Best Ways to Optimise Last Mile Logistics

Being the last leg in the supply chain, last mile deliveries are notorious for being the costliest and most time-consuming. And it’s about to get worse – at least for companies who don’t take the necessary steps to optimise their last mile logistics.

As e-commerce continues to grow, customers expect faster and more precise deliveries, forcing companies to refine their delivery operations to meet customer needs while remaining profitable. 

So, if you’re looking for the best ways to optimise every last mile delivery, this is the blog post for you.

 

What Are the Best Ways to Optimise Last Mile Logistics? 

Optimising last mile logistics requires a multi-layered approach. As the final step in the supply chain, numerous variables are involved, each of which can significantly impact the efficiency and customer satisfaction for each delivery. 

To optimise your last mile logistics and make each delivery as efficient as possible, you should be looking to optimise at each level of your logistics ‘stack’:

 

Predictive Analytics in Logistics:

With developments in technology, logistics companies can now take advantage of predictive analytics software to optimise their last mile logistics. 

Using historical data and advanced algorithms, the predictive analytics software can forecast future trends and potential issues affecting delivery times and customer satisfaction.

Being proactive allows managers to act on the incoming information and allocate their resources more effectively, schedule deliveries more accurately, and enhance the overall operational efficiency of the delivery team.

The best part of predictive analytics is that it is all done automatically by software. All the manager has to do is look at the incoming data, turn it into actionable insights, and act on them.

Route Optimisation:

The route your delivery drivers take to fulfil orders will have a tremendous impact on the cost of each delivery and customer satisfaction. When it comes to the ideal route, it will be the one that minimises travel time and maximises how many items are in each vehicle.

That way, the customer gets their order sooner and the delivery driver takes as little time as possible to make the delivery, all while the wear and tear of the delivery vehicle and the fuel consumption is brought down to a minimum. A win-win for both the business and the customer.

To optimise a delivery route, the first integration you need to consider is advanced route planning software. This works in two ways: firstly for pre-scheduled deliveries (where you know the volume and destinations in advance) it will help you understand how many vehicles are required and what their routes should be. 

Modern carriers like Gophr can often take care of this for you, or if you want to optimise in a particular way, we can also accept pre optimised routes over API. But not every carrier offers this option, so check in advance.

The other side of route optimisation is in real time – offering the ability to dynamically adjust delivery routes based on real-time traffic data, weather conditions, and road closures. This is particularly important for delivery certainty and accuracy of ETAs.

 

Micro-fulfilment Centres

Micro-fulfilment centres are small, strategically located warehouses designed to bring inventory closer to the customer. 

The key difference between them and their larger counterparts is that they don’t hold stock of every item the company sells. Instead, they stock up on the items that are most likely to be ordered repeatedly (based on historical data). 

The benefits of micro-fulfilment centres are undeniable. They allow for faster delivery times and lower shipping costs as the package has to travel less. They also allow companies to adapt to changing product demand without requiring large infrastructure investments.

If you want to know more about how this could work, we have a partnership with Parcelly, who are one of the leading providers of microfulfilment services. Read about it here:

Smart Locker Systems:

Smart locker systems are now widely available across the UK. They are a convenient and secure alternative to making deliveries door-to-door. Some of the key advantages of using smart locker systems include:

 

• Delivery drivers and customers can use them 24/7
• The delivery driver will always be able to fulfil the delivery – reducing failed deliveries to zero.
• The lack of failed deliveries will result in fewer repeat trips, leading to reduced fuel consumption, vehicle wear and tear, and lower carbon emissions.
• They’re a great way to consolidate multiple deliveries to a single locker location.

 

Sustainable Practices:

Incorporating sustainability practices as part of your delivery operations will not only have a positive impact on the environment but will also benefit your business financially. 

For example, instead of relying only on diesel or petrol-powered vehicles, think about investing in their electric or hybrid counterparts.

This will likely hurt your profitability in the short term (as you need to invest in a new fleet of vehicles), but over time, the ROI of your approach to green logistics will start to creep in, making the initial investment worthwhile.

 

Driver Recruitment and Training

One aspect of last mile logistics that can hurt profitability is the constant recruitment and training of new drivers. 

