I. Introduction: What is “last mile delivery”?
As the name suggests, “last-mile delivery” is the final stage of the journey that a product travels from its manufacturer (or, place of origin) to its end destination, i.e., the address of its end consumer. It is the final leg of the supply-chain network, the end stage of the delivery process.
Importantly, not only is it the most critical in ensuring the success of the delivery process but also the most challenging, the most expensive, and, an important differentiator for firms that are trying to build a loyal customer base.
We live in the modern era, one that is characterized by global competition, widespread use of radically new technologies, and, ever-increasing demands of the consumer! Every day, we want our lives to be better, faster, more convenient, cheaper – well, the list is endless!
Perhaps the eco-system that is most deeply embedded within this “better, faster, more” lifestyle is the supply chain. Today’s consumers want their products delivered quickly, as per their convenience, and as cheaply as possible.
With ever-increasing consumer demand fueling the burgeoning e-commerce industry and the app-led lifestyle, businesses are scrambling to optimize their delivery process. A solid fulfillment process would ensure happy customers, repeat business, and the ability to scale efficiently. Whether culminating at a customer’s doorstep or at a commercial address, it is imperative that your last-mile delivery operation is set up for excellence; if not, your business will find it difficult to sustain itself in the face of competition.
What are the various steps involved in last-mile delivery? After the customer has confirmed his order, either via an online e-commerce website/App or at a brick-n-mortar store, a central server that houses the order processing system pings the order fulfillment center where the inventory is stored, and the process of dispatch is initiated by the warehouse team. At this point, the last-mile delivery leg begins.
The delivery agent loads his vehicle with the order and proceeds toward delivery. The 3PL uses last-mile delivery software to optimize elements like multiple routes, number of stops per route, and coordinating customer delivery windows (etc.). The process ends with the parcel being delivered to the customer’s address.
While this process may seem a simple one, it really isn’t! There are several moving parts and each step of the last-mile delivery process is exposed to ever-changing dynamics including inclement weather, traffic, fleet and driver availability, and last-minute changes.
Therefore, to ensure that the last-mile delivery process is carried out with the required efficiency, clients prefer using 3PL logistics partners that are past masters at it.
And lastly, you’d do well to remember that in the online commerce model, the delivery agent and the 3PL company are the only touch-points that client companies (like yourself!) have with their customers. Therefore, it is an invaluable opportunity to make sure you create a positive customer experience. You won’t have repeat orders without it!
II. What are some problems that plague last-mile delivery?
The very nature of a supply-chain operation exerts severe pressure on it, not least of all on the last-mile delivery process. Modern-day consumer demands like same-day delivery, real-time updates, and constant cost pressures are just some of the variables that pose severe challenges.
The top last-mile problems are highlighted below:
1. 24-hr delivery; Same-day delivery: ecommerce behemoths like Amazon have successfully used unbelievably low delivery times like “same-day delivery’ to build loyal customer bases. Research suggests that a whopping 80% of customers will happily pay an extra fee to have their parcels delivered faster.
While the “convenience” of all this keeps customers “delighted” and coming back for more, it poses significant challenges for last-mile deliveries! Routing, coordination between 3PL logistics teams and consumers, inventory management, fleet vehicle, and driver availability—are just some of the potential pitfalls that make last-mile a constant challenge.
Another barrier is that same-day deliveries are generally small in size. This poses the problem of underutilized space in the delivery vehicles, which would mean sub-optimal logistics. This, in turn, would prevent achieving economies of scale and result in driving up the cost of operation for the 3PL. That would also affect the final price point being offered to consumers.
2. Manual processes: Simply put, the legacy manual processes that used pen-and-paper or “en-route” traditional telephone calls to plan, receive updates, and manage the supply-chain network are simply not good enough in today’s complex global marketplaces. Without the modern, GPS-led, cloud-server automatic systems of today, managing a complex supply-chain network is pretty much impossible.
The rigidity of legacy processes: has widely contributed to inefficiencies in the supply-chain network. However, in today’s rapidly changing global marketplaces, there isn’t any room for such rigidity. For example, today’s customers demand that companies be flexible about their delivery windows and allow them to change their delivery details (such as delivery windows, and locations) on the go should they require it. To keep up with consumer demand, companies are being compelled to reinvent their entire logistics process.
