We are living in times when lightning-speed delivery has become a new norm. The latest technology advancements have alleviated consumer expectations to an all-time high. If we only talk about eCommerce in the last two years, then its growth has caused the B2B last-mile demand to shoot up by about 33%, according to Leigh-David: Final Mile Delivery. Similarly, B2C businesses have also experienced a rise of 67%.
Last-mile delivery comes with its own set of challenges with logistics and supply-chain companies racing to meet consumer demands while handling increased volumes of deliveries. Efficiency suffers big time when companies have to tackle massive volumes and complete tasks within a designated time frame. But efficiency isn’t the only issue because, according to Insulated Products Corp, last-mile contributes to more than 40% of the total logistics cost. The cost goes up by a great deal if shipping expenses are factored in as well. If last-mile delivery isn’t optimized, it can have a devastating effect on your business and lead to a downward trajectory when it comes to revenue.
When customer expectations continue to change over time, businesses have to be flexible enough to adapt to their needs quickly.
Many customers demand same-day delivery, and the high demand puts a lot of pressure on logistics businesses. They have to engage more personnel and assets to ensure that deliveries are completed on time, which increases overall costs. Customers also expect companies to bear the shipping costs. According to Khalid Selah of Invesp, more than 60% are likely to cancel if shipping isn’t free. On the other hand, if free shipping is offered, more customers are inclined to make purchases. Due to high demands, companies are compelled to cover shipping costs even if it reduces profit margins.
What happens if the customer isn’t present to receive the delivery? Or the package is sent to the wrong address? Both situations fall into the category of failed deliveries, which is a disaster for the company as it means time, energy, and resources are wasted. Moreover, it leads to increased delivery costs.
It is imperative that drivers take the most efficient route while dropping off packages. But it is much tougher than it sounds. For instance, delivery points in a rural area can be spread several miles apart, but with fewer items to be dropped off at each delivery point. On the other hand, delivery points in an urban area could be located close by, but traffic, weather, and congestion might play spoilsport.
5 COST-SAVING STRATEGIES
Last-mile costs can be reduced by using an efficient last-mile delivery software that addresses all problems and streamlines operations so the process is swift, cost-efficient, and timely.
Dispatch Packages Automatically
One of the most essential features in any last-mile delivery system is auto-dispatch. It helps in the hassle-free and effective management of important assignments and on-demand orders. The idea is simple—find the most suitable driver to carry out the right task at the right time, which minimizes both service time and labor costs.
When distance between two drop points increases, the cost of delivery goes up as well. That is why it is essential to optimize multi-stop routes so drivers follow the most efficient route and complete deliveries on time. Last-mile software comes with a route optimization feature that factors in time, location, driver capacity, distance, and traffic conditions to figure out the most cost-efficient route. When new deliveries arrive, they can be simply reassigned by changing delivery routes and notifying drivers in real time.
Obtaining proof of delivery (POD) is a must, and thanks to the software it can be done in a very simple manner. POD generates a proper record of when the shipment was delivered, who signed for it, and the location where it was dropped off. Drivers can collect vital information such as barcodes, photos, signatures, and notes within a matter of seconds. This data can be accessed later to provide valuable insights that help to detect bottlenecks, verify deliveries, and identify areas of improvement.
Offer real-time updates to customers about their package. They want to stay informed every step of the way and track the location of their shipment in real time. With the help of a last-mile delivery and logistics solution, you can offer automatic status updates to customers. They receive notifications when the delivery is packed and shipped, regarding the estimated time of arrival and the real-time location of the delivery person. If the customer is aware of when the package will arrive, they will be present to receive it. Thus, it means a considerable reduction in the number of failed deliveries.
Multiple Delivery Options
Let customers choose the date and time of delivery instead of offering only one option. For instance, if you have only one option available, such as same-day delivery, it could be problematic. At first it sounds great, but this choice isn’t always beneficial. What if the customer has to leave home early and returns late at night? In that specific case, same-day delivery doesn’t make sense. However, they would still order it and your delivery person would rush to complete delivery for a recipient who is not even there. Let the customer choose a preferred delivery slot as per their schedule and convenience, so there won’t be failed deliveries, as mentioned above.
The last-mile phase of the supply chain is the most expensive of all. That is why reducing last-mile costs is of utmost importance, or it leads to significant profit reduction in a span of few years. A last-mile software can help to achieve this, while helping to develop a robust process that is cost-effective and keeps your business profitable.
ABOUT THE AUTHOR
Neil Coomar is the CEO of Anstel Global, a SaaS-based IoT platform for connected logistics solutions that helps fleet management companies reach business objectives. He is passionate about IoT-based applications and has spent the last decade working with organizations to improve their ROI through connected logistics solutions. Find out more, visit www.anstelglobal.com.