Last-Mile Delivery Costs: How to Control and Optimize It

Savvy customers are expecting same-day delivery of goods as a pre-requisite for ordering online. With the demand for a faster and effective delivery service increasing, companies need to find effective ways to optimize last mile delivery costs.

The last-mile costs refers to the investment that goes in the final step of the delivery process from a distribution center or the facility to the end-user. This step is crucial for achieving customer satisfaction. Implementing a cost-effective and efficient system helps in building brand loyalty. However, if last-mile delivery is not executed efficiently it can result in massive losses in the guise of financial dents, poor brand reputation and bad customer experience.

How much does last mile delivery cost?

If not managed efficiently, the cost incurred on executing last mile executing can put a significant dent on your bottomlime. Last mile delivery costs can contribute upto 41% of overall logistics expenses. A modern last mile solution can go a long way to help enterprises manage this increasing costs.

Optimizing Last Mile Delivery Costs

Logistics processes of the last mile when implemented properly can save a lot of time and money. Some of the key controllable last mile costs are as follows -

1. Ensuring Fleet Visibility

Companies need to ensure transparency and visibility on the movements of fleets available for the delivery of goods. By implementing automated systems and smart technology, company can keep track and maintain a communication channel between the ground staff and the delivery fleet to avoid last minute delays. The visibility of fleet enables companies to keep customers informed about the status, location and timing of their deliveries. Happy customers mean better business.

2. Implementing Real-Time Tracking

Real-time tracking provides complete visibility to customers and solves any internal delivery issues faced by the company. The ability to communicate critical information to guide the delivery fleet efficiently would help in avoiding delays due to traffic or weather conditions. With real-time tracking, companies can provide the estimated time of delivery (ETA) to customers via web or mobile application automatically. It also helps in managing last mile delivery costs and ensuring transparency of delivery at all times. Companies can even monitor the efficiency and performance of drivers. Real-time tracking saves last mile costs by optimizing miles travelled and enhancing driver productivity.

last mile delivery costs

3. Utilize Route Optimization

Route optimization is the process of determining the most cost-efficient route while enabling maximum number of delivery points. Companies need to consider factors like fuel costs, driver productivity, risks, one-way windows, delivery urgency and more, to figure out a viable and efficient route. With highly efficient delivery routes in place, companies can dispatch delivery tasks within seconds.

Additional factors like monitoring the routes that fleet drivers take, identifying the traffic patterns, idling time and driving time enables a company to find efficient routes, thereby cutting down the fuel costs and the delivery time. Real-time route alerts like unexpected traffic situations can be used to re-route the delivery fleet to avoid delays. With such information, dynamic route optimization can be implemented. It can help companies integrate new orders into the delivery schedule. A route planning software will help shift deliveries to other drivers automatically, in case of a vehicle breakdown. Companies will be able to map the shortest path, taking all parameters into consideration. This way, they can save time, cut expenses and increase overall efficiency.

4. Enhancing Customer Engagement

Customers are increasingly demanding transparency on the status of the goods and control over both the delivery location and the timing. When customers have the option to select the desired time window, companies can plan their delivery process better, thereby reducing the risk of first-failed delivery. Customers should be provided with real-time updates of their shipments. These updates can be sent via e-mail, SMS, in-app notifications or a phone call.

5. Maintaining Proof of Delivery

Companies need to maintain proper proof of dispatch and delivery, condition of the goods delivered, customer’s non-availability status and payment details. These proofs can be electronically captured through notes, pictures or videos, and uploaded immediately into the system. Having the ability to maintain data in the real-time will help in resolving customer queries. Electronic proofs eliminate unnecessary paperwork and reduce physical storage space in an office.

Controlling the last-mile delivery costs by optimizing routes, reducing fuel usage and tracking fleet, companies will be able to deliver goods on-time and keep customers satisfied. This will build brand loyalty and drive profitability.

FarEye has been empowering retailers across the globe to achieve high levels of delivery efficiency by optimizing their last mile operations.