3. Poor visibility: By extension of the point above, the manual processes that were used resulted in poor visibility, numerous errors, and poor communication between teams. All this resulted in a time-consuming and stressful operation.
While this has been an area of significant improvement for modern logistical processes, just a solitary stakeholder (e.g., a 3PL) upgrading to modern systems doesn’t create efficiency. That is achieved when all stakeholders – clients, online portals and systems, 3PLs, delivery teams, and fleet management systems – use systems that talk to each other in real-time and seamlessly. Without this, there would be deep-rooted inefficiencies and their harmful effects, that would impact the business.
4. Dealing with COVID-19: The onslaught of the pandemic disrupted all our lives – we stayed indoors and had everything delivered to our doorstep. Social distancing norms altered the methods for packing, picking, delivering, and receiving them. Zero-contact deliveries were the order of the day, and this puts even more pressure on the last-mile delivery process.
5. Demands of scale: e-commerce is driving the rapid demand for online commerce and, therefore, an increasing volume of orders. In addition to grappling with scale, the supply chain has to constantly satisfy the modern consumer who wants his parcels delivered faster, cheaper, and better! This exerts constant pressure on supply-chain companies and especially on last-mile delivery processes.
6. Environmental sustainability: Transport, and its related activities, generates 20% of global emissions. And, as environmental sustainability gathers momentum and legal teeth, consumers are looking for brands that are carbon neutral. right from manufacturing and packaging, to delivery methods (e.g. E-vehicles). This adds to the pressure on last-mile delivery companies since they need to adopt best practices that ensure such carbon-neutral processes.
III. How does last-mile delivery software work?
Software for the last mile is equipped with tools to tackle the core problems of last-mile delivery. Harnessing its potential can propel your last-mile delivery operations to greater heights. Some of the leading problem-solving features are mentioned below:
1. Route optimization: This is perhaps the most important feature in enabling Fleet Managers to improve their last-mile delivery operations.
With route optimization, you can minimize delivery times by honing in on the most efficient route mix. Remember, the “most efficient” isn’t the fastest or cheapest—rather, it is the one that takes into account all the numerous elements that go into route planning. It includes traffic patterns, weather conditions, road quality, number of stops along a route or in a locality, type of cargo, vehicles available, and drivers that are suited for the trip, to name a few.
Importantly, it allows managers to make last-minute changes or alterations and communicate with the driver in real-time.
2. Deploying automated dispatch: This helps in matching the right driver, the most suited delivery vehicle with the type of delivery, i.e., the nature of cargo, quality of road that will be taken, time limitations (etc.). Often, this feature is used to service the more important deliveries (urgent, fragile, on-demand, rush orders, A-customers, etc.).
3. Providing real-time visibility: Another huge advantage of using a last mile delivery software is that it provides fleet managers with 100% visibility in real-time. Back in the day, once the driver and vehicle were out to delivery, the only way for fleet managers to monitor progress was when drivers checked in en route during a pit stop or at pre-designated points like warehouses along the route.
However, today’s delivery-management software gives them a real-time view of the fleet vehicles, speed, and driving habits (e.g. hard cornering, braking, rash driving, idling, etc.). Not only does this provide more control, but it also helps minimize pilferage, ensure safety, and prevent theft.
4. Providing live updates: By extension of the point above, a last-mile software helps you provide customers with live updates about delivery progress. This makes the process more transparent and also helps in making last-minute adjustments in case of changes on either side, thus reducing delays or failures. The net result is that customers are kept updated on the whereabouts of their parcels.
With customers demanding to know the progress of their parcels in real-time these days, this goes a long way in ensuring customer satisfaction.
5. Measurement via KPIs (Key Performance Indicators): the software provides you with key metrics that you can use as performance indicators to judge and monitor the performance of your logistics operations.
Important business metrics such as delivery-success percentages (e.g. failed deliveries, on-time, delayed), customer feedback, distances traveled, fuel efficiency, etc. provide managers the context with which they can assess actual performance versus what had been planned. The data can be segmented by hour, day, week, by vehicle or clutch of vehicles, by drivers, etc.
6. Generating insightful reports: With the system churning out detailed reports using the extensive data that it can maintain and mine for insight, Fleet Managers are able to obtain a wealth of information that helps them in making informed and insightful business decisions.
