Last-mile delivery is a significant challenge and a crucial opportunity for organizations that often consumes excessive time and resources due to complications like traffic and route inefficiencies. Central to this is a well-designed software platform that consolidates data and enables quick decision-making through real-time dashboards.  Including real-time data analytics allows for dynamic route adjustments through machine learning algorithms to fine-tune these routes and predict customer preferences for delivery windows; automated communication keeps customers informed and minimizes missed deliveries. By embracing these data-driven tools, companies not only navigate the complexities of last-mile delivery but also position themselves for ongoing growth and customer satisfaction.

Why last-mile delivery matters?

An efficient delivery fulfills and solidify customer expectations and satisfaction. When a package arrives on time in perfect condition, it sends a strong message about the business’s competence and reliability, leading to repeated business and word-of-mouth recommendation. A report from Accenture highlights that 89% of companies in retail, manufacturing, and logistics acknowledge the escalating need for speed in deliveries due to the growth of eCommerce.

The trend towards online shopping isn’t slowing down either. Consumers are increasingly opting for the convenience of doorstep delivery over the hassle of navigating crowded physical stores, with over 60% stating a preference for online deliveries. With 90% of consumers actively tracking their online orders, offering such tracking capabilities is a requirement for all online eCommerce platform. This increasing consumer demand amplifies the need for further efficiency in last-mile delivery system, as they become the frontline representation of a company’s value proposition.

Understanding last-mile delivery challenges

Last-mile delivery remains a pressing issue for logistics and shipping companies, often making up a whopping 53% of total shipping costs. This can be attributed to a combination of factors, such as fluctuating fuel prices, frequent route alterations, and the unfortunate incidence of failed deliveries. Fuel prices are a shifting component in operational costs. As these prices rise, the costs inevitably get passed on to the customer or eat into the company’s profits. Similarly, when a delivery route needs to be changed due to unforeseen circumstances, the associated time and fuel expenses add to the overall costs.

Traffic congestion is another looming challenge when operating in urban areas. When delivery vehicles get stuck in traffic, deliveries get delayed, operational cost rises due to extended fuel consumption, and once again, customer satisfaction takes a hit. A cascading effect can occur as one delay could lead to further delays down the line, essentially throwing off the entire delivery schedule for the day.

Amidst these challenges, consumer expectations continue to soar. People expect quicker deliveries now more than ever, putting immense pressure on fleet managers to streamline operations and meet these high demands. In many cases, failing to meet delivery expectations can result in losing a customer to a competitor.

What is last-mile delivery software?

Last-mile delivery software serves as a specialized tool for streamlining the entire delivery process, specifically focusing on the last leg of the journey from the warehouse to the customer’s doorstep. The software is equipped with a range of features that serve multiple purposes, each contributing to a more efficient and customer-centric delivery model.

One of the primary capabilities is enhanced visibility, offering a comprehensive view of the entire delivery process by integrating features such as customer alerts, proof of delivery, and delivery analytics. For instance, as soon as a package leaves the warehouse, both the delivery agent and the customer receive real-time notifications. This high level of transparency can also be extended to delivery metrics, helping businesses understand performance indicators and areas that need improvement.

Complex logistics tasks such as route planning and dispatching can be automated , thereby reducing manual errors and labor costs. Optimizing routes on the go ensures drivers take the most efficient path, saving both time and fuel. Advanced dispatching algorithms further fine-tune this process by assigning deliveries based on a variety of factors such as driver availability, proximity, and load capacity, which collectively contribute to reducing the generally high costs associated with last-mile delivery.

Meeting customer expectations in today’s fast-paced world is non-negotiable. Last-mile delivery software rises to the challenge by offering real-time tracking and management tools. These functionalities ensure that packages arrive within the promised time frame, thus meeting or even exceeding customer expectations for prompt and accurate delivery.

Data in the driver’s seat

Being proactive, rather than reactive, is key to addressing challenges in the fast-paced world of last-mile logistics. Data can identify potential bottlenecks or issues before they escalate into real problems. For example, by combining real-time traffic data with historical patterns, one can predict local congestion. This forecasting enables companies to reroute their vehicles intelligently, avoiding delays and reducing operational costs. These insights have become essential as 63% of companies affirm that using data analytics notably enhances efficiency and productivity.

Consumer data serves as a powerful tool in this optimization process. With granular insights into consumer behavior, like delivery preferences and frequent delivery locations, retailers can fine-tune their operations. More than just making operations lean, this data supports customer personalization strategies. Targeted promotions and specialized offerings can be developed to improve customer retention and widen revenue streams.

