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How to Cut Costs and Boost Loyalty with Smarter Last Mile Delivery

Last mile delivery is about a lot more than just cheap, fast order fulfillment. It’s about a lot more than the Amazon effect, or the e-commerce boom. It’s about managing complexity in the last leg of the supply chain management process in order to keep your customers happy—whether they’re consumers waiting for a new dishwasher to arrive, grocery stores awaiting pallets of lettuce, or busy job sites in need of lumber.last mile delivery
Anyone who lives this process day in and day out can tell you how much goes into getting it right. This is meant to be a resource for precisely those people. On this page, we’ll elucidate on some of the challenges that face last mile delivery business, the trends that are impacting deliveries this year and beyond, and some of the ways that modern last mile delivery software can impact operations. 

Here’s what we’ll cover:

  • What Is Last Mile Delivery?
  • What Is the Last Mile Problem?
  • The Top 5 Challenges in Effective Last Mile Delivery
  • Last Mile Trends and Predictions for 2024
  • How to Choose the Right Last Mile Software Solution
  • Conclusion
  • Last Mile Delivery FAQ

What Is Last Mile Delivery?

If you’re thinking that last mile delivery is the just the final leg of the delivery journey, as something that starts when the delivery driver starts their route for the end and ends at the customer’s doorstep, then you may need to widen your definition. In point of fact, last mile logistics optimization starts before the first pallet has been loaded onto the truck and doesn’t finish until long after the order has been delivered and documented. 

  • Middle mile/shuttle routes: Depending on the type of business and the specifics of your transportation network, the first step in the process might actually be getting the right goods from the warehouse or distribution center to a transportation hub or cross-dock. This may involve shuttle drivers and other personnel. 
  • Warehouse loading: Items have to be scanned onto the right delivery vehicles at the right times, either by drivers or warehouse staff, with thorough documentation. 
  • Routing and planning: This one also depends a lot on the industry—a furniture retailer might be creating dynamic delivery routes from scratch every day, while a food distributor or services company might be starting from a baseline plan. Here, routers and routing specialists need to create optimized delivery routes that ensure that the right goods get to the right place at the right time. 
  • Dispatching: Simply put, once routes have been created you need to dispatch the right drivers with the right skills and equipment to get the job done.  
  • Customer communication: This is something else that feels like second nature to recipients but can create real complexity for delivery businesses. Customers need to know when their orders are coming and what to expect when they arrive. Ideally, they’d have some degree of  visibility into the delivery process as it’s unfolding. Doing this at scale can be a challenge.
  • Last mile delivery tracking: A crucial piece of the last mile puzzle is tracking the order from dock to destination. Dispatchers and managers need more than just GPS coordinates on a map for this—they need live status updates and other data to put those GPS coordinates in context. More than that, they need a way to track everything that’s happening across every delivery run from a single dashboard so they can spot and respond to exceptions quickly. 
  • Proof of delivery: Drivers are often the unsung heroes of the last mile journey—they’re the face of your brand in many situations—and one of the most crucial things they do is document the last mile deliveries from end to end. This comes to a head with the driver capturing proof of delivery, ideally via photos and digital signatures. 
  • Backhauls and returns: In cases where an item is damaged or simply doesn’t fit the customer’s needs, you might need to haul it back to the warehouse. Or you might be hauling away someone’s old fridge after delivering a new one. You might want to avoid driving back to the DC with an empty truck by making some pickups on your way. All of this has to be planned for, optimized, tracked, and documented. 
  • Post-delivery follow-up and reporting: After the delivery is completed, you might want to send post-delivery follow ups, surveys, or other communications to customers. 

With the whole journey in mind, you can start to see just how much falls under the last mile logistics umbrella. Why is this so important? Because it helps delivery businesses to better understand how they can tackle the challenges of last mile deliveries head on. 

What Is the Last Mile Problem?

Every dispatcher has been there at some point: A highway pileup first thing in the morning has made all of your ETAs for the day obsolete, and your switchboard is lighting up with customer calls. You scramble to reschedule impacted deliveries to ensure consignees will still be home when the driver gets there. 

The result? All of your truck routes become jagged and inefficient. Your drive times increase, your fuel costs go up, and your customers start drafting irate Yelp reviews. 

People talk about the last mile problem—the problem of getting the goods from the warehouse to their final destination—but really there are (at least) two distinct problems that we talk about when we talk about last mile routing: 

Complexity makes it difficult to set efficient routes. This leads to increased drive time, sub-optimal capacity utilization,  and higher fuel and labor costs. 