Each logistics company should know exactly how much money a new hire will cost to recruit and train before they can take up the delivery job and do it to the highest company standards.

Although cutting significant costs when it comes to recruitment and training can be difficult, that shouldn’t be your primary focus. Instead, you should focus on retaining your existing drivers and making sure that they are happy and satisfied with the job. 

That way, you won’t have to constantly spend more money recruiting and training new drivers to replace the ones that have churned.

 

How Logistics Companies Can Drive Efficiency

Logistics companies should seek more holistic solutions and look at their organisation as a whole to drive efficiency. 

The reason being is that even if all other aspects of the business are operating smoothly, if one isn’t, that can have a knock on effect and ruin the efficiency across the board.

That’s why logistics companies should write down their most important KPIs and keep track of them. Over time, the data will help you identify problematic areas, allowing you to make changes before obtaining more data and seeing if there is a positive impact.

Some examples of KPIs that logistics companies should keep track of include: 

 

• Vehicle fill rate
• Failed deliveries
• Return rate
• Transportation cost per mile
• On-time delivery rate (OTD)
• Inventory turnover

How Can Logistics Managers Drive Efficiency? 

Driving efficiency requires a combination of strategic planning, the adoption of technology and automation, process optimisation, and continuous improvement. 

However, the exact logistics managers should take to drive efficiency will depend on whether they have their entire logistics operations in-house or if their logistics are outsourced to a 3PL.

 

In-house Logistics Managers

For in-house logistics managers to drive efficiency in last-mile logistics, they first need to recognise a problem. The best way to do that is to keep track of the different KPIs.

For in-house logistics managers, the three main areas of concern (key cost centres) are the fleet, the drivers, and the delivery as a whole. Each of these areas has different KPIs, which will show if there are inefficiencies within the operation. They include:

 

• For the fleet: Utilisation of vehicle (idle time vs active time), cost per delivery, fuel consumption, miscellaneous costs
• For the drivers: Cost per recruitment, time to fully onboard, retention, compliance
• For the delivery: Delivery rate, fail rate, customer service interactions, on-time performance

 

Once the data from the KPIs starts rolling in, identifying areas for improvement will be much easier.

For example, if the cost per delivery is too high, you should look at optimising the route and giving your driver further training on efficiency. If the delivery fail rate is too high, you should look at giving your customers more delivery options, such as delivering their order to a nearby smart locker system.

 

Outsourced Logistics Managers

Outsourced logistics managers have much less control over the day-to-day logistics operations. Instead, they oversee everything that is being done by their 3PL partner and make recommendations.

So, to drive efficiency as an outsourced logistics manager, your first job is to find the right partner who can not only fulfil your delivery needs and scale with your company’s growth but also be flexible around your needs and happy to make changes upon logical recommendations.

Before working together, you should agree on every little detail in the engagement, including who is responsible for updating integrations, if there are going to be any peak or fuel surcharges and how much, and more.

Aside from direct partner costs, you should also look at the additional resources that are needed to make sure that your partners are working efficiently. Some examples include customer service costs, reporting, SLAs, establishing cost controls (to prevent branch managers from overspending, making sure your partner isn’t costing you your reputation, and more.

Lastly, returns are one of the biggest cost centres for outsourced logistics managers. Every time a delivery fails, or an item is returned and needs to be stored or disposed of, it costs money.

To optimise the cost of returns and the other two cost centres above, you need to determine the KPIs to measure performance across the board and monitor them rigorously. 

That way, if you see an increase in delivery costs over time (for example), when there is an open line of communication, you can suggest potential changes that would bring the cost down (better route optimisation, better driver training, and more).

 

Learn More About Optimising Last Mile Logistics

Many companies struggle with optimising last-mile logistics due to a variety of complex and interrelated factors, including increasing costs, worsening urban congestion, rising customer expectations, growing concerns around sustainability, and infrastructure limitations.

Hopefully, after reading this article, you now know about the best ways to optimise the last mile logistics within your company (whether you outsource logistics or keep them in-house). 

If you’d like to learn more about last mile logistics, check out our blog where you’ll find other helpful articles about logistics optimisation in today’s hyper-competitive environment.