7. Convenience of ePOD (electronic-proof-of-delivery): With digital signatures, comments, barcodes, invoices, and customer feedback surveys, the last-mile software not only improves the speed of completing documentation and delivery formalities but also helps maintain a permanent record of all documents.
Gaining a “holistic view”: as should be evident by now, a last-mile software is equipped with numerous robust features that enable Fleet Managers to monitor and manage the delivery operations successfully.
The Fleet Managers have helped immensely with the birds-eye perspective that the software provides, i.e. from the larger, overall perspective right down to the operational level. Managers can plan, execute, monitor, and constantly communicate and support their on-field teams – as well as customers – as they go through their daily schedules.
IV. How does one choose the best last mile delivery software?
Last-mile delivery software is a great tool to handle your logistics, achieve delivery efficiency, and reach cost-optimization. However, the onus of selecting the software that best suits your requirements is yours. Therefore, you must address the selection with method and purpose. And, given the complexity of the decision, bear in mind that it could even overwhelm you!
Given below are six important features to look out for while making that decision:
1. Route optimization: Perhaps, the most important feature to start with while conducting your research. Route optimization, as the name suggests, is the first step in achieving the best possible route for your delivery vehicles to travel on. It is geared toward minimizing delivery times and reducing costs.
There are numerous (ever-changing!) variables to balance into a golden mean while attempting optimization. These include delivery addresses, weather, traffic patterns, fleet vehicles, driver availability, and road conditions, to name a few. By balancing out all these elements, it arrives at the most “optimal” – or, efficient – last-mile route. It also enables fleet managers to change, or re-optimize, on the fly for last-minute changes that often come up.
2. Auto-dispatch: By extension of the point above, an automatic dispatch is a non-negotiable feature of a modern, last-mile delivery system. What the system does is “automatically” make the best match between the most suited driver, the type of (delivery)job on hand, and the most suited vehicle type based on the route, cargo (etc.).
Not only does this achieve the most efficient handling of daily dispatches, but it also makes the best use of the available resources so as to achieve 100% capacity utilization and optimal levels.
3. Real-time tracking: Today’s customers have evolved into a demanding lot! They want to be kept informed about the progress of their packages at all times. The last mile delivery management system provides fleet managers with 100% visibility of their fleet movement. Thus, they can track progress and keep their customers updated in real-time. Once out for delivery, they can also contact their delivery agents/ drivers at any time. This gives them a sense of assurance and confidence in your company.
From your perspective, the last-mile solution helps you achieve efficient operations since Logistics and Fleet Managers can track the entire process holistically. Without this feature, a last-mile software would be well short of its value!
4. Data & metrics: With detailed data-tracking and storage, a last-mile system records, analyzes, and presents your performance by measuring it against metrics for best practices. Fleet Managers can slice and dice the data by time, business units, teams, or any which way they like. This helps in analyzing performance, making improvements, and investigating for innovations.
Advanced analytics: Data analytics, with its use of modern tech tools like artificial intelligence and machine learning, is a winning feature that you must check out thoroughly. It has the ability to process vast amounts of data to check your performance against industry best practices, pre-defined benchmarks, and the relevant metrics (e.g. delivery performance, agent performance, resource utilization).
This provides clarity of performance, and with its predictive methodology, firms can gain a proactive handle on managing critical aspects of the business.
5. Feedback mechanism: Customers today want to be heard, they want their suggestions incorporated – they have become used to being treated as such! Be sure to pick software that has enough (omnichannel) options for consumers to reach out to you – by way of customer reviews, feedback, suggestions, or even in emergencies. This will help your customers to mention their satisfaction with your performance, which, in turn, will help you to attract more clients for yourself.
6. Hand-held devices: The “hand-held device,” such as a tab or a mobile phone, has now become a natural extension of the human body! We use it for everything, including daily work requirements.
Therefore, be sure to check the robustness of the software in its mobile version. Unless the mobile version is well developed, as well as seamlessly integrated with existing ERP, MIS, and other 3rd party vendors that you need to use, you will struggle to extract the correct value from your last-mile software. Simply put, the strong mobile app functionality is a must-have feature!
