5 Keys to Shipping Optimization

There’s no getting around the fact that shipping is expensive. It’s not just fuel cost and driver pay that make it difficult to keep shipping costs down, it’s everything from the complexity of managing so many moving parts to the sheer volume of manual effort that can go into things like communicating with end customers, tracking shipments, and documenting deliveries. Optimization is increasingly non-negotiable.

Luckily, the tools are out there to help delivery organizations optimize shipping and reduce delivery costs. In this post, we’ll cover all of the ins and outs of making that happen. 

The Power of Shipping Optimization for Reducing Logistics Costs

Shipping—particularly the last stage of the process, i.e. getting the goods to the end customers—is a huge cost center at most organizations that deal with it. There’s no way around the fact that the process is complex and consumes a lot of resources, but it’s also rife with inefficiencies most of the time. 

If you can cut out those inefficiencies, you can directly address many of the root causes of high shipping and logistics costs: manual planning and tracking effort, unplanned returns, rework, disruptions and exceptions, etc. 

It’s not something that’s as simple as flicking a switch, but at the same time it’s absolutely achievable with the right delivery management technology and the right best practices. 

Keys to Optimizing Your Shipping Process

1. Increasing route efficiency 

The most powerful first step you can take in decreasing logistics costs is to optimize your shipping and delivery routes. This is something that can shave more than 10% off your total number of miles driven (at least in the last mile), which in turn means significantly lower fuel costs and driver hours per stop. 

The key here is to make sure you have route optimization capabilities that can actually keep up with your operational needs. If you’re running scheduled deliveries that require the customer to be at the delivery site and may require some on-site services, it can be difficult to utilize your resources efficiently while still meeting job site, customer, vehicle, and personnel requirements consistently. Only an intelligent, AI-powered routing engine can cut through this complexity at scale.  

2. Engaging with customers 

There are a few factors that determine how many miles your team will have to drive per delivery. One of them is how efficient your routes and schedules are to begin with, but another that’s nearly as important is your delivery success rate. After all, any time there’s a failed delivery and the order has to come back to the warehouse and get redelivered the next day, you’ve effectively doubled the mileage.

How do you make sure you’re delivering successfully on the first attempt as often as possible? By engaging with your customers to ensure that they’re ready to receive the delivery when the truck arrives. This is just as important when it comes to B2B deliveries (e.g. food and beverage or building materials), and getting it right comes down to customer communication and engagement. 

The best practice here is to make sure you’re communicating early and often with customers—sending them schedule updates, live delivery notifications, and personalized communications in the case of exceptions. It can be tough to do this at scale, which is why finding a way to automate these messages is so critical. 

When you get this part of the equation right, you can make meaningful progress towards shipping optimization simply by taking the guesswork out of the customer experience. 

3. Boosting visibility across all miles

Every piece of the logistics and fulfillment puzzle is fundamentally connected. What happens in the first mile impacts the middle mile, which in turn can determine success or failure in the last mile delivery to the end customer. If the teams managing each leg of the journey don’t have visibility into one another, you wind up flying blind. 

By connecting all miles and boosting visibility across the board, you can take control of your logistics processes and approach true shipping optimization. 

This might sound painfully abstract, but visibility is actually something that’s specific and actionable when you get it right. It means connecting systems in such a way as to ensure easy answers to questions that might arise across different touchpoints and teams: 

• What’s your available delivery capacity for a given day?
• Which of your customers have confirmed their schedules? 
• Are any orders running behind schedule? 
• Has proof of delivery been captured at every stop?
• What’s the planned vs. actual stops for a specific route or delivery run?
• How profitable are your deliveries?

When you can answer the most pertinent questions in a matter of moments, rather than hunting for data across multiple systems, you can optimize your shipping and logistics processes much more quickly and easily. 

4. Connecting planning and execution 

You may have noticed that one of the hypothetical questions we posed above was “What’s the planned vs. actual stops for a specific route or delivery run?” That’s for good reason—it’s an important number for letting you know how well your plans are aligning with your execution. 

If there’s a gap between planning and execution, it typically comes down to route optimization, driver enablement, or customer experience (which we discussed above). In the case of route optimization, it’s important to make sure your routes are actually built to execute. Simply put, they should be as efficient as possible while still being feasible for your drivers—that means realistic ETAs and close alignment between driver skill and job type. 

From there, it’s crucial to enable drivers with all the tools they need to get the job done smoothly. That means turn-by-turn directions, configurable compliance forms to ensure service levels are met, easy proof of delivery capture, two-way communications, and even AI-powered stop briefings to simplify access and parking. 

5. Intelligent reporting for iterative success

Even with all of these best practices in place, shipping optimization isn’t a one-and-done activity. It’s something that’s going to take some time and some trial and error, which is why it’s so important to be able to turn visibility into intelligent insights and reporting. 

Here, the right software is going to be crucial. Look for a solution with a combination of native reporting capabilities and straightforward integrations with the business intelligence platform of your choice. You should be able to establish a source of truth for figuring out if your attempts at shipping optimization have been successful or not. 

From there, you can refine what you’re doing and reduce delivery costs even further. 

Conclusion

At the end of the day, shipping optimization is about more than just finding ways to cut costs or save time—it’s about taking a holistic approach to delivery and logistics management that makes your operations leaner, more cost effective, and more scalable. By leveraging the best practices we’ve been talking about, you can save money, improve customer satisfaction, and build a better pathway to growth. 

If this all sounds daunting, it doesn’t need to. Our team of shipping optimization experts is always on hand to help walk delivery organizations through the power of the right logistics technology. Reach out to us today and we’d be happy to provide a more concrete picture of exactly what these best practices look like in real life.