3 Key Areas for Automation in Last Mile Logistics

This article was originally published in PARCEL on June 3rd, 2021. Check out the original article here.

As parcel delivery evolves, last mile technology will need to evolve with it — particularly by way of automation. Otherwise, efficiency gains and improvements elsewhere in the delivery chain may be wiped out by slow, inefficient manual efforts on the final leg of the journey.

By the time you’re ready to ship a parcel, a lot has already had to go right: you’ve had to successfully match your capacity and inventory to demand levels, get your goods to a warehouse or distribution center efficiently, pack your shipment in an accurate and cost-effective way, and track the whole process from end-to-end. No matter how many parcels you ship every year, you know that getting the first and middle miles to go right is a difficult feat—one that often involves complex integrations and sophisticated technology solutions.

But if the last mile—a process that, at best, takes up about half of one’s supply chain costs—doesn’t go according to plan, then all of the efficiency gains and cost optimizations that happened upstream could easily be squandered.

The risk here is, in some ways, greater than ever. Why? Because automation is rapidly changing the way that we grapple with the entire parcel delivery chain. Businesses of all shapes and sizes are implementing Internet of Things (IoT) devices to automate monitoring in warehouse operations, RFID chips for automated transportation tracking, and sophisticated new warehouse management systems (WMS) with the power to reduce manual planning effort. But you can’t truly get the full value out of these advances if you don’t also invest in automation for the final mile of the parcel delivery process.

1. Routing and Dispatching

The goal of automation in the last mile is more or less the same as the goal in the rest of the delivery chain: reducing costs, decreasing manual efforts, and boosting efficiency—which is why top targets for automation in this area need to be the most costly and time-consuming parts of the delivery process. At the very top of the list? Delivery routing.

The last mile is inefficient by its very nature. Even with just a few stops to make on your routes, the number of possible permutations for those stops grows exponentially and quickly becomes unmanageable. Then, you have to consider traffic conditions, how drive time is impacted by different vehicle types, loads, and drivers, customer tiers and delivery preference, and more. Simply put, if you route your deliveries by hand you’re stuck spending countless hours not finding the most optimal routes in terms of time, distance, or cost.

Conversely, when you automate, you can rapidly calculate efficient routes and automatically dispatch drivers for those routes. Not only does this reduce human effort and help optimize costs, it also improves performance in warehousing and other touchpoints by keeping stock moving at a brisk clip.

2. Customer Notifications and Communications

File this one under “Amazon Effect.” Notifying your customers when you’ve got their order in stock, when their parcel is out for delivery, and when the parcel has actually made it to their doorstep isn’t a luxury add-on — in fact, it’s essential to managing the workload of your customer support team and other staff members. When end customers don’t have a clear window into when to expect their parcels, they’re more likely to call customer support for updated ETAs or with general worries about their packages.

This isn’t just bothersome: it’s incredibly time-consuming and can take important human resources away from more value-additive tasks. But if you can automatically walk your customers through the entire parcel delivery experience via clear, well-timed last mile communications, you can reduce inbound customer support calls and manual outbound notification efforts. To make this happen, you need to be thoughtful about the flow of the customer delivery notification experience (i.e. choosing which stages in the delivery process require an update, how to direct customers who still need support, etc.). You also need to leverage technology integration (e.g. between your WMS and your communication channels), but if you’re already working to optimize the last mile across other touchpoints, you should already have the dataflows you need to make this kind of proactive customer communication possible.

3. Invoicing and Driver Settlements

One of the reasons that last mile costs pile up rapidly is quite simple: labor is expensive. You need to pay the truck and van drivers (or the carriers) who actually get your goods from the distribution center to the customer’s doorstep. This might be fairly obvious — but what’s often less obvious is how the time and effort it takes to actually process those payments can cause your costs to balloon. Even after a successful delivery, someone on your accounting has to track down the drivers for each delivery and confirm the correct settlement amount. When deliveries don’t go quite to plan—or drivers have to add charges or credits based on the day of delivery — the process becomes even more time-consuming and laborious.

Not only does this process require significant manual effort, it’s also highly error prone. For freight invoicing there’s a 5-6% error rate, and driver and carrier settlement is probably comparable. If you can automate the process of collecting delivery data from drives, however, you can just as easily automate the settlement process based on your different sets of payment rules. The likely result? Better cash flow, fewer errors, and significantly reduced labor time spent processing invoices.

This is another area where a baseline level of last mile technology integration and automation can pave the way for more robust automation possibilities. If you’re collecting data about the day of delivery anyway, why not leverage it into a workflow that auto-generates driver settlement documents? Given all of the technological advances currently happening across the world of parcel delivery, it’s going to be this kind of approach — one that ultimately aims to cover the entire fulfillment process comprehensively — that truly confers a competitive advantage.

Key takeaways:

• Parcel delivery is changing rapidly to keep up with evolving customer expectations that can only be met through efficiency and visibility on the last mile.
• Without a comprehensive approach to automation, inefficient, error-prone manual processes can make it difficult to provide great parcel delivery experiences.
• Automation in areas like routing, customer notifications, and invoicing doesn’t just reduce manual effort: it helps create a connected, comprehensive approach to the delivery process.