That same complexity makes it difficult to set accurate ETAs. Whether routes are efficient and cost-effective or not, businesses need accurate ETAs in order to reduce failed deliveries, reverse logistics costs, negative customer reviews, etc.

More often than not, these two problems go hand in hand. And because of the difference in travel times between trucks and cars, it’s something Google Maps and Waze really can’t help you with. 

Neither of these are new challenges—but changing customer expectations mean that dealing with these problems is no longer optional.

The Top 5 Challenges in Effective Last Mile Delivery

An alternate title for this section might be: 5 capabilities you need to succeed at last mile deliveries. Simply put, these are the areas of complexity that put up barriers to ensuring great customer service and profitable operations. 

If you can solve these, e.g. with the right last mile delivery technology, you can reduce total costs and delight customers with every single delivery run. 

Route optimization

It’s hard to overstate the importance of effective route optimization. It looks different in different industries (most retailers will need to leverage mostly dynamic route optimization to deal with an influx of new orders and customers each week, whereas a distributor or a field service provider may have static routes for each day that need to be tweaked as each day’s actual orders materialize). But the basic facts remain the same: delivery businesses need the ability to quickly and easily generate routes that are cost-effective and meet complex requirements. 

Your last mile solution should be able to offer you:

  • Highly-accurate delivery ETAs
  • Support for customer time window requests
  • Rapid route optimization and rerouting
  • Delivery cost estimates at the planning stage
  • Easy route adjustments
  • Configurable delivery service times for different delivery types
  • Strategic route planning that balances plans across multiple days of the week

To make this possible, you really need an AI-powered, SaaS-based solution that can handle a host of different parameters without slowing down to a crawl of losing out on route efficiency.

last mile logistics

Customer experience

The measure of a successful delivery isn’t whether or not it arrives within the ETA that your routing solution spit out (though of course that’s a prerequisite). It’s whether or not it met the customer’s needs and expectations. 

When it comes to something like when to expect the delivery and what to expect when the delivery team is on site, it’s your job to set those expectations. This can be hard to do at scale—calling customers to schedule deliveries and confirm schedules can be incredibly time consuming without some kind of automation. Likewise, asking drivers to call or text customers along the route with live updates is usually untenable. 

The result is that when you rely on manual processes for customer experience you can’t set yourself up for successful deliveries. Here, the best practice is to find a tool that can enable you to send out emails and texts in bulk to:

  • Schedule deliveries
  • Confirm delivery schedules
  • Double-check availability before routing
  • Provide ETA notifications
  • Send alerts during the delivery run
  • Send feedback survey requests post-delivery

This might not seem like mind-blowing technology, but it can help significantly reduce the number of failed deliveries and unexpected returns on any given route. Why? Because opening up a line of communication with your customers to make sure they’re prepared for the delivery helps turn up potential not-at-homes before the goods are routed and loaded into the truck.

Last mile visibility

No matter how effective your communications are—and no matter how well thought out your plans—actual delivery runs will never go quite the way you expect them. Customers won’t be available, drivers will get flats, extreme weather will intervene. 

When situations like these arise, you need to be able to manage by exception and resolve situations before they get out of hand. To make that happen, you need total visibility into the entire last mile delivery process. 

But what does visibility actually look like in this context? It’s more than just having information spread out across, say, a telematics solution, a driver management solution, and a last mile platform. On the contrary, real visibility means having the right data right at your fingertips when you need it—because by the time you’ve hunted down the info you need, it may already be out of date.

As it happens, driver management is a key component of visibility. When you know the status of your drivers throughout their delivery runs, you can more easily spot exceptions and manage situations proactively. 

To make this happen, you need a driver mobile application that boasts complete, real-time connectivity with the rest of your last mile functionality. You want the ability to get status updates in real time without the driver having to more than just push a button—and you want to be able to connect with drivers directly via chat to deal with any situations that might arise. 

Here, it’s valuable to have proof of delivery integrated within the driver mobile app as well. When your drivers can document each and every delivery—successful or failed—and share that data instantly with teams back at the office, you can gain much greater insight into your deliveries as they’re unfolding. 

Then, once the delivery run is finished, you have a complete audit trail for the process from dock to door.

Cost visibility/reporting

All of the above can be difficult to get right without the right technology—but in many ways it can be just as difficult to tell whether you’re getting it all right or not. 

