How Can Route Optimization Software Reduce Last-Mile Delivery Costs?

Last-Mile Delivery expenses can account for up to 50% of a company's logistics and distribution expenditures. While it may merely be the "final mile" of a complicated supply chain network, it is the most difficult and complex to maintain.

Furthermore, as consumer demands become more severe by the day, fueled by "Same-day" and "24-hour" delivery models proclaimed by eCommerce behemoths like Amazon, organizations' delivery choices have become critical in promoting customer satisfaction.

Fleet Managers may control the various variables that comprise Last-Mile Delivery expenses by utilizing contemporary, automated Route Optimization Software.

How much does "Last-Mile Delivery" cost?

Last-Mile The delivery cost is the expenditure organizations make in planning and executing the last step of delivering items to their consumers (people, cars, systems, warehouses, etc.). It is actually the "last mile" traveled by the cargo before it is delivered to its final destination.

Why has the cost of Last-Mile Delivery increased in recent years?

Rapidly changing consumer behavior throughout the world has made today's customers significantly more demanding, fueled by the fast expansion of eCommerce and its 24-hour delivery models. Nowadays, a company's delivery options and fulfillment performance are important in the effort to gain customers, promote customer happiness, secure repeat purchases, and develop corporate loyalty.

Managing cost while maintaining delivery efficiency poses the biggest challenge in managing Last-Mile Delivery effectively. Mishandling will result in financial losses, negatively affect the company's reputation, and lead to poor customer experience.

Several crucial aspects that contribute to Last-Mile Delivery costs may be controlled with Route Optimization Software.

1. Route Optimization: "Route Optimization" refers to the process of determining the most efficient route between two sites while assuring the highest number of deliveries. To determine the most efficient route, logistics companies must examine several elements such as client delivery windows, driver and vehicle availability, cargo type, weather, and traffic patterns (among others). Remember that the most effective route is not the quickest or cheapest, but the one that takes into account all of the elements that influence daily delivery schedules.

The difficulty increases since all components are dynamic and continually changing. Driver idle time, one-way roads, highways vs. non-highways, driving behaviors, fuel consumption, and accidents are some examples.

2. Maintaining delivery visibility: One of the most essential advantages of Route Optimization Software is that Fleet Managers have a total insight into their logistics and distribution processes, resulting in real-time transparency. This enables Fleet Managers to not only monitor all cargo and vehicular movements but also to respond quickly to problems and crises. Fleet Managers may follow the movement of their goods by maintaining regular contact between delivery teams, on-the-ground workers, and control room teams (and, delays if any).

3. Real-Time tracking: As an extension of the previous point, the transparency and visibility provided by Route Optimization Software allow Fleet Managers to connect with all stakeholders in real-time and therefore follow the status of a shipment in real time. 

4. Maintaining Customer Satisfaction: The introduction of e-Commerce, with its "24-hour delivery" and "Same-day delivery," has substantially altered customer expectations. These delivery choices, which were unthinkable merely a decade or so ago, are now becoming the standard. Customers want to be brought up to date on their delivery timings, but they also want to be able to pick their delivery windows and even adjust them if necessary. Given that this is now the "new normal" for the delivery industry, logistics and delivery companies of all sizes must stay up or risk losing clients to competitors who are.

Customer happiness is the ultimate objective of every firm.

5. e-POD (Electronic Proof of Delivery): Using modern automated software, delivery businesses may collect proof-of-delivery via e-signatures, photos, or comments and promptly upload it to the central system. This not only eliminates the conventional issue of superfluous paperwork, but it also avoids lost/damaged delivery notes, minimizes the amount of physical storage space required, and prevents malpractices.

6. Data Analytics: Perhaps the most significant advantage of employing contemporary Route Optimization Software is its capacity to mine the vast amounts of real-time data that are continually created and recorded across all elements of the delivery process. A detailed study of such data allows Fleet Managers to discover shortages and inefficiencies throughout the whole supply chain, particularly in last-mile delivery.

Data such as the average time needed per delivery, planned vs. actual, fuel consumption, driver habits, accident records, safety protocols (etc.) is easily accessed at various levels (individual drivers, clusters, teams) across any period (hourly, weekly, monthly). This analysis generates invaluable insight based on factual data and allows Fleet Managers to tackle issues such as:

• Accident-prone times and routes
• Typical traffic and weather patterns (can be tracked across 12 months)
• Malpractices e.g. pilferage, drivers using company vehicles to run a private delivery business on the side
• Driver performance: underperforming drivers, all-star performers, learnings from each set

7. Improve efficiency and reduce costs: As previously said, the use of Route Optimization Software enables the use of contemporary technology in assessing and regulating every part of a delivery operation, from planning to execution to evaluation. At a high level, this helps transportation businesses reduce costs, increase efficiency, and utilize limited resources to run a viable business.

To maintain an effective distribution operation, promote customer pleasure, and preserve profitability, enterprises must use delivery software to monitor costs and optimize routes.