How to Improve Last-Mile Delivery in 2021

This is our complete guide to improving last-mile delivery in 2021.

In this all-new guide you’ll learn:

• What last-mile delivery is
• The importance of last-mile delivery in 2021
• The top challenges of last-mile logistics
• New strategies to improve last-mile logistics
• Lots of advanced tips and techniques to do it

So if you want to cut down on costs and generate more revenue from delivery this year, you’ll enjoy this guide.

Let’s start.

What is last-mile delivery?

Last-mile delivery is the movement of products from distribution centers to their final delivery destinations - the customers who ordered them.

Last-mile delivery logistics applies to the very last step of the delivery process and how it’s completed.

The main goal of last-mile logistics is to deliver items to the end-user as fast as possible and at the lowest cost to the company that’s delivering them.

According to McKinsey and Company, last-mile parcel shipment is estimated at over $83 billion this year, with expectations to double within the next 10 years.

This brings us to the importance of last-mile logistics.

The Importance of Last-mile Delivery

The last mile is a crucial part of the delivery process.

Consumer demand for exceptional delivery experience has never been higher than it is right now.

In fact, studies show that 80% of consumers want to track their delivery in real-time.

Another 45% of customers expect a delivery window of 2 hours or less.

To keep up with these expectations, businesses have to change the way they operate.

And without last-mile delivery opportunities that wouldn’t be possible.

But typically, the last mile makes up about 53% of a shipment’s entire cost.

Additionally, we’re living in the age of Amazon and Covid 19.

And if you want to stay relevant in a post-COVID world, you NEED TO have a good delivery.

With the state of delivery in time of the coronavirus as it is, there are a lot of possibilities to approach the audience that’s willing to use your service.

Here are some of the key benefits of last-mile delivery solutions:

• Offer products or services online
• Attract more new and return customers
• Generate more sales and income
• Make it convenient for customers to shop
• Understand your customer’s needs
• Create an omnichannel supply chain
• Overcome market disruptions like COVID-19

The top challenges of last-mile logistics

If you want to know how to improve last-mile delivery, you first have to understand the challenges.

As consumers increasingly turn to eCommerce for all their shopping needs, fast fulfillment and distribution aren’t just a “good to have” business model — it’s the expectation and necessity of every online shopping experience.

Last-mile services became a necessary part of the global supply chain, because of the change in consumers’ behavior.

They aren’t only demanding in terms of quality but also in terms of product differentiation, and customization.

Naturally, there will be plenty of last-mile delivery challenges.

And here are the biggest ones:

Competing with Amazon

Let’s put it this way:

Amazon is the king of online retail.

And Prime is his strongest weapon.

Amazon offers same-day delivery on a large number of orders. Which means other retailers and businesses need to do the same.

But the trick to learning how to compete with Amazon delivery isn’t to contend with them. It’s to co-exist.

The only way to achieve this is to build a solid last-mile delivery operation of your own.

As a result, many businesses are cutting down delivery times.

And they do this by starting to ship from physical stores and not only distribution centers.

This enables them to plan multiple depot locations where it matters - in the last mile.

They reduce the distance between shipper and receiver without breaking the bank.

Big products that come in multiple boxes

Large products typically come in multiple boxes.

So shippers need to think about how all the pieces of the larger order are packaged and shipped.

They need to ensure that the unpacking is easy for customers and that no pieces get lost in transit.

If your business doesn’t offer assembly services, make sure your last-mile carrier does.

Depending on the products you sell, the installation sometimes needs to be handled by a trained technician.

In that case, you should assemble the items and choose a delivery fleet that can deliver larger goods in urban areas.

High Costs of Last-mile Delivery

Last-mile delivery cost is another big challenge. Especially when it comes to small businesses.

With new and higher customer standards, the pressure on companies’ budgets is really high.

Even though according to delivery statistics, 44% of customers don’t mind paying for expedited deliveries, it’s still quite challenging to accomplish it without losing money.

This expectation of same-day deliveries has a huge impact on the budget.

In fact, 28% of the entire delivery cost actually comes from the last mile.

Usually, this is transferred to the user. But that results in a poor customer experience.

And when that’s not the case, operational expenditure is transferred to you. And that harms your company.

So this challenge can only be resolved with higher efficiency and better planning.

Supply Chain Visibility

Having information about the location of your orders in transit is critical for the success of last-mile operations.

You need to be aware of which orders are supposed to be shipped when the order request arrives so you don’t miss the delivery date and time.

If you’re working with an external carrier, you should also have insight into the fleet that is delivering your products on your behalf.

You always need to know the number of drivers available and the delivery times to make sure all of them deliver on the promises you’ve made to your customers.

Last-mile delivery tracking gives you access to all this data.

It ensures you understand where all the pieces are, so you can maintain control over your last-mile logistics.

This is what gives you visibility over the supply chain and allows you to spot derangements easily and quickly when and if they happen.

Managing multiple fleets

While retail giants such as Amazon have their fleet, most businesses are working with external fleets.

This means that you have to depend on people outside of your organization.

And this is a challenge.

The key here is to find ways to maintain control.

