A few weeks back, Walmart got its new fleet of 4500 electric delivery vans to efficiently fulfill its online orders in the last mile. It mentioned that this fleet enables it to add more sustainability and efficiency to its last-mile delivery operations. Logistics and supply chain experts said this move was a response to counter Amazon’s unveiling of electric delivery vehicles in 2020.
An intuitive question that arises for anyone reading this is – How can Amazon and Walmart manage the logistics of different products from different industries simultaneously flexibly? There is an uncompromising need for more flexibility in their fleet utilization to manage the logistics of different business verticals with varying fleet requirements.
Read Also: How to improve fleet utilization
What aspect enables both Amazon and Walmart to integrate and manage varying fleets flexibly for different business verticals? The answer is Cross fleet utilization. Let’s drive in to explore this!
What is Cross-fleet utilization?
Some businesses handle the logistics of two or more different products. Also, they might have a separate fleet to handle the logistics for those two or more products. Can they integrate it and use those fleets flexibly to unlock more delivery efficiency? Yes, it’s possible.
Cross-fleet utilization uses varying fleets from different business verticals. Say, a business handles pharmaceutical and CPG deliveries and has 100 delivery vehicles in-house for handling the last-mile logistics of both these products. Suddenly, there is an increased demand for pharmaceutical deliveries, and the business needs 50 more vehicles to manage it.
Cross-fleet utilization uses both these fleets, combining their capacities so the business gets maximum space to handle pickups and deliveries.
Why is cross-fleet utilization critical for business growth?
Cross-fleet utilization is the need of the hour for any business with hybrid fleet requirements. The preference to go for an in-house or outsourced fleet varies for every business. Companies have started leveraging the best aspects of in-house and outsourced fleets. But they have silos in integrating the fleet capabilities of various business verticals. Let’s find out why businesses should use cross-fleet utilization for fleet management.
Read Also: Fleet Management
1. Selecting the best-suited carriers
When a fleet manager sets out to dispatch the orders, there are four critical questions they go through.
- How many loads can I assign to this vehicle or carrier?
- Shall I make 100% use of the fleet space?
- Can I deliver the orders to my customers at their preferred time slots?
- Which type of vehicle suits each order?
All these questions are connected by one aspect – selecting the best-suited vehicle or carrier for each order. It isn’t easy to sort this manually or with mere spreadsheets, especially when 500 orders need to be dispatched with different time slots, service areas, capacities, and carrier costs.
This is where cross-fleet utilization comes into play. Cross-fleet utilization enables businesses to auto-ship each order with the best-suited fleet type or carrier based on customer-preferred time slots, carrier costs, order dimensions, driver availability, and fleet capacity. This enables businesses to select the best-suited carriers and optimize their daily capacity.
2. Minimize cost per delivery
In a recent survey, 300 logistics providers in the US specified that delivery cost is the biggest challenge they face in last-mile delivery. Other statistics state that last-mile delivery contributes to 53% of shipping costs. Even a 30% – 35% cost that last-mile delivery contributes to total shipping cost makes managing it highly expensive.
Logistics and supply chain experts cite that the average cost of last-mile delivery for a small package in high-density delivery is $10. And for low-density packages or large items like refrigerators, it is $50. So, the focus of all businesses has shifted to minimizing the per-unit costs of last-mile delivery and making them profitable.
Read Also: Unit Economics in Last-mile delivery
Cross-fleet utilization helps businesses intelligently group and club the pickups and deliveries. Its hybrid and dynamic routing lets businesses deliver all scheduled, reattempted, on-demand, and last-minute orders in a single run. This helps companies to maximize their fleet utilization and minimize the costs incurred in last-mile deliveries on multiple runs.
3. Cut down miles traveled
In a recent survey of 2048 US employees, 37% mentioned that being overworked was the most common cause of work-related stress. Another 33% said that lack of work-life balance was the second most common reason for their work-related stress.
Dispatchers and delivery drivers are the ones who feel the heat from last-mile delivery. Even minor delivery errors like tracking failures, Unrealistic Expected Time of Arrival (ETA), lack of timely alerts, routing inefficiencies, route deviations, traffic, and exceptions can make them stay for hours rectifying it. These mistakes can overburden them and affect their work-life balance. The best way to avoid these errors and ensure the tasks are completed before the anticipated time is by focusing on cutting down the distance traveled.
Businesses can use cross-fleet utilization to plan their deliveries with optimal order mix. The zone-based route plans with cross-fleet capacities minimize the number of vehicles employed for deliveries.
Businesses can minimize the distance covered per delivery when they leverage route optimization on their cross fleets. As the distance covered per delivery falls, it leads to a fall in fuel consumption and delivery costs. By combining cross-fleet utilization along with route optimization, businesses can make the best of fleet space and eliminate empty miles driven. Beyond minimizing the delivery costs and empy miles, it lets drivers complete their tasks much before the anticipated time and spend more time with their loved ones.
Read Also: The definitive guide to logistics route optimization
Locus Customer Experience and Dispatch Management Platform: Unlock efficiency in deliveries with cross-fleet utilization
Cross-fleet utilization comes in handy not just for two business verticals. It comes in handy for businesses when they handle the logistics of multiple industry verticals at the same time. For instance, a company may handle meat deliveries, fruit deliveries, alcohol and beverage deliveries, and pharma deliveries with refrigerated delivery vans.
Some days they may need additional vehicles for meat, alcohol, and fruit deliveries. Whereas other days they may need added vehicle capacity for pharma deliveries. In circumstances like these, cross-fleet utilization helps businesses manage these sudden spikes in demand.
But there is a question that arises. How do I integrate my capabilities to enable cross-fleet utilization? Which platform can I invest in for cross-fleet utilization? The definite answer is Locus’ Customer experience and dispatch management platform.
With advanced algorithms of Locus’ Customer experience and Dispatch management platform, businesses can quickly auto-assign their orders to the best-suited vehicle. They can club pickups and deliveries for a single vehicle to ensure its capacity is best utilized. Also, its dynamic route planning and delivery orchestration capabilities help businesses minimize the distance per delivery and reduce the number of vehicles on the road. This allows enterprises to scale rapidly with flexibility across diverse channels and unlocks efficiencies of common fleets across business verticals.
Locus’ offerings help your business integrate and manage conventional and electric delivery vehicles seamlessly. Say, your business has electric vehicles that can serve for a radius of 50 miles. Locus’ platform automatically sorts any order beyond 50 miles to a conventional fuel vehicle. Also, it plans routes for those vehicles based on fuel recharge stations. This makes it easier for your business to manage diverse fleet capabilities across various business verticals.
Are you looking to add more efficiency to your common fleet across business verticals?
References:
https://www.businessinsider.in/retail/news/check-out-walmarts-new-fleet-of-electric-delivery-vans/articleshow/92859415.cms
https://www.statista.com/statistics/816884/last-mile-delivery-logistics-providers-challenges/
https://www.supplychaindive.com/news/last-mile-spotlight-retail-costs-fulfillment/443094/
https://www.insiderintelligence.com/insights/last-mile-delivery-shipping-explained/