Running a marathon may be about the long haul, but that last stretch is what makes all the difference. Imagine your customer stuck in the office and they check their phone in the 53 seconds timed break that they get, and see one missed call from an unknown number. They call back, but no one picks up. “Your delivery partner could not reach you. Your package will be delivered at a later date.” their message reads. They had no clue their delivery was due today, and now they’re infuriated. Their anger finds home in the only party they can blame- you.
The works of your entire marketing team go down the drain because Mr. Delivery Guy failed at what is called a First Attempt Delivery. Your customer swears off your company and moves on to the next, only to have this endless cycle of last mile challenges repeat itself.
Last mile deliveries: A costly affair
With unidentifiable addresses, infrastructural adversities, and remote locations, last mile logistics translate to 28% of a product’s transportation expense. According to IMRG, it’s costing retailers, couriers, and consumers a collective $2 billion a year. Since the last leg of delivery seems to be the only face time a consumer gets with company representatives, these first impressions will determine a consumer’s future interaction with the firm. Hence, last mile delivery expenses may not be avoidable but can be reduced to a fraction of that value if tackled in the right manner.
A growing customer base
The growth of e-retailing in North America is progressively fast-paced and accounts for a fair share of the retail market as a whole. It is estimated that there will be a total of 254 million e-Commerce users by 2021, which will represent 85% of the total population. Thus, instead of waiting for your user base to grow and disappoint them in masses, why not get a head start on how you can optimally bring down last mile delivery overheads while improving customer satisfaction?
In the e-commerce industry, sales trends have drifted from conventional customer satisfaction with over-glorified promises of next day deliveries and transparency in the order tracking. The new norm focuses on time-definite delivery (specified time slots) that ensures delivery on the first attempt. A study conducted proved that 16% of respondents will abandon shopping with a retailer altogether if they receive an incorrect delivery just one time, and 14% will do so if they receive a late delivery just one time. Thus, last mile logistics solutions in the last stretch can make or break the revenue source of a company as well as its customer retention capacity.
Why human intuition is not good enough?
Before we start pointing fingers at Mr. Delivery Guy, understand that he was simply unequipped with the right arsenal to take on last mile deliveries. To incorporate a free-flowing system of delivery route optimization, it might seem like a good idea to rely on human intelligence and local experience to provide a supportive base for last mile deliveries. This can be debunked on two counts- first, no matter how experienced an employee may be in terms of local logistics, not every employee matches up to a set standard.
Ms. A may have lived in Chicago all her life, and having played through the streets of it, knows her way inside out. Mr. B however, recently moved here and can’t seem to find his way out of his own lane without GPS. Second, the extent of human intelligence can go only so far as to put into practical application what is limited to its biased opinion. If a CPG company sends its executives to the retailers without considering fatigue level, then they are setting themselves up for failure. However, technology knows no bias, only facts. So with machine learning factoring in routes, traffic conditions, employee abilities, and vehicle fleet mix, it is taking a multi-dimensional approach with no room for error.
When companies fail to incorporate the gift of technology, they abandon their employees with the feat of figuring things out on their own. Thus, to eliminate the construct of human error, firms must embrace the advent of AI and the numerous possibilities that it beholds. Delivery route optimization is one such gift. AI enables route optimization by considering historical data, real-life constraints, and distribution models using deep machine learning engines to learn and improve the instilled system continually to enable last mile delivery and logistics solutions.
So, how can technology help?
Contrary to popular belief, advanced technology does not resonate with flying cars and time travel. We’re talking about what’s here and now- Artificial Intelligence which isn’t just technology-driven, but human inclusive as well. When technology tells you how to deliver to a location faster while minimizing fuel costs, it isn’t taking over your job; it’s simply improving it.
Here’s how technology has made the last leg of the supply chain optimal-
1. Variable load balancing:
Advanced software includes constraints like vehicle models, capacity, operating hours, locations, etc. This ensures that resources are used optimally and logistics costs are reduced.
2. Intelligent routing plans:
3. Smart parcel sorting:
Automated shipment sorting first converts the fuzzy addresses into their accurate geo-coordinates, and then groups them based on their geographic zones. This helps in higher first-time delivery rates for companies.
4. Instant alerts and live tracking:
Mitigation plan for any network disturbances or deviations in real-time, facility or customer live notifications resulting in a delightful customer experience
5. Adherence to SLAs & business constraints:
Servicing of critical time-bound deliveries (Scheduled & On-demand) with data-driven planning and execution, which allows companies to prioritize orders and minimize customer complains.
The last mile delivery conundrum might be a tough cookie to crack, but Locus has already taken a shot at it and has brought this particular cookie monster crumbling to the ground. Check out how Locus helped an online grocery firm, achieve 99.5% SLA adherence.
IMRG: The Valuing Home Delivery Review 2018
Locus is solving complex logistics decision-making problems for some of the biggest brands. To know more, get in touch with us.