4 Ways to Regulate Your Last-Mile Delivery Costs

Have you ever tried to calculate the costs involved in last-mile delivery?

Last-mile is the final and yet the most expensive step of the whole supply chain. 

It takes up a significant amount of profit. This might lead to companies’ decline. 

Do you want your company to suffer because of the last-mile delivery costs?

Do you know how to optimize last-mile delivery to reduce costs?

If your business provides delivery services and you want to optimize the workflow for better management then you need to implement certain strategies.

Here, you are provided with four ways that can help you regulate your last-mile delivery costs.

What is Last-Mile Delivery?

The transportation of the parcel from the nearest distribution center to the delivery location is known as last-mile delivery

It is the final step of the whole supply chain.

The last mile determines if the package has safely reached the customer. 

Businesses that require instant delivery, such as food delivery businesses, enterprise supply chains, and businesses that promise one-day delivery, must be cautious about the last-mile delivery.

The last-mile delivery has gained significance recently and is predicted to grow to more than 200 billion US dollars by 2027 from 108.1 billion US dollars in 2020 globally.

What are Last-Mile Delivery Costs?

The charges involved in making the last mile successful are last-mile delivery costs.  The last mile charges are considerable and play a very significant role. 

The last mile costs are about 53% of the total expenditure in the whole process. Further, the problems involved in last-mile delivery can make it an expensive affair.

Hence, taking measures is an important step to regulating last-mile delivery costs, otherwise, it can affect a business badly.

Why is it Important to Regulate Last-Mile Delivery Costs?

The last-mile delivery cost is the most expensive part of the supply chain. That is because last-mile delivery is a time-sensitive procedure. The costs involved here are high, and so are the risks. The challenges involved in making last-mile delivery successful are another pointer that makes last-mile delivery an expensive procedure. 

Some of the challenges involved in last-mile delivery are:

  • Time-sensitive delivery

    Last-mile delivery is time-sensitive. Certain e-commerce businesses like food delivery, flowers delivery, and grocery delivery are bound to manage costs and deliver in a time-bound manner. 

    Any delay can lead to an unhappy customer, who might choose another service over you. Faster delivery service is a must nowadays, which constantly increases pressure on the service providers.

  • Route planning challenges

    To make on-time delivery without disturbing profit margins, finding the most efficient route is important.  

    But who can tackle the unpredictable route issues? 

    Constant traffic delays, vehicle breakdown, and rerouting due to road blockage are all common reasons that can lead to delays in last-mile delivery. 

    Further, these delays add to the price involved in the delivery process and can disrupt the whole schedule. 

    Route planning must be done very carefully, considering all the parameters and keeping an eye on real-time data.

    Otherwise, failure in last-mile delivery operations will become a common loss factor for your logistics.

  • Failed deliveries

    Failed deliveries are a major setback for e-commerce logistics that deal with last-mile delivery. This adds up to your delivery costs and leads to repeated delivery rescheduling. 

    This might happen if the customer is not at the designated location during delivery. 

    The late arrival of the delivery personnel at their desired location might also lead to failure.  Hence, all failed deliveries increase the overall delivery costs and lead to complex rescheduling.

  • Fuel costs

    Fuel costs play a significant role in deciding if delivery will make you a profit or a loss. 

    Market fuel price may barge into your budget; further traffic congestion, constant delays in arrival time, and the mistake of taking a long route all add up to fuel costs. 

    The fuel consumption capacity of an unvented and delivery vehicle is another concern. The more fuel consumed simply means the more delivery cost. 

    Fuel costs cannot be cut down totally; they can only be saved by taking certain efficient measures. Hence, tackling this challenge is a bit complex.

  • Shifting consumer demands

    Covid has changed the perspective of a customer where there is a sudden shift in customer demands. 

    To get faster delivery, customers are ready to pay extra prices without giving it a second thought. The customers expect a better delivery experience; otherwise, they can shift getting services from one business to another. 

    Customers also expect free shipping on the orders. But with increased shipping costs, it becomes difficult to manage the overall shipping costs and incur additional costs, all together. 

    Moreover, same-day shipping leads to an increase in operational costs, hence making the whole process very expensive for the company.

    It can be concluded that leveled up expectations of customers are adding more pressure on last-mile delivery companies to improve their services without affecting their profits. 

Now, this needs strategic workflow management.

How to Optimize Last-Mile Delivery Costs by Using 4 Regulating Strategies?

The act of making the best and most efficient use of the situation is known as optimization. Hence, by optimizing last-mile delivery costs, a last-mile delivery service can be efficient. 

To make that possible for any e-commerce delivery system, 4 main strategies have been listed below. Let’s explore them:

1. Determine the speed of delivery

Understanding the urgency of delivery can actually help you determine a better framework and prioritize important deliveries, making the work management a lot easier. 

Prioritize the same time delivery in the case of time-bound delivery businesses like food, flowers, and groceries. 

