When people talk about growth, the concept of the “flywheel” tends to come up. Amazon famously uses it as a metaphor for the virtuous circles created by ensuring great selection, low costs, high traffic, and great customer experience—essentially, it puts them in a position to build momentum at every stage of the process until optimization in each area feeds improvements in the subsequent stage of the wheel. Each element makes the others run more quickly and efficiently.
When your logistics operations are going right, that’s exactly what it should feel like. You should be operating more efficiently, improving the level of service you offer to customers, encouraging repeat businesses, and finding new improvements and economies of scale as you scale up the service levels that you offer.
In a world where logistics in general and last mile logistics in particular is usually a huge cost center, this might seem like a pipe dream—but we can tell you from experience that when you truly optimize your logistics that’s precisely what happens: improved route optimization leads to better delivery performance, which leads to happier and more engaged customers, which leads to even better delivery performance, until you’re driving fewer miles and processes fewer unplanned returns across the board.
When you can really get the flywheel running, you can turn logistics from a cost center into a growth engine and start widening your margins significantly in the process. The only question is: how do you make that a reality?
Here are five steps to accomplishing just that.
Prioritize Visibility Across Your Network
This step often feels like the most nebulous—which can make it seem either dauntingly complex or deceptively simple. But the reality is that visibility is something that can and should be defined in a fairly concrete way.
Start by asking yourself a few questions about your logistics ops?
- How much does your average route cost?
- What about your average delivery?
- What percentage of your deliveries are running on time right at this second?
- How many delivery exceptions do you have at the moment?
- What percentage of your available delivery capacity are you using?
- How many of your customers have confirmed their deliveries for the day?
We could go on with this list for a while, but you probably get the idea. If you’re not using a connected last mile solution to manage this part of the logistics chain, there’s a chance those questions might be hard to answer. At best, they might require a lot of digging.
The ability to get answers to those questions and all of the knock-on questions that arise around them is the concrete definition of visibility that we’re talking about. When you have that, you can take greater control of your logistics operations from end to end and optimize for cost across the board.
How do you set yourself up for that level of visibility? It starts with establishing a solution that will work as a source of truth, and then making sure that it’s gathering all of the data you need about your deliveries into a single place. From there, you need to connect your other data sources to it in a way that ensures timely data and instant answers. A huge amount of this will come down to real-time delivery tracking, so don’t neglect the driver portion of the solution.
Automate Route Optimization and Dispatching
Once you have visibility into your actual capacity, it’s time to make sure you’re getting the absolute most out of said capacity. That means automating your route optimization and dispatching capabilities to ensure route efficient, maximum capacity utilization, and accurate delivery ETAs.
This might sound daunting, but modern route optimization capabilities give you the tools you need to generate routes based on your delivery parameters—all at whatever scale you need.
If you can leverage a tool that seamlessly accounts for vehicle and job site requirements, difference in driver speed and skill, customer time window requests, etc. you can achieve a few things:
- Significantly faster routing
- Automated dispatching once routes are finalized
- 10% decrease or more in miles driven per stop
- 98%+ delivery ETA accuracy
This puts you in a position to improve the reliability of service you’re offering to customers at the same time that you’re reducing delivery costs.
Loop in Your Customers to Ensure Smooth Deliveries
Speaking of the reliability of service you offer to customers:
One of the things that can quickly drag down the efficiency of your operation is the dreaded “customers not at home” and all of the side effects that come with it. When your driver shows up at the delivery site late, or early, or simply at a time that didn’t work for the customer to begin with, the odds of a successful delivery (on-time in full, perfect order performance, whatever you want to call it) drop precipitously.
The result is unplanned returns, the potential for damage, annoyed customers, and all of the costs that come with making redelivery attempts.
But this doesn’t have to be the default. Once you’re confident that you can show up at precisely the time that you’ve promised, you can leverage customer communication and engagement capabilities to increase your delivery success rate.
The best practices for communication cadence will vary by industry and delivery type, but make sure to send a message a few different touchpoints:
- When the delivery is scheduled—with an option to confirm the delivery time and details
- The day before the delivery as a reminder
- When the delivery run has started
- When the customer’s stop is coming up
The top one can be particularly impactful. Why? Because it means that you can immediately spot at-risk deliveries based on who did or didn’t confirm. This all goes a long way towards ensuring the customer is ready to accept the delivery the first time—which can decrease your costs, improve your capacity utilization, and boost your CSAT scores.
Connect the First, Middle, and Last Miles
We talked about the concept of the flywheel at the start of this post—and from that perspective it’s important to remember that while the last mile is the biggest cost center in logistics, it doesn’t exist in a vacuum. To wit, transfers between the first, middle, and last miles of the supply chain cost huge sums of money every year across the world of logistics.
To truly turn logistics into a growth engine, you need to connect these pieces of the puzzle into a cohesive whole. That means total visibility into first and middle mile transfers and a complete chain of custody that you can visualize as needed. By prioritizing these interconnections, you can put yourself in a position to stop up cost leakages and shorten delivery lead times.
Extend and Enhance Your Capabilities with AI
If the first four steps sound like a lot, we have good news for you: AI is finally making itself useful in the world of logistics, and with the right deployments you can get more out of your teams and do more with less. This is obviously going to be huge for businesses that are trying to drive growth with their logistics operations.
What does this look like in practice? There are a few crucial ways that you can leverage practical, tried and true AI capabilities to enhance your logistics performance and get more out of your teams:
- Use AI agents to answer simple customer questions and requests (like “when’s my order scheduled” or “I need to update my delivery address”) to save time and money for your customer support teams.
- Leverage AI to generate briefings for drivers at every stop on their routes so they can speed up their deliveries.
- Use AI and machine learning to improve route performance and AI accuracy.
- Utilize AI agents to simplify data management and reporting to extract smarter insights.
At the end of the day, these AI-powered enhancements can augment the capabilities of your existing teams and improve cost efficiency and performance across the board.
Combine that with the other steps on this list, and you’ll be well on your way to turning logistics into a growth engine and setting your operations up for sustainable success.
