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

 

The delivery costs for the last mile often account for up to 50% of a company’s logistics and distribution costs. While it can only form the “last mile” of a complex supply chain network, it is the most challenging and complex part to manage. and “24-hour” delivery models promoted by e-commerce giants like Amazon, the delivery options offered by companies have become an extremely important tool to increase
customer satisfaction.

A modern automated route optimization software system enables fleet managers to manage the complex elements that make up last-mile delivery costs.

What does “last mile delivery” cost?

Last mile delivery costs are the investments (people, vehicles, systems, warehousing, etc.) that companies make to plan for the final and carry out the delivery step of delivering goods to your customers. The package travels the “last mile” before it is finally delivered to the end customer.

Why has the cost of last-mile delivery increased in recent years? It has made today’s consumers much more demanding.

Today, businesses’ delivery options and fulfillment performance have become crucial in the battle to attract customers, increase customer satisfaction, ensure repeat purchases, and strengthen company loyalty.

Managing costs while maintaining delivery efficiencies presents the greatest challenge in effectively managing last-mile delivery. Improper handling results in financial losses, negatively impacting the company’s reputation and resulting in a bad Customer Experience.

Routing optimization software can be used to control several critical elements that contribute to last-mile delivery costs.

1. Route Optimization: The method of finding the most efficient route between two points and ensuring the maximum number of deliveries is called “Route Optimization”. Logistics companies must consider numerous variables, including customer delivery windows, driver and vehicle availability, cargo type, weather, and traffic patterns (etc.) to find the most effective route.

Remember that the most effective route is not the shortest or cheapest, but the one that balances all the factors affecting daily delivery schedules.

The challenge goes deeper as all Factors are dynamic and constantly Changing. Examples are driver idle time, one-way streets, roads vs. non-roads, driving habits, fuel consumption, and accidents. A route optimization software uses dynamic route optimization methods considering all variables and their volatility; This allows you to integrate new orders, automatically transfer deliveries between drivers/vehicles, reroute in real-time and remain profitable and efficient.

2. Maintain Delivery Visibility: One of the key benefits of route optimization software is that fleet managers have complete visibility into their logistics and distribution process, which means there is 100% real-time visibility. This allows fleet managers not only to monitor all their cargo and vehicle movements but also to solve problems and emergencies immediately.

Through constant communication between delivery teams, ground crew, and control room teams, fleet managers can track the progress of their packages (and any delays).

3. Real-time tracking: As an extension of the previous point, the transparency and visibility that route optimization software offers allow fleet managers to constantly communicate with all interested parties in real-time and thus follow the progress of a shipment in real-time. -Time. For example, delays caused by traffic congestion or inclement weather can be tracked and resolved in real-time, while customers are notified of changes via notifications or SMS.

4. Maintaining Customer Satisfaction: The advent of e-commerce with its “24-hour delivery” and “same-day delivery” has significantly changed customer expectations. These delivery options were unimaginable until about a decade ago! — are now becoming the norm. Not only do customers want to be up to date on their delivery times, but they also want to be able to choose their delivery windows and even change them at will if necessary. With
now being the “new normal” for the delivery business, logistics and delivery companies of all kinds need to keep up because if they don’t they risk losing their customers to the competition, which they certainly do.

Ultimately, customer satisfaction is the goal of every business.

5. e-POD (Electronic Proof of Delivery): Modern automated software enables delivery companies to capture proof of delivery via electronic signatures, images, or notes and upload it immediately to the central system. This not only solves the traditional problems of unnecessary paperwork but also prevents lost or damaged packing slips, reduces the physical storage space required, and prevents misuse.

6. Data Analysis: Perhaps the most important benefit of using modern route optimization software is the ability to extract large amounts of real-time data that is constantly being generated and collected on all aspects of delivery operations.

Detailed analysis of such data enables fleet managers to identify gaps and inefficiencies across the supply chain, particularly in last-mile delivery.

Data such as average time taken per Delivery, scheduled vs. real-time, fuel consumption, driver habits, accident records, safety logs (etc.) can be easily accessed at different levels (individual drivers, groups, teams) at any time (hourly, weekly, monthly). This analysis generates invaluable fact-based
information, enabling fleet managers to address issues such as:

• Accident-prone times and routes
• Typical traffic and weather patterns (can for tracked for a period of 12 months)
• Bad Practices e.g Shoplifting, drivers using company vehicles to run a private delivery business on the side

· Driver Performance: Underperforming drivers, star performers, insights from every sentence

7 Optimizing efficiency, Minimize Costs: As described above, the use of route optimization software enables the use of modern technology to analyze and control all aspects of a transportation operation, from planning to execution to verification. At a general level, this enables transportation companies to minimize costs, maximize efficiency and optimize limited resources for profitable operations.

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