That’s where reporting and analytics come in. When you have the entire last mile centralized within a single, streamlined solution, it’s much easier to create a single source of truth. From there, you can iterate on your processes to improve them over time and offer better and better service to your customers. 

Crucially, you can also gain greater visibility into last mile delivery costs. Ideally, your solution will give you the ability to see route costs at the route planning stage. When you have this information at your fingertips, you can make informed decisions about how best to put together your routes so that you’re serving your customers in a cost-effective way. 

Learn how S Bertram Foods was able to do just that:

Case Study: How Ryder Elevated Their Last Mile with DispatchTrack

​​As one of the largest 3PLs in the country, Ryder has been working behind the scenes to manage their customers’ supply chain, transportation, and fleet functions for more than 90 years. In 2016, they partnered with DispatchTrack to digitize their last mile execution.

By partnering with DispatchTrack, Ryder was able to digitize their last mile execution and gain the tools to represent their clients’ brands in the best possible light.  

Our platform offered: 

  • Self-serve customer scheduling 
  • AI-powered route optimization
  • Total delivery visibility for dispatchers, customers, and clients alike
  • An easy-to-use driver mobile app 
  • Digital proof of delivery via pictures, signatures, and notes
  • Automated customer communications via calls, texts, and emails

They were also gaining a flexible solution that could adapt to changing needs. 

By empowering smarter route optimization and delivery execution, DispatchTrack’s platform was able to help Ryder deliver on their vision. They were able to cut out manual processes like collecting proof of delivery via pen and ink and replace them with smart, automated, streamlined processes. Because the solution was easy to use, they could train their people on it rapidly, and as a result they were able to significantly reduce the time it took to schedule and execute on last mile deliveries. 

In addition, DispatchTrack gave Ryder the ability to configure its operations differently for different use cases and share data with clients in flexible ways. As a 3PL with diverse clients delivering diverse products, this has proved invaluable—and it’s formed the basis of continuing partnership as both businesses have grown. 

  • Reduction in delivery lead times by up to 1 day
  • 98% on-time delivery rates via route optimization
  • Minimal training time for new users/drivers
  • Significant reduction in calls from end customers 

ryders

Last Mile Trends and Predictions for 2024

1. Visibility Will Be More Crucial Than Ever

In 2024, businesses will have to dig into what visibility really means to their organizations. This will mean different things to different people, but might broadly be described as ensuring that you have the right information in the right place at the right time. The information here can include anything from live truck locations during delivery to more complete insight into your available capacity at the planning stage. 

This can be tricky to get right—it means that even having the right information isn’t always enough, e.g. if it’s so hard to find that it goes out of date while you’re hunting for it. But it’s a goal that will be worth prioritizing as businesses look at new ways to stay agile. 

2. Technology Will Help Level the Playing Field in Some Industries

One trend that we’ve seen playing out in the past few years involves businesses of different shapes and sizes using technology to gain a competitive advantage. Specifically, we’ve seen some of the ways in which mid-sized businesses can use smart technology deployments to compete more effectively with their enterprise-sized competition. 

It’s not too hard to imagine why this might be. First of all, smaller organizations are often a bit leaner and can make technology decisions and roll out new software deployments more quickly. More importantly, the proliferation of SaaS technology options has lowered the barrier to entry for a number of different improvements. Now that it doesn’t require a large internal IT staff and a host of on-site servers to get the most cutting edge logistics technology, mid-sized players can lean in on their digital transformations without breaking the bank.

3. Businesses Will Put a Premium on Flexibility

The past few years have shown how much can change about market conditions over the course of just a few months. The businesses that succeed in the face of these unpredictable disruptions are the ones that prioritize flexibility. You need to be able to adjust your routes to deal with changing customer demands, for instance. But the flexibility to make frequent route updates is hardly a given—many businesses struggle to reroute more than once or twice a year because the route parameters and requirements are so complex.

By the same token, businesses with fluctuating consumer demand levels over the course of the year (many retailers, for instance, who do most of their business during a few long weekends and in the lead-up to the winter holidays) need flexibility in how they fulfill orders. The ability to optimize the use of your own fleet vs 3PLs vs contract carriers and other fulfillment options is crucial for getting high volumes delivered on time during busy periods.

