June 2018 | Commentary | IT Matters: Logistics & Supply Chain Technology

Last-Mile Technology Needs a Radical Rethink

Tags: Last Mile Delivery, Logistics, Supply Chain

William Salter is President & CEO, Paragon Software Systems, Inc., 972-731-4308

We need to stop viewing last-mile logistics as solely a delivery challenge. The broader challenge is ensuring processes and their supporting technologies work together to allow supply chains to meet the market's insatiable appetite for faster, more precise deliveries.

Supply chain management technology is boldly exploring sophisticated new developments such as driverless vehicles and the Internet of Things. And yet, we're still employing 1985 technology when it comes to the last mile.

The Reality of Route Planning

Here is what delivery route planning and scheduling looks like at many businesses that manage their delivery fleets using manual methods: A route planner gathers customers' paper orders, assigns them to a driver based on territory, arranges them from first to last after eyeballing a map, and hands over the stacks to drivers to deliver in sequence.

These plans can fall apart the moment there's a delay, and it's difficult to quickly fix them manually. Inefficiencies hamper every route. Deliveries are late or missed, customers lose faith in the supplier, and truck routes often cross each other or double up needlessly. When working manually, any expert knowledge about peculiarities of loading docks, special customer unloading requirements, and habitual traffic snarls tends to get lost because there's no central place to collect it other than in the planner's memory.

That is astonishing in the highly automated world of freight management.

There's a steep cost to the consequent inefficiency. Last-mile delivery costs in the B2C sector have ballooned to an estimated 30 percent of the total transportation cost; a similar figure could no doubt be arrived at in the B2B sector.

The fully burdened cost of a truck mile is $1.59, according to the American Transportation Research Institute. For a 50-vehicle private delivery fleet, where each vehicle racks up 50,000 miles per year, driving 20 percent more miles than necessary means nearly $800,000 in lost profit annually. Customer satisfaction suffers, too.

Delivery performance has become a competitive differentiator, making it a closely scrutinized end goal at almost every departmental level. Last-mile delivery performance is now inextricably connected to every part of the business.

And yet, while the final mile is the most complex part of the supply chain, it is the last part to be optimized.

Automating the Process

Automated routing and scheduling ensures delivery route plans are crafted to maximize delivery stops and minimize fuel while making the most of driver shifts and available trucks. It can also collect critical information about the actual routes driven that companies can use to give customers accurate delivery times, and can feed back into the system to generate even better route plans next time around.

The last mile of the supply chain is an integral, not stand-alone, function. Without great delivery route planning and scheduling, all the smart, powerful technology companies invest to streamline sales, order management, marketing, product design, and customer service grinds to a halt at the final hurdle.






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