But, why does last-mile delivery tend to be expensive? Last-mile delivery is a complex task – delivering thousands of parcels to numerous destinations day in and day out under constant pressure from several sources, both internal and external, isn’t easy! As a result, there are cost pressures from various factors.
- Fuel consumption: Customer addresses exist everywhere in and around a city. Your delivery vehicles have to maneuver around small roads, traffic lights, and dense traffic. As a result, there is stopping, starting, and idling. This causes low mileage and drives up fuel costs, which is the single largest cost for fleet management companies.
- Failed parcel delivery: If you are delivering to a B2B client (e.g. supply-chain partner, a 3PL fulfillment center), there isn’t any worry about them not being available. But, if you are delivering to an end customer, the reality of a failed delivery – due to reasons like last-minute changes or unavailability – is a real one. It adds to operating costs.
- Order returns, discounts, refunds: Ecommerce return rates are 20%! And, returns and refunds are very much a part of the online commerce world and will not go away anytime soon. This contributes significantly to the operating costs of last-mile delivery firms.
In addition to the points above, other elements like employee turnover, overtime, high insurance costs, supply-chain issues, and cross-border tax regulations also add to the operating costs of last-mile delivery firms. Therefore, make sure you choose a 3PL that maintains an efficient operation and is able to offer you competitive rates.
V. Future trends in last-mile delivery
In an ever-evolving world, last-mile delivery is also progressing rapidly. Let’s look at some developing trends:
1. Shorter fulfillment times: Faster, cheaper, more convenient! That is what consumers are forever demanding of their delivery firms. From a time when “24-hour delivery” was thought unimaginable, we are now getting used to the concept of “groceries in 20 minutes”.
2. Micro fulfillment centers: Using a hub-n-spoke model where there are numerous small warehouses located closer to customers is a great way of reducing cost, delivery times, and inventory carrying costs.
3. In-house logistics: E-commerce players that have achieved a certain scale are now using an in-house logistics system. This eliminates dependence on 3rd party carriers, retains control of the logistics process, and helps mitigate costs. Amazon is a leading example.
4. Improved order and vehicle tracking: Traceability and monitoring of parcels are key requirements in today’s supply chain logistics. All stakeholders, not the least of which is the end-consumer, want live updates about their goods. As technology becomes faster and more agile, we will be able to track goods’ movement with even greater detail and efficiency.
5. Drone technology: New technologies such as driverless cars and drones for delivery are being tested by companies like pizza companies, and pharmacies.
Conclusion: So, who needs this software?
This article should have established a strong case in favor of using last-mile delivery software to solve your last-mile problems, reduce delays in deliveries, and deliver your products safely, and efficiently.
Delivery-management software is an increasingly powerful tool within the supply-chain ecosystem, and all companies—whether small or large—that deliver goods and products as a critical part of their business model must make sure they are deploying the use of robust last mile delivery software.
How Does Last-Mile Delivery Software Reduce Delivery Costs and Enhance Customer Experience?
In today’s uber-competitive era, the battle for customer loyalty is a frenetic one! Companies are constantly coming up with new ways to entice customers or wean them away from competitors. The speed, convenience, and options of parcel delivery are (increasingly) important tools in their armory.
Therefore, it is imperative for Logistics and Distribution companies to use all available means, including the latest technology such as last-mile delivery software to reduce delivery costs while at the same time maintaining a positive customer experience.
I. Why have delivery costs risen in recent years?
In today’s globally competitive world, companies are battling customer attrition and fierce competition every day. Therefore, they use all tools available to them for keeping their customers happy. Increasingly, the delivery feature of a business (times, costs, options, etc.) has become such a tool.
It started with e-commerce behemoths like Amazon offering the customer unbelievably quick delivery times such as “Same-day delivery” and “24-hr delivery” – now, this is a benchmark that all customers expect from all suppliers, especially online commerce firms.
However, with the burgeoning Ecommerce trade, supply firms have found it difficult to keep up with the rapidly growing number of deliveries. An even bigger challenge is to keep costs manageable while at the same time not compromising on efficiency. Rising delivery costs erode profit margins and it is important to understand what factors constitute this cost.