You have to work together with your last-mile provider to ensure they maintain the level of service your customers are accustomed to.

This reduces the chance of a poor experience.

7 ways to improve last-mile delivery

#1 Centralized Logistics Management
#2 Driver Dispatch Automation
#3 Automated Route Planning
#4 Real-Time Driver Tracking
#5 Improve Driver Communications
#6 Automate Status Updates
#7 Monitor Driver Performance

#1 Centralized Logistics Management

To centralize or not to centralize delivery operations? - that’s the question you need to answer.

Centralizing how you manage last-mile delivery logistics is the first step you need to take.

It doesn’t matter whether you use an internal vs external delivery fleet, operating them from one central location enables you to gain control and visibility over the entire last mile.

But how can you do this?

The answer is:

You have to use a tool that connects all the different parts of your organization into one end-to-end platform.

You have to rely on delivery management software.

This type of software adopts a cloud-first approach to delivery logistics.

On the one hand, the software is modulated.

This means you can plan various aspects of your last-mile delivery, such as routes, schedules, and dispatching.

On the other hand, it can connect with other apps that you already have and use.

Thanks to the API integration, you can connect the software with other tools you use to manage order requests, supply chains, or inventory.

And this means you can have centralized control over the entire operation, from the first to the last mile.

And because it works using cloud computing, all the data you collect and generate is stored on the cloud.

Which means you have complete visibility in time and space. And you can analyze and optimize everything automatically, and make adjustments in real-time.

That means you can constantly improve operations to gain speed and lower costs of the last mile.

But that’s not all.

#2 Driver Dispatch Automation

With automated driver dispatching, you can reduce your service labor cost and time.

How do you do that?

You simply let last-mile delivery software do it for you.

Instead of dispatching drivers manually, the software connects the main control dashboard to a delivery driver app.

The app is located on the drivers’ phone, which they can access in the field.

So instead of printing out fixed routes and schedules, the drivers use the app to access all the information.

At the same time, dispatchers can dynamically route vehicles while the drivers are making their stops.

For example, if an order arrives when the driver has left the distribution center, you can add the new stop and automatically readjust his route using the software.

But you can also set auto-assignments rules based on route distance and driver location.

And that will limit the number of tasks per driver.

#3 Automated Route Planning

The cost of transportation is by far the most expensive activity in last-mile delivery. It also creates a lot of waste of your resources, especially if you don’t plan routes ahead of time.

But not all route planning is the same. And manually planning routes can be just as ineffective, if you don’t optimize them for cost and speed.

That’s why delivery management software has built-in route planning and optimization capabilities.

On the one hand, automated route planning makes it fast and efficient to map routes with multiple stops for all the drivers and vehicles in your fleet.

All you have to do is to set up your fleet and upload the orders to the system. You can plan as many drop-offs and routes as you like because there’s virtually no limit.

On the other hand, the delivery software will automatically and simultaneously optimize those routes, as well.

And it does this based on several different internal and external factors, such as driver availability, stop density, cost per delivery, traffic, and many others.

So this type of last-mile delivery logistics software will generate the most efficient routes every time, which means you can save as much as 50% of operating costs alone.

#4 Real-Time Driver Tracking

Give your customers more than just a static tracking number. They will be thrilled if you give them an experience with live driver locations.

Routing software allows you to create tracking links. These links let the customer see where their order is in real-time.

But not only that, but your customers can also communicate with the driver in live chat. Customers love direct communication like this because it gives them a sense of greater value.

Updating customers about their delivery status and notifying them when it arrives makes them feel safe about their decision to do business with you.

Customers love notifications, 73% of them said that notifications were a crucial factor when deciding to buy online and have the order delivered to their homes.

So, if you want to hook more customers to use your delivery give them what they want. And let them see what they bought.

#5 Improve Driver Communications

Not only do your customers need to be able to communicate with your driver, but you also need to be able to communicate with them as well, no matter where they are.

This will help locate possible issues and solve them right away in real-time, or you will catch it before it becomes an issue.

Additionally, the delivery driver mobile app streamlines communication between teams with the help of the onboard chat.

Drivers can use the chat for internal communication with customer support and dispatch.

#6 Automate Status Updates

As we mentioned earlier the majority of customers expect to be able to track the status of their orders.

Last-mile delivery technology makes sure your customers know exactly when the delivery has left the distribution center and when it should be expected to arrive.

Processing data and using it for your delivery helps you to create a personalized customer experience.

You can personalize updates, notifications, and share customer information with drivers.

Thanks to delivery management software, you can learn more about customer preferences and customize deliveries to fit each individual.

#7 Monitor Driver Performance

One of the key metrics in delivery logistics to pay attention to is the performance of your drivers.

This includes:

• On-time rates
• Service times
• Customers Feedback
• Number of orders delivered

Monitoring this data will help your business identify concerns for driver safety as well as opportunities for improvement.

With the help of the software, you can not only monitor all this but also filter data by drivers, teams, day, week, or even by the hour of the day.

You can also export the data to create detailed reports that you can pull regularly to keep track of the shape of your last-mile logistics and how you’re improving over time.

If you want to learn more about how you can improve your last-mile delivery, we can help.