4. More Businesses Will Leverage What-If Scenarios

One big part of the flexibility equation is the ability to make informed choices between different logistics planning options—and often to make those choices on a tight timeline. That’s one of the reasons that we’ve seen what-if scenarios becoming more common, and we expect they’ll continue to do so in 2024 as delivery businesses continue to look for ways to get smarter, more efficient, and more flexible. 

What exactly do we mean by “what-if scenarios?” Simply put, we mean simulated logistics environments in which planners can run scenarios with proposed plans and see what the outcomes would be. To be effective, these are often powered by AI and designed to leverage as much data on previous deliveries as possible. By running these scenarios and comparing the results, planners can make more informed decisions about which options are the most cost-effective, the lowest risk, etc.

5. AI Will Become More Prevalent—In Unexpected Ways

If 2023 was the year of AI hype (which, given the rise of ChatGPT, DALL-E, and other AI platforms, we’d argue it absolutely was), then 2024 might be the year when we move past the hype to get down to practical applications of these technology paradigms. 

Given all of the breathless news coverage of advances in AI, logistics professionals could be forgiven for thinking that the real-life impact of AI has been slow in materializing. But in 2024 we expect that the practical applications of AI will slowly but surely make a greater and greater impact on the world of logistics. In last mile logistics, AI has already transformed areas like route optimization—albeit mostly behind the scenes. Applications like these will become more commonplace as time goes on, but we’ll also see new targeted AI-deployments that are laser-focused on helping human planners to do their jobs more effectively. 

How to Choose the Right Last Mile Solution

In the next section, we’ll argue that a lot of the functionality that’s historically lived in separate solutions or more monolithic TMS platforms should be housed within your last mile delivery software. But before we get to that, let’s take a look at some of the must-haves for logistics software that apply beyond specific individual technology deployments.

SaaS Technology

Like we saw above, different logistics functions require connectivity if you’re going to effectively coordinate across the fulfillment process. That means finding solutions that work nicely together—and can continue to work nicely together over time. 

That second part is crucial. SaaS technology already has the upper hand when it comes to connectivity, but the real value comes down the line when the software provider takes on the onus of ensuring ongoing updates, patches, improvements, and enhancements over time.

Ease of Use

Any given software solution is only as valuable as the use you’re able to get out of it—and that depends largely on how effectively your people can utilize the features and functionality you’re paying for. 

If you have a software solution deployed that requires the help of outside specialists in order for your team to do what it needs to do, you’ll never really be able to get your money’s worth out if. Obviously, some solutions are going to be complex and solve complex problems, but that doesn’t mean UX and UI don’t matter.

Scalability

This one is related to SaaS technology. After all, on-premise deployments are much harder to scale up—whether it’s because your business is growing or simply because it’s the holiday rush. A SaaS solution that’s architected to scale will give you a lot more freedom to up the number of trucks you’re routing, for instance.

But scaling isn’t just about software architecture. It’s also about empowering scalable processes, including software deployment. You want technology that can be rolled out to new branches without requiring months and months of frustration. By the same token, you want to know that when you deploy software to new branches they’ll be using in the approved way and running the most up-to-date version of the software.

Capabilities to Look for in Last Mile Logistics Software

Okay, let’s take a quick step back. How does the last mile figure into all of this? Many of the functions we’re talking about, again, could fall under the umbrella of a TMS or similar—and much of what a TMS does isn't going to come standard in your last mile solution.

And yet, so much depends upon the last mile. What you pay drivers and what you bill to customers are going to be determined by what actually transpires on the road. Did the customer receive their order in full? How many hours did the driver take to finish their route?

That’s a big part of why we recommend leveraging last mile delivery technology for a significant chunk of your logistics software needs. Specifically, we recommend finding a last mile solution that can offer:

  • Route optimization
  • Strategic route planning
  • Shuttle route planning
  • Customer communications via email and text
  • 2-way customer chatting
  • Real-time delivery visibility
  • Driver mobile app
  • Electronic proof of delivery capture
  • Sales/merchandising app
  • Billing and settlement capabilities
  • Visibility across roles and functions

If that sounds like a lot of things for one solution to do well, you’re not wrong. But by consolidating all of these within your last mile technology, you do more than just decrease your IT spending. You actually create visibility and connectivity across the entire process. 

By way of example: 

Let’s say you’ve got a slate of orders to deliver. You send out customer communications to confirm delivery schedules, then you route the ones that haven’t canceled, and send out another notification that includes an accurate ETA derived by the routing engine.