The packages of these e-commerce logistics are supposed to be delivered within a certain time period, or else they become useless for the customer. 

Then you can check on the packages that demand same-day delivery. The delivery of these packages is also time-bound, but the time period for the same-day delivery is slightly more than the ones that require instant delivery.

Delivery operations need to be handled carefully to get the best customer feedback. 

This simply means that no matter if the delivery is traditional or instantaneous, the quality of service shall never be compromised.

2. Optimize dispatching and routing

This is the most crucial step that can be used to optimize the last-mile delivery to its best. 

Optimizing the loading and dispatching process can actually ease the burden on delivery drivers and ensure faster delivery. 

In order to achieve this:

  • Prepare an ascending list of the orders based on their location and urgency. 
  • Download the orders in the delivery vehicle according to the list. 
  • Let the orders be delivered to the nearest locations kept close to the door. 

Then provide the same list to the delivery driver to be able to deliver the right parcels at the right locations. 

This will reduce the chaos that occurs if the parcels are not arranged properly. 

After the loading is done, the management should focus on finding the most efficient route to the delivery locations. 

Choosing a multi-stop route to make multiple deliveries can prove to be the most efficient manner of delivery.  

Make sure you update the route with real-time ETA in order to avoid constant traffic delays.

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3. Offer more convenience to the customers

No matter what business you handle, if your customer is not satisfied, there is no way your business can thrive for long. 

Offer more convenience to the customers

Business efficiency and customer satisfaction are two main things to optimize to ensure better results. 

Offering more convenience to the customers has your customers’ experience, but also increases their trust level in your brand. 

You can provide your customers with real-time package updates right from the moment they place the order. 

Letting customers track their package when it is out for delivery is yet another game-changer that can reduce the chances of failed delivery. 

Because when a customer gets to know that the parcel is out for delivery, they are bound to stay at the location until the package arrives. 

Any delays in the delivery and the customers’ unavailability might lead to failed delivery.

In order to save the extra cost of failed deliveries, a clear interface can be provided to the customer where they can track their package and estimate the time of arrival. 

This will save them a lot of time and will increase your brand value and gain customers’ trust.

4. Use technology to plan and optimize driver routes

Last-mile delivery cost breakdown is possible by proper optimization of the last-mile delivery process. Many last-mile delivery logistics have started using software to optimize the workflow to keep up with the last-mile delivery market size. 

Use technology to plan and optimize driver routes

A delivery optimization software can help you with many parameters to make the management easier. Some key benefits of a last-mile delivery software are:

  • Dynamic route planning
  • Multi-stop routes
  • Record of vehicle maintenance costs
  • Assigning jobs to delivery truck drivers
  • Calculation of supply chain costs
  • Consumer feedback
  • Online payments
  • Management of delivery fleet
  • Increased delivery efficiency
  • Managing high-density delivery
  • Reduced rescheduling costs

Overall, having a last-mile delivery optimization software can make the last-mile operations more cost-effective and enhance the customer experience as well. 

FAQs

The transportation of the parcel from the nearest distribution center to the delivery location is known as last-mile delivery. It is the final step of the whole supply chain and determines if the package has safely reached the customer.

In order to optimize delivery operations:

  • Plan a workflow strategy
  • Main records of deliveries
  • Optimize route planning
  • Prioritize customer experience
  • Automate the business with an optimizing software

The strategies adopted by any delivery service to generate profits and reduce incurring additional costs make a delivery service efficient.
Prioritizing important orders to increase revenue and reduce the impact of the failed deliveries can ensure the efficiency of the delivery service.

Last-mile is the final step of a supply chain when the package is dispatched from the distribution hub or the warehouse to the delivery location which could be residential, commercial, or an e-commerce lockbox.

The charges involved in making the last mile successful are last-mile delivery costs. The last mile charges are considerable and play a very significant role.

The challenges of a last-mile delivery service are:

  • Time-sensitive delivery
  • Route planning challenges
  • Failed deliveries
  • Fuel costs

How is Upper Route Planner Helpful in Optimizing the Last-Mile Delivery Costs?

Upper Route Planner is powerful route planning and optimization software. It is the recommended delivery management solution for delivery businesses to plan and optimize their delivery routes efficiently. 

Upper Route Planner can help you in many ways. It can automatically optimize routes, considering service time, time windows, real-time traffic, and avoiding ferries, tolls, and highways.

With Upper Route Planner, companies can focus on the core business operations and cut down on manual planning and scheduling hours while the algorithm takes care of the rest.

So the next time you doubt when and why you need route planning, visit the Upper Route Planner website and get your answers.

Author Bio
Rakesh Patel
Rakesh Patel

Rakesh Patel is the founder and CEO of Upper Route Planner. A subject matter expert in building simple solutions for day-to-day problems, Rakesh has been involved in technology for 30+ years. Looking to help delivery businesses eliminate on-field delivery challenges, Rakesh started Upper Route Planner with the ultimate goal of simplistic operations in mind.

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