Using Analytics to Manage Last Mile Delivery Costs

Using Analytics to Manage Last Mile Delivery Costs

last mile delivery costs

Many innovative advancements have occurred in the past few years within the transportation network, including a focus on last mile delivery costs and shipping rate management through analytics. The ever-shifting nature of the transportation industry and the growing demand for e-commerce have forever changed how shipper providers will meet consumer needs. With rising consumer expectations, the pressure to offer fast and reliable delivery without increasing costs has brought shipping processes into greater focus than ever before. With that in mind, shippers need to understand the value of using analytics to track and reduce costs in the last mile.

Why Last Mile Delivery Costs Are Incredibly High

One of the most significant factors affecting shipping and delivery processes is the dramatic increase in the sheer volume transported every day.  Costs have increased because demand has grown so quickly. Many transportation service providers have been unable to keep pace, causing capacity and drivers to fetch a premium rate. According to Supply Chain 24/7, online spending made up more than 21% of total retail sales for 2020. 

Additionally, consumers spent more than $86 billion with online shopping services in 2020, an incredible increase of 44% over the previous year’s rates. This unprecedented level of demand and growth continues to put pressure on shippers and carriers. It thus drives up last mile delivery costs as the industry continues to adapt to this new normal. The need for accurate supply chain data analytics and collaborative technology-driven data becomes apparent when the intricate details of last mile delivery services are considered.

Analytics Enables Ongoing Optimization and Improvement of Operations

Shippers have always relied on innovations and technology to improve operations and functions within the supply chain. Proper analytics make it easier to adapt and grow with changing market demands while also focusing on improving day-to-day operations by highlighting and preparing for disruptions. Last mile distribution and logistics are affected by several variables. Most are beyond the control of shippers and retailers. 

Examples of last mile optimization and operation issues that are common today include:

  • The customer’s location and closeness to the central warehouse or distribution center the shipment is coming from. Optimization and innovation can help provide tools to improve route selection and to deal with disruptions that occur. Additionally, using data and analytics optimizes service levels. For example, the analytics may show that for a specific shipment for zone 2 may signify that a ground shipment is more optimal instead of air or priority services, saving both money and getting your package where it needs to go on time.
  • The total number of deliveries that lie along a carrier’s route that day and how many stops get made in total. More streamlined routes and real-time delivery tracking can allow for driver-led decisions on route changes and adjustments as needed. Use data to identify delivery density, which may uncover opportunities to hub inject into a local DC for a lower zone, wrestling in a reduction of last mile delivery costs.
  • Local traffic levels, road conditions, and weather situations while in transit for the last mile delivery handoff. Up-to-the-minute digital tracing and forecasting tools can allow shippers and managers to operate and make divisions in real time in real situations. 
  • Retailer’s availability to sign and accept packages when necessary or insufficient location for dropping off packages. Digital options for signing and paying as well as more streamlined loading and unloading practices are possible with digital optimization.
  • Issues with vehicles like breakdowns and sudden driver unavailability that cause scheduling issues. Collaborative dashboards that allow for fast and easy scheduling and assignment can help fill in gaps and make it easier to overcome scheduling problems. 
  • Inventory shortages or discrepancies in order tracking that causes miss- communications to occur. Optimized inventory tracking with on-demand mobile access and automated update availability can allow managers to focus on procuring capacity ,managing delivery rates, and providing real-time delivery updates to customers.
  • Routing errors or an overall lack of transparency and coordination from start to finish in the supply chain. Optimization with innovative analytics increases productivity by ensuring uniform access to the same data and tools and is focused on the same goal.

All these factors play into the complexity of managing final mile delivery. They also contribute significantly to the rising last mile delivery costs seen and felt throughout the industry today. Proper analytics and response can help reduce their impact and improve overall operations in the supply chain network. 

Additional Ways to Apply Analytics and AI to Enable Last Mile Cost Reductions

Addressing last mile delivery costs often comes back to the acceptance and integration of analytics and AI technology. There are several ways that automation can help manage last mile costs and expenses:

  • Improved communications throughout the supply chain network.
  • Innovative digital platforms that make collaboration easy.
  • Improved transparency and visibility throughout the network. 
  • Data-sharing tools to give everyone access to real time data and updates.
  • Driver-directed decision-making to reduce time waiting for authorizations.
  • On-demand status reports with up-to-the-minute shipment information.
  • Reduce instances of delays with better shipping capacity management. 

These technologically based tools and AI-driven analytics can improve shipping services and optimize last mile delivery services.

Choose the Right Supply Chain Analytics Solution to Control Last Mile Delivery Costs

Matching the right analytical tools and processes with the right shipping services can do wonders for balancing last mile delivery costs and benefits. These last few miles of shipping are some of the most complicated and vital for shippers. By streamlining the process and ensuring optimization and continued growth, last mile delivery services and expenses can be balanced as the focus on e-commerce shipping continues to dominate the market. Connect with Intelligent Audit to start tracking and managing your last mile costs today.

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