5 fundamental ways to reduce Last mile Delivery Costs

April 12, 2018

The term “last mile” is more than just a buzzword in the logistics and supply chain industry, concerning the transportation of goods to the final destination. Last mile delivery plays a key role in maintaining customer satisfaction. You can measure your fleet performance with 5 key metrics for last mile delivery. However, the inefficiency of delivering goods and difficulties in reaching end users trigger last mile problems by dint of high transportation expenses. How can businesses reduce the cost of last-mile delivery? Are there any effective ways facilitating fleet management? Or are there any intriguing tools that can anticipate, avoid and mitigate vehicle problems? To answer such questions, we need to consider 5 essential ways as below.

 

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1. Use Route Optimization Software

 

It is undeniable that an optimized route plan is the best way to minimize your cost. A route optimization software establishes best routes and assigns orders based on the volumes, traffic conditions, time arrival estimation, depots, time windows of stores, number of vehicles, loads, etc. in the least amount of time. Instead of manually planning, the best route optimization system helps businesses allocate time and resources more efficiently and economically as well as reduce operational costs, overhead costs and fuel expenses on road. If you want to shortlist the key software features needed to manage last-mile delivery, please read more here.

 

 

2. Optimize Load Distribution

 

Load distribution refers to the allotment of goods loaded on vehicles to make the best use of the capacity. Its main goal is to maximize the resource utilization and minimize response time without overloading any resources. In details, to execute a larger volume (i.e. a full loaded truck) is an optimal way to reduce transportation costs, number of deliveries and risk of damage to products caused by extra space. With better load distribution, you can reduce the number of vehicles and human resources, which helps mitigates the cost and increase the efficiency and accuracy.

 

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3. Locate Warehouses in urban areas

 

The third way to reduce last mile cost is placing warehouses in urban areas, near end-user places. Depending on your business, there are different types of warehouse: sun warehouse, x-dock. Rather than thousands of middle distribution channels, these urban warehouses are now near the highly populated areas for quicker and more convenient shipping. Goods are transported from production sites, stored there then delivered to the end customers. It lessens last mile delivery costs while improve the speed and responsiveness of the supply chain.

4. Choose fit-for-purpose Vehicles

 

Companies need to reckon vehicle alternatives in accordance with specific purposes, geographical and traffic conditions. For instance, urban restrictions and increasing congestion make it hard to use the same equipment on city routes as you might use in the suburbs or the countryside. There exists a variety of choices among motorbikes, trucks, vans, cars, etc. but the right type of vehicles can allow full Vehicle Fill Rate (VFR), reduce costs and time spent on road, thus assists the last mile deliveries.

 

5. Don’t forget Reverse Logistics

 

Reverse logistics involve the process of delivering the desired goods to customers, receiving and sending back their unwanted products. At least 30% of all products ordered online are returned as compared to 8.89% in brick-and-mortar stores. This means the delivery of products does not put an end to your job. 92% of consumers said that they would buy again if product return process was easy whereas 79% of consumers prefer free return shipping. Hence, reverse logistics needs utilizing with a good return plan; otherwise, this factor will substantially increase last-mile delivery costs. 

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In this era of digital transformation, enterprises have incentives to integrate technology to coordinate deliveries. It is the key for companies to differentiate their brands, boost efficiency and grow their businesses. These initiatives shed the light to the final stretch of delivery. However, emphasizing solely on the delivery process is not enough. A complete and successful last mile operation requires appropriate fulfillment at the order management, inventory management, route optimization, distribution and shipping level.

 

Now that at ABIVIN, with the advent of Abivin vRoute 3.0, all you need are incorporated in All-in-one route optimization software  with an easy-to-use interface. Machine learning and artificial intelligence use algorithms designed to save your delivery costs and better allocate company's resources. We aim at developing a complete supply chain optimization software, which is not just about solving the problem but also maximizing the efficiency and improving your services.

 

Sign up to experience Abivin vRoute - Logistics Optimization Software

 

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References:

  1. https://www.logisticsbureau.com/fixing-retail-supply-chain/

  2. https://www.carpal.me/press-news/last-mile-delivery-costs/

  3. http://mylogisticsmagazine.com/logistics/columnist/driving-cost-last-mile-delivery/

  4. https://www.mitchellsny.com/blog/overcoming-last-mile-logistics-challenges/

  5. https://www.supplychaindive.com/news/last-mile-spotlight-retail-costs-fulfillment/443094/

 

 

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