The routes are dispatched to the drivers via the mobile app, and as they start and finish deliveries those updates are reflected on the solution’s dashboard. Dispatchers, managers, customer service staff, and even sales can see which deliveries are underway, which are running on time, and which have exceptions.

For deliveries with exceptions, the team can jump on them right away to smooth the situation over. The salesperson can call the customer directly after logging into the system and seeing that their order is going to be late based on the ETA being projected by the routing engine. For deliveries that go off without a hitch, you can send a delivery receipt with proof of delivery, and based on the information collected at the job site (e.g. for extra time or accessorial charges) you can invoice the customer and pay the driver or carrier. 

When all that’s through, you can send a survey to the customer via text to capture a CSAT score along with all your other analytics. 

Sure, there’s a lot that has to happen before and after this process that will require interconnection with other solutions. But you can see how housing different functions under one umbrella—within a platform that’s purpose built for the last mile—can create efficiencies, boost visibility, and ultimately reduce the costs of last mile delivery and improve customer experience. 

Conclusion

Last mile delivery isn’t an easy process—especially when you’re talking about big and bulky goods. But it’s also something that’s ripe for digitization and optimization. In the modern last mile, you can leverage connected digital processes to create workflows that are streamlined, agile, and intelligent. 

That’s all well and good in theory, but we hope that the rundown we’ve given on this page gives you the info you need to put it into practice. After all, when you know what to look for in terms of last mile delivery capabilities, you can much more effectively seek out the right tools and technology for your operations.

At the end of the day, the technology on the market right now really does have the power to be transformative. By upgrading to an AI-powered, SaaS last mile delivery solution, you can put yourself in a position to reduce shipping costs, delight customers, and future-proof your last mile. 

To learn more about how DispatchTrack can help, get in touch with us here:

Last Mile Delivery FAQ

How does last mile delivery affect customer satisfaction?

The delivery experience is a primary driver of customer satisfaction. Recent SalesForce research found that 9 out of 10 customers are more likely to make another purchase after a positive customer experience. Knowing where their order is, when it will arrive, and having it arrive at the promised time are fundamental to the customer experience. Improving last mile performance by communicating clearly and delivering on time boosts customer satisfaction.

How can I reduce last mile costs?

Last mile delivery accounts for half of total shipping costs; its largest components are fuel and drivers. Manual routing and simplistic shortest-distance routing don’t make much of an impact. A sophisticated routing platform can optimize fleet capacity to make more deliveries with the same trucks and optimize routes to reduce miles driven. Especially in a dynamic operation with frequent day-of-delivery changes, you need tech that can make updates on the fly without degrading route efficiency.

How can I make my last mile delivery operation more efficient?

Last mile delivery is a complex, multi-step task. A smooth flow—of data, direction, and feedback—from order-in through done-delivered-reviewed minimizes operational friction that slows deliveries and frustrates everyone from routing specialists to drivers and, ultimately, your customers. Reduce that friction with a tech platform that integrates internal processes and connects the different roles, seamlessly moving orders from an ERP to the customer’s door. Tracking and analyzing KPIs, including customer ratings, monitors challenges and highlights opportunities for further improvement.

How can I reduce first attempt delivery failures?

The cost per failed delivery in the U.S. was $17 in 2020. First attempt failures are often caused by customers not being present. When customers can self-schedule into optimized windows they’re more likely to be there. Your routing platform should be able to forecast ETAs your drivers can meet 98% of the time. Communicate continuously with the customer, from delivery reminders to day-of notices and implement live tracking, so they can see where their delivery is at all times.

How can I reduce WISMO calls?

Customer “where is my order” (WISMO) calls are costly. Proactively push automated notifications—day-of, route start, ETA, and live tracking—to customers. When customers know where their order is and when it will arrive, they won’t have to call. Implementing two-way customer chat will also cut WISMO and improve first attempt delivery rates. A customer may need to update a delivery crew with a gate code or time change, and two-way messaging is quick, efficient, and satisfying to the customer.

How are AI and machine learning affecting last mile delivery?

AI and ML are driving dramatic improvements in efficiency. They allow sophisticated platforms to combine time, distance, and sequencing with dozens of factors including customer preference, crew skills, traffic patterns, load factors, and more to produce routes that reduce miles driven and labor hours while improving on-time performance and customer satisfaction. However, AI is sometimes being used to describe minimal implementations. To take full advantage, logistics platforms must be able to analyze all of the factors that affect deliveries and profitability, not just distance and time.


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