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  May 17th, 2023 | Written by

Route Optimization Key to Unlocking Efficiencies and Cost Savings in the Last-Mile

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Last mile delivery is the final and often the most crucial stage in the logistics process, as it involves the transportation of goods directly to the end customer. This practice is highly challenging due to the need for quick delivery times and the increasing demand for same-day and next-day delivery options. Look at the ‘Amazon effect’ and the stress it has placed on shippers to provide speedy delivery to consumers.

To meet these time demands, route optimization has become a critical component of last mile delivery operations. From e-commerce to food delivery, the last mile of delivery can make or break a company’s reputation. This is where route optimization comes into play, revolutionizing the way delivery operations are managed.

One of the biggest challenges faced today is the unpredictability of traffic and road conditions. Route optimization software uses real-time traffic data to provide accurate and up-to-date information about traffic conditions, enabling delivery companies to adjust their routes in real-time to avoid traffic congestion and delays. This can significantly reduce delivery times, improve on-time delivery rates, and ultimately improve customer satisfaction.\

By leveraging more efficient routes, delivery companies and shippers can reduce fuel costs, increase delivery speed, and improve customer satisfaction.

Three Key Benefits of Route Optimization in Last Mile Delivery

1. Strategic Route Planning

Companies that specialize in delivering goods and services on a regular basis must optimize their routes to ensure that their fleet capacity is used efficiently while meeting the service level agreements (SLAs) of repeat customers. To achieve this goal, static route planning based on historical delivery data can be a valuable tool.

Static route planning involves creating a fixed schedule of delivery routes that are optimized based on historical delivery data. This data includes information such as delivery frequency, package size, delivery location, and delivery time. By analyzing this data, companies can identify the most efficient delivery routes and schedules to maximize fleet capacity and reduce delivery time.

The use of historical delivery data allows companies to predict the volume of orders and deliveries that will be required in the future, which helps them plan and allocate resources accordingly. This approach also enables companies to identify areas where they can optimize their delivery routes and reduce unnecessary driving, fuel consumption, and carbon emissions.

2. Dynamic Route Optimization

Unlike static route planning, which involves creating fixed schedules of delivery routes, dynamic route optimization involves creating optimized routes in real-time based on changing circumstances.

Dynamic route optimization allows companies to identify the best route/driver/vehicle combination for each delivery, based on factors such as delivery location, package size, and delivery time. By analyzing this data, companies can identify the most efficient and cost-effective route, driver, and vehicle combination for each delivery. This in turn, reduces delivery time and cost.

Dynamic route optimization also allows companies to respond quickly to changing circumstances, such as traffic congestion or unexpected delays. By adjusting delivery routes and schedules in real-time, companies can ensure that non-recurring one-time orders are delivered on time and at the lowest possible cost.

Dynamic route optimization helps companies improve their customer service by providing more accurate delivery estimates and real-time updates on delivery status. By using advanced analytics and machine learning algorithms, companies can predict delivery times and provide customers with accurate information about when their packages will arrive. Identifying the best route/driver/vehicle combination in real-time makes way for a reduction in delivery time and cost, improvement of customer service, and an edge against competition.

3. On Demand Optimization

To efficiently handle unexpected orders, businesses should invest in a powerful on-demand optimization tool that can quickly and accurately re-route drivers to meet new delivery requirements. This is where AI-based route optimization tools come into play.

On-demand optimization tools use real-time data from the field, such as GPS tracking, traffic updates, and delivery information, to make the best possible decisions for each new order. By analyzing this data, the tool can quickly identify the most efficient route for each driver, taking into account factors such as traffic, weather conditions, and delivery urgency.

The solution can also greatly refine response time to unexpected orders, ensuring that last-minute deliveries are made on time and at the lowest possible cost. Dynamically re-routing drivers lets the tool minimize driving distances and time, reducing fuel consumption, and vehicle wear and tear.

Exceptional Adaptability is Possible through Advanced Technology

The success of any delivery strategy depends largely on considering the unique circumstances and challenges presented by the delivery location and type.

For example, when delivering to customers along a busy highway during peak traffic, an optimization solution should prioritize delivering to the farthest location first and work its way back against the traffic. This approach can help to minimize the time spent in traffic and reduce the risk of delays. Conversely, when delivering to suburban areas where the delivery locations tend to be more spread out, it may be more efficient to focus on the shortest distance between stops in order to save on fuel and minimize travel time.

By carefully considering the specifics of each delivery scenario, businesses can develop effective strategies that maximize efficiency and ensure timely, reliable delivery to their customers.

While route optimization technology is not new, its adoption has been relatively slow. Thankfully, there is a growing realization among businesses that route optimization can significantly fill the well known gaps in the field.

The hope for those in the supply chain space is that by using this technology, the industry will drastically improve their overall productivity. As the last mile delivery market continues to grow, route optimization will become increasingly important for companies looking to gain a competitive advantage.

Gururaj (Guru) Rao is the Chief Executive Officer of nuVizz, a leading network-based last mile delivery management & route optimization SaaS platform with a mission to connect all transportation from the First Mile to the Last Mile, and enable businesses to orchestrate the movements using state of the art AI and ML Technology. The nuVizz platform hosts more than 2000 companies, 35000+ active drivers & supports more than 50 million transactions.