Last-mile delivery: gaining efficiencies and reducing operating costs

The cost of last-mile delivery 

Last mile is by far the most expensive link in the fulfilment chain. Depending on who you ask, the last mile accounts for as much as 35 to 53% of the total delivery cost. Even using the more conservative 35% figure makes the cost astronomical for retail logistics. Each package costs on average, U.S. $10.1. Businesses charge the consumer – again, this is an average – U.S. $8.08 to cover these costs.

The rest comes from the profit margins of sold products. Keep in mind that these are mostly small packages too. Last-mile delivery for larger items, such as electric appliances, can cost up to U.S. $50 per package.

Each failed delivery costs U.S. $17.78, on average. What makes this so bad is that an astonishing 5% of all last-mile deliveries fail.

For logistics, that doesn’t leave much room for margins to maneuver.  Charging customers more to deliver is not much of an option when 73% of shoppers abandon their online cart if a delivery fee is charged.

Little wonder that 75% of respondents in a Business Insider survey said that meeting e-commerce demands for deliveries has become their most significant challenge. It will only become more difficult. The number of delivery vehicles in the top 100 cities around the world are projected to rise by 36% by 2030.

The congestion this will create will add 11 more minutes to commute time for each passenger every day, making it even more challenging to hit targeted delivery windows. With congestion comes lower average speeds and more time on the road.

Outdated technology used for last-mile delivery

Nearly half of global transportation and logistics companies use outdated technology for last-mile delivery. This is exactly why they struggle to deliver on time. They need a dynamic element. Most companies realize this, and that’s half the battle: 51% of respondents to a Business Insider survey said that they would try new technologies to gain efficiencies and reduce costs.

Those companies are on the right track. The only way to rise to these challenges and edge out the competition is through digitalization. By integrating digital solutions into your supply chain, you can simplify the last mile, making it more efficient while reducing costs.

Digitalization creates significant efficiencies

Efficiencies ease the pressure on margins and unlock performance. Working inefficiently wastes precious time, frustrates customers, costs more, and leaks revenue.

Creating efficiencies starts with digitalization. You can work with various systems, all of them online, but if they’re not integrated with each other, communicating data in real time, providing a deep view into operations, and optimizing processes, you’re not working digitally.

Hence, you’re unable to address unexpected events or order changes that impact your operating costs. Nor can you gain insights through a transparent, deep view into operations.

You’re simply working in silos online. It’s those silos that prevent your business from working cohesively and contribute to inefficiencies that eat away at your margins.

Challenges make last-mile support critical

The AMCS Transport Optimization Suite should be your first step into the digital world. In a nutshell, it optimizes your routes to cut out wasted miles to help you deliver within narrow time frames.

It stands alone but can also integrate with other systems. The latter is the ideal situation. By connecting your devices, you embrace a truly digital ecosystem to gain maximum efficiencies.

The AMCS Transport Optimization Suite is based on the cloud and with critical add-on modules, it provides tremendous support for different aspects of logistics: strategic, tactical, operational, and post-operational.

Strategic

Perform “what if” simulations to see how a strategy, business move, or a new piece of legislation would work. What adjustments will you need to make? What will be the effect on costs if you combine distribution with back-haul transport, for example? Use different vehicles? A simulation will answer your questions by enabling you to collect data to analyze.

Tactical

The system deploys your resources in the most efficient way to minimize revenue leakage and protect your margins. The AMCS Transport Optimization Suite also optimizes your master plans so that you can coordinate events in your supply chain and synchronize demand with transport.

This enables you to streamline operations, not only freeing your team from so much stress, but also giving you the tools to work with agility and efficiency.

Operational

You’ll have the ability to carry out maintenance on your masterplan either weekly or monthly. Time-slotting for new customers is possible, so you can build a loyal customer base. You also have full transparency into the vehicles and drivers available. The system can receive orders on a daily basis. Ad hoc order planning is easy too. As each order is added into the system, the schedule and routes are re-optimized.

You can co-ordinate activity with warehouses, eliminating wasted time and errors – this is another example of how transparency creates efficiencies. Mobile devices enable drivers to send and receive status updates to the system. They can record every event so that you know what’s going on in real time.

Plans vs actuals is fundamental to analyzing performance. It answers the question, “did the plan work?” The system makes it possible to compare what actually happened to what should have happened according to the plan. The insight you gain can then inform your decisions.

Post-operational

Execution debriefing with truck drivers can help lead to operational efficiencies. For example, data will tell you that a stop took half an hour, yet only 15 minutes was scheduled. The driver can provide specific details, and if relevant, you can include those details in future planning.

You can also compile trip reports from the data derived from the system’s live data model and from the built-in data warehouse. The report can include customer service levels, loading list publishing, warehouse activities, performance and forecasts – anything that the data captures and informs.

AMCS Transport Optimization Suite as standalone

This powerful optimization suite takes on the constraints your drivers face and improves the quality of daily routes. It addresses rush-hours in zones and on roads, and narrow time windows on orders, resources, and terminals. AMCS Transport Optimization Suite accounts for vehicle and road challenges, such as different speeds and driver qualifications. You can rest assured that the right driver will always be scheduled for certain loads.

AMCS Transport Optimization Suite also handles multi-trips and multi-terminals in the most efficient way possible. Use it to create master plans using visit frequencies and patterns. Take advantage of the ability to do territory and district planning, which manually, is complex and time intensive. In other words, it’s a drain on your resources. You can optimize how you use your network of depots for which orders. Let technology instantly sort it out, giving you the most efficient, cost-effective multi-leg plan.

The numbers: what you can achieve

With AMCS Transport Optimization Suite, retail-logistic users have experienced up to a 25% reduction in the number of vehicles and driver shifts needed. They’ve lowered the number of miles, driving time and CO2 emissions by up to 30%. The time spent trying to optimize each route fell by up to 90%. These efficiencies have led to significantly improved customer service and visit accuracy.

Reduce your operational costs

Fewer miles driven equals less wear and tear on vehicles, less fuel consumption, and deliveries completed faster. These efficiencies affect your operational costs. Doing business becomes more economical for you while improving performance and lowering your carbon footprint.

Digital solutions are the only way forward to not only be competitive but to succeed. AMCS’ expertise in logistics and software result in efficiencies and lower operational costs that open up a new world of possibilities.