile delivery operations.

Dynamic Routing

Dynamic routing gives fleets the power to do more with their existing resources while providing strong customer service, improving fleet utilization, and expanding their business. Dynamic routing considers factors like new orders, driver availability, time windows, load constraints, traffic, weather to develop fresh route sequences for drivers every day.

In a dynamic routing environment, dispatchers’ planning workloads decrease dramatically, while fleet efficiency metrics, including utilization and on-time delivery, see significant improvement. Planned around the known business orders and fleet considerations, dynamic routes match the reality of the delivery day. Fleets using dynamic routing typically see major performance efficiencies as they deliver to more customers with fewer vehicles (due to better-planned routes and more efficiently scheduled vehicles).

Zone-Based

The key to a successful transition to dynamic routing is a gradual transition. With zone-based routing, dispatchers establish geographic areas, each covered by a given driver who is dedicated to servicing stops in that region. Dispatchers can import or define geographic zones and driver zone preferences to ensure that dynamic routes match familiar territories, while still respecting business rules and optimizing for efficiency. Zone-based routing serves as a tool to ease out of traditionally static routes and experience the benefits of route optimization, with fewer risks and disruptions to key customers.

How Wise Systems’ Route Optimization Software Works

At the core of the platform is the AI-driven Dynamic Optimization Engine that continuously ingests data from operations and makes real-time decisions to improve fleet efficiency. Wise Systems’ software is designed to support any routing strategy from static, to dynamic, to a hybrid static + dynamic hybrid.

Our machine-learning models use the data gathered from your fleet to predict how the fleet will perform in the future and significantly enhance the power and accuracy of future routes. Designed to enable the perfect last-mile delivery for your operation, Wise Systems provides improvements for everyone in the delivery process. Drivers have access to the Driver app, which provides all of the tools needed to manage their delivery day. From notes, proof of delivery, barcode scanning, parking pins, and more. Dispatchers have full visibility into their fleet, allowing them to ensure on-time deliveries. They can manage fluctuating orders, edit routes, and report on daily metrics. Managers have access to analytics of their performance, enabling them to balance fleet efficiency and customer service. And final delivery recipients get real-time notifications about their deliveries through the Customer Portal.

 

Frequently Asked Questions About Last-Mile Delivery

How Does Last-Mile Delivery Work?

Last-mile delivery refers to the final leg of any delivery process. This can be the most unpredictable part of the shipping process. Because highways and shipping infrastructure are designed for shipping, they are highly optimized. However, in the final miles of a shipment, drivers are often navigating complex routes in areas with lower speed limits and more intersections. Fleet management software is designed to increase the efficiency of last-mile delivery by creating routes that respond to real-time data.

What Challenges Occur During Last-Mile Delivery?

There are a variety of challenges that can make last mile delivery expensive, time-consuming, and inefficient. Lower average speed limits decrease fuel efficiency, complex intersections and routes increase late arrivals, and day-of problems like weather or road work can cause delivery failure. Fleet management software takes all of these obstacles in and produces routes that have real-time adjustments to decrease last mile delivery costs and late-arrivals.

What Is the Most Effective Way To Improve Last-Mile Delivery Costs?

There is no one-size fits all solution for last mile delivery. The best way to improve last-mile delivery optimization is with dynamic solutions. Data-driven routing that utilizes both existing data as well as real-time data is the best way to help drivers and fleets decrease inefficiency.

How Can Businesses Improve Delivery Success Rate?

Businesses can improve delivery success rate in a few ways. One of the best ways to approach delivery is ensuring that your recipients have real-time data and communication from your team. Automated updates and a customer portal can help your recipients plan for their delivery arrival. Additionally, ensuring that your drivers have the tools they need to get to the right location on time can prevent delivery failure.

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