It may be a mile or two, or it may be a hundred miles or more, but the so-called last mile of the supply chain can account for more than 25% of total transportation costs. With that in mind, a focus on last mile delivery efficiency can potentially yield big cost savings for your logistics operation, along with opportunities for service improvement.
There’s no doubt that last mile delivery–that final leg of transportation from your distribution centre to customers’ doors–is the most complex, costly, and sometimes frustrating, of the entire supply chain.
The good news is that with technology available today you can make substantial inroads into improved last mile delivery performance, in spite of the complexities and challenges—provided you implement and use that technology effectively.
Technology and Last Mile KPIs
As with all aspects of supply chain performance, you need to measure what matters in order to identify where last mile delivery improvement can be made.
By carefully selecting and monitoring a set of last mile delivery KPIs, you’ll be able to build up a detailed picture of performance, and see where the most valuable improvement opportunities exist.
Metrics for transportation over the last mile should take financial, service, and vehicle/driver performance factors into account. Useful KPIs might include:
- Deliveries made on-time, as a percentage of total deliveries
- Fuel consumption per driver/vehicle
- Number of deliveries per route
- Percentage of vehicle capacity utilised
- Vehicle running cost per kilometre
- Planned kilometres versus actual kilometres driven
- Driver hours in-motion and stationary
A few of these KPIs can be gathered without dedicated technology solutions, but some, such as details of driver and vehicle activity on-route, will need the assistance of digital solutions like vehicle telematics and GPS tracking. Fortunately these solutions are now widely available and are reducing in price and complexity, especially as cloud computing simplifies infrastructure and hardware needs.
Last Mile Delivery Optimisation
One of the keys to improved last-mile distribution is optimisation. In all but the smallest operations, manual route-planning simply can’t combine deliveries, vehicles, drivers, and routing in an optimal manner—but a computer algorithm can.
Route-planning software is perhaps one of the most important investments you can make in last-mile delivery performance.
Properly implemented and configured, an automated planning application is guaranteed to save planning hours. More importantly, it should be able to plan each day’s deliveries onto fewer vehicles, create routes with lower mileage, and improve on-time delivery performance (as long as your drivers follow the planned routes): such is the power and effectiveness of algorithm-driven route optimisation.
Modeling Can Minimise Miles
Optimisation for last mile delivery improvement can be expensive to implement, but remember the point made at the start of this post. The size of the prize is potentially well-worth the investment.
This applies not only to the optimisation of your daily distribution plans, but also to that of your actual distribution network, especially the placement of fulfillment centres.
A network modeling exercise can help you evaluate the current locations of your facilities, and determine the benefits of adding, removing, or relocating distribution nodes in your network. Modeling can also help you determine if last mile delivery performance gains would be greater with outsourced, rather than in-house distribution services.
A Last Word on Last Mile Deliveries
If you’re beginning to think technology holds all the answers to improving last mile delivery performance, you’re not too far wrong. It’s not so much the software that’s key, but rather the data which today’s logistics solutions can provide.
This data gives you visibility into last mile delivery performance, the information required to measure it, and the power to ask “what if?”
With that in mind, it’s worth considering the size of the potential prize in last mile delivery improvement, and factoring that into your technology investment plans for 2017. Who knows, It might be the one decision that gives you and your team a reason to smile … about the famously frustrating supply chain last mile.
“Nice information. Last Mile Delivery acts as the only point-of-contact between the buyer and the seller. It completes the buying process and is the biggest contributor of customer satisfaction. Use of technology is making this contribution more effective.”
Businesses are adopting innovative technologies to lower costs and increase shipping speeds of packages. As the competition is rising, it’s by no surprise that last-mile delivery has become top of mind for most retailers.
Modelig is definitely worth the investment! Cheers for the great post