Data analytics extends its utility to inventory and resource management as well. Accurate demand forecasting derived from consumer data minimizes the twin pitfalls of overstocking and stockouts, ensuring that resources are utilized to their full potential. And it’s not just about inventory; data helps determine the most cost-effective mix of internal and external drivers for deliveries. For instance, density data can help figure out the most efficient deployment of drivers, whether they are in-house or third-party, to optimize costs and margins.

Making the business case for last-mile delivery optimization software

Cost saving

Last-mile delivery software can help businesses save a significant amount of money by reducing fuel consumption, lowering maintenance costs, and maximizing the utility of each delivery vehicle. According to a study by DispatchTrack, optimizing delivery routes can result in fuel savings of more than 10%. Using route optimization means last mile delivery routes are shorter, which leads to less driving, lower fuel costs, lower driver wages, and better working conditions for drivers

Time efficiency

Last-mile delivery software using advanced algorithms to plan the most efficient routes, last-mile delivery software helps in delivering packages more quickly. According to McKinsey & Company, 90% of consumers expect two- to three-day delivery as standard. These expectations push businesses to evolve and adapt.

Customer satisfaction

Consumers have high expectations for fast and accurate deliveries. According to Salesforce research, 89% of consumers are more likely to make another purchase after a positive customer service experience. The quality of service provided here also has a massive impact on customer satisfaction, as 84% of shoppers say they would be unlikely to buy again from a business that gave them a poor last-mile delivery experience. Moreover, a whopping 88% of people link their opinion of a brand with how well their delivery experience went. Satisfied customers are more likely to be repeat customers, which increases lifetime customer value.

Competitive advantage

In crowded marketplaces, offering reliable and quick delivery can set a company apart from its competitors. Adopting an optimized last-mile delivery system can become a unique selling point, thereby attracting a larger customer base. The global last-mile delivery market is vast and growing rapidly. The market statistics show that the global last-mile delivery market is estimated to reach $288.9 billion by 2031.

For many businesses, last-mile delivery software can lead to shorter routes, lower fuel costs, lower driver wages, and less back-office planning and admin time. This results in lower delivery costs all round, providing a competitive advantage for businesses in crowded marketplaces. By staying updated with the changing market trends and implementing an optimized last-mile delivery system, businesses can not only meet but exceed customer expectations, thereby gaining a competitive edge.

Success stories: Learning from the industry leaders

Onfleet

Onfleet is a leading provider of delivery management software that caters to all industries. The platform offers end-to-end route optimization, dispatch, communication, and analytics. It is designed to handle the complexities of last-mile deliveries, allowing businesses to focus on their core operations. Onfleet has powered over 200 million deliveries across more than 90 countries. The platform has been instrumental in helping businesses reduce costs, improve customer experience, attract and retain delivery drivers, and meet the rapidly growing consumer demand for convenience.

UPS

United Parcel Service (UPS), a renowned name in the world of logistics, has harnessed the power of technology to revolutionize its last-mile delivery capabilities. At the heart of this transformation is a sophisticated route optimization software known as the On-Road Integrated Optimization and Navigation (ORION).

ORION blends advanced algorithms, artificial intelligence, and machine learning, which enable UPS to orchestrate the movements of multiple drivers across multiple stops, thereby simplifying the intricate dance of last-mile delivery. Through ORION, UPS oversees the delivery of around 5.5 billion packages annually, coordinating the movements of 125,000 vehicles. UPS was able to saves an estimated 300 million USD to 400 million USD annually, and save around 10 million gallons of fuel per year.

Takeaways: Next steps for business leaders

Advancements in last-mile delivery software have paved the way for real-time data analytics, which stand as a cornerstone for enhancing operational efficiency. For business leaders, this is a fundamental shift in how logistics can be managed. Having a skilled team and integrated software paves the way for leveraging real-time data analytics. This data can be analyzed to predict delivery times more accurately, manage inventories, and even forecast demand. Real-time analytics provide a snapshot of operational efficiency, but more importantly, they give insight into areas needing improvement.

The next immediate step is to put these data insights into action. Quick action based on real-time data not only solves immediate issues but also aids in long-term planning. Business leaders should not only reconsider their existing logistics strategies but take immediate action to implement these advanced systems. Failing to adapt to this changing landscape risks not just falling behind but becoming obsolete. Therefore, now is the opportune moment to evaluate, and if necessary, overhaul last-mile delivery processes.

Thomas Charneau

December 14, 2023

8 Min read