II. Leading components of delivery cost
- Fuel costs, fleet vehicles, maintenance
- Warehouses, drivers, onsite teams, delivery teams
- Free shipping; 24-hour delivery; Same-day delivery
- Failed deliveries; Late deliveries
Why is last-mile delivery fraught with inefficiency? Of all the moving parts in a supply-chain network, logistics firms struggle with last-mile delivery due to its numerous complexities. These include:
- Numerous parcel sizes and delivery points along routes and sub-routes
- Vastly different logistics in urban and rural areas
- Changing weather, traffic patterns, dense population areas
- Exponentially increasing number of deliveries due to the growing online commerce business
Last-mile costs constitute nearly 40% of total supply-chain costs. It is responsible for about 50% of total shipping cost. Implementing a last-mile delivery software goes a long way to cutting delivery costs and enhancing customer experience ~
III. Top 7 ways that last-mile delivery software can reduce delivery costs and enhance customer experience
By using an effective last-mile delivery software to optimize delivery operations, firms can save money and time, while improving efficiency, and customer experience.
1. Route Optimization: The process of determining the most efficient route between two points is referred to as Route Optimization. Remember, it isn’t the cheapest, fastest, or the one with the least interferences but the one that is the most effective and efficient after balancing out all critical elements. These include:
Delivery windows, fuel costs, number of stops on a route, type of cargo and drivers available, driver productivity, urgent orders (etc.). The delivery management software identifies the most efficient routes within seconds by balancing out all the parameters.
Other factors that the software considers:
- Existing routes
- Vehicle breakdown, driving time, traffic patterns, idling time
- Re-routing on the go based on changes
2. Real-time tracking: Among the biggest legacy problems that Logistics and Distribution companies faced was the inability to track the fleet and drivers once out to delivery.
Conversely, this is one of the biggest advantages of modern last-mile delivery software. The feature of real-time tracking is the first step to solving such issues. It provides complete visibility of fleet movement to Fleet Managers as well as customers. Any delays, emergencies, changes in route (etc.) can be solved on the go, thus ensuring that minimal delivery times are maintained. This helps in mitigating delivery costs and maintaining customer satisfaction.
3. 100% fleet visibility: By extension of the point above, firms can achieve complete visibility and transparency in their fleet movement and driver behavior. Smart technology enables them to maintain live communication between delivery teams, on-ground teams, as well as the head office. Customers can now be updated in real-time on their parcel delivery. This achieves customer satisfaction, which ensures a profitable business.
4. Customer satisfaction: Today’s customers are a demanding lot! They want to be kept in the loop about the status of their parcels in real-time. They want options for delivery timings, payment methods, as well as drop-off or pickups! Delivery management software is adept at including all these customer requirements while managing daily delivery schedules.
5. ePOD (electronic proof-of-delivery): Another endemic issue of manual systems of the past was the maintenance of proper paper trails, bills, customer documents, payment vouchers, and slips.
With all such information – such as payment details, receipts, and unavailability of customers – now being captured electronically through electronic signatures, photos, and videos and uploaded onto central servers for global access, such documents are conveniently available at all times. It also aids in audit trails, responding to customer queries, reducing paperwork, and reducing the need for physical storage.
6. Data analytics: Modern route-optimization software has the innate ability to mine through vast amounts of data within very short times. Also, the very nature of such modern software is to “digitize” or to “bring online” all stakeholders and elements of the supply chain, thereby generating vast amounts of data across all aspects of the operation. This data is then available to be sliced and diced in innumerable ways, thereby generating deep insight for team leaders while taking their decisions.
Activities like completed tasks delayed deliveries, average task times, failed tasks (etc.) help in spotting inconsistencies and achieving greater levels of efficiency. Data can be accessed at various levels e.g. individual driver level, team level, business segment, type of vehicles (etc.)
7. Manage last-mile costs: Last-mile delivery logistics isn’t just the most challenging in the entire supply chain but also the most expensive. It accounts for up to a third of the overall delivery costs!
This cost can be minimized by adopting best practices such as investing in the latest technologies and software. With all stakeholders and participants of the supply chain, the overall cost can also be equitably allocated to the various stakeholders. This ensures fair distribution and effective cost management for all parties. This enables firms to offer competitive pricing to their customers.
Conclusion: As is evident, delivery costs can lead to the downfall of a business if not managed properly. However, using modern tools like last mile delivery software ensures customer satisfaction and brand loyalty.