Last mile delivery solutions – what they are and how they can be optimized

The xTrack TMS (Transport Management System) plays an important role among the software applications developed by Axes Software for the logistics sector because it provides effective solutions for efficient transport management, including the optimization of last mile delivery solutions, and for significantly reducing related costs.

The integration of xTrack TMS functionalities ensures a number of optimizations of transport and distribution activities. We present below the concept, scope and benefits of last mile deliveries.

What does a last mile delivery solution mean?

If milk run refers to the collection of products from several suppliers and delivery to their customer-company (B2B relationship – from a series of warehouses to a single warehouse or distribution center), last mile, as the name suggests, is the last segment of goods distribution. In other words, the last mile refers to the “journey” from a HUB (regional warehouse, distribution center) to the final customer which can be an entity (B2B – Business to Business relationship) or an individual (B2C – Business to Consumer relationship).

The name has originally been used in the telecommunications industry, the last mile referring to the last, difficult stage of connecting individual homes (end users) to the main network. Extrapolated in the context of the supply chain, last mile deliveries describe the final, arduous and costly journey of goods from a warehouse to numerous end users in different locations.

The importance of optimizing this final delivery segment is not at all negligible – the increase in online retail sales has led to a directly proportional increase in the volumes of goods delivered and, therefore, in transport volumes and costs. Thus, financial challenges have required and continue to require the creation and development of new transport management optimization solutions.

In order to minimize costs, increase efficiency and ensure transparency in delivery processes, carriers and couriers have as their main objectives:

• route optimization,
• avoidance of empty runs,
• traceability of goods and activities,
• monitoring of deliveries,
• identification of more efficient distribution and pricing models.

Financial efficiency depends, to a large extent, on the integrated automation of all workflows that such companies manage. Therefore, optimizing milk run or last mile delivery is only part of the logistical challenge, as it does not lead to a reduction of all costs.

In the quest for maximum profits, companies have not stopped diversifying their last mile delivery solutions. And technology is providing the support they need. Software solutions to optimize the transport system allow, for example, the installation and tight management of a network of Pick Up Drop Off Points (PUDO), collection and drop-off points where end customers can pick up their ordered goods or return those they do not want for various reasons.

PUDO is a term commonly used to describe smart lockers located in densely populated areas that are readily accessible to any consumer. The development of an increasingly large network of smart lockers as a result of the widespread implementation of interactive delivery management means the use of an ever-increasing number of locations and i requirements to schedule last mile deliveries and optimize the associated routes. And the complexity of the PUDO system makes manual management of all the data impossible from the outset.

Alongside PUDO network deliveries, Click & Collect deliveries are also a cost-saving alternative to last mile deliveries for carriers, helping them to group several deliveries in the same location. The Click & Collect method (buying a product online and having it physically picked up by a customer, either in-store (BOPIS) or from a nearby location (curbside pickup)) has become very popular during the pandemic and continues to contribute to the growth of the FMCG sales segment. However, as it is linked to online deliveries, the method will not disappear from the list of delivery models used by large retailers, especially as it has already proven its effectiveness in practice.

Under these circumstances, the usefulness of TMS transport management software systems is unquestionable. Our xTrack TMS software solution automates deliveries in general and last mile deliveries in particular. The application generates a list of deliveries based on the order lists of each distribution warehouse through which the goods transit on their way from another central warehouse to the final customers. The creation of these lists takes into account a number of parameters related to the goods (quantity/number, volume, cut-off time for receiving, etc.), the payload of the available transport vehicles, tonnage limitations, driver and customer work schedules, etc.

Optimal routes are also determined via the application, depending on their profitability, with calculations being made automatically based on the minimum total price charged for deliveries. Through the implemented algorithms, xTrack TMS also determines other useful specifications for each trip, such as the right vehicle for each route resulting from the last mile optimization. The identification of the vehicle can be done, apart from the payload, by applying additional criteria such as wear and tear. In order to “distribute” wear and tear in the fleet, only the car with the lowest wear and tear (lowest mileage) can be selected from a range of cars that meet the load and availability conditions, or vice versa.

The result of the route optimization process can be sent automatically via the application to the warehouse managers who coordinate the preparation and grouped sorting of the goods for each individual route.

Benefits of optimizing last mile delivery solutions

The main objective of transport optimization, i.e. the fastest and most efficient delivery of products to end customers, is the one constant.

Otherwise, differentiating factors emerge. Last mile deliveries are made over distances ranging from a few blocks to tens of kilometers. The specifics of the goods (perishable or dangerous, refrigerated or non-refrigerated, etc.) and routes (municipal roads, urban streets, ring roads, motorways) and customer requirements are parameters that influence the characteristics of the delivery.

With the use of a multitude of variables, automating last mile deliveries is becoming a necessity, especially for distribution or courier companies. Digitizing and processing data flows maximize the practical benefits of this delivery solution, and carriers can save time and money by avoiding costly errors.

A major benefit of implementing last mile delivery solutions is the optimization of last mile transport and a more efficient distribution of goods through xTrack TMS, in the context of the spread of online commerce and the reorganization of economic activities in terms of digitalization, marketplaces, local customers versus global markets.

The benefits of last mile delivery and automated optimization solutions also relate to better goods receipt and storage, as well as faster loading.

For both B2C and B2B shipments, last mile deliveries need to be faster and cheaper and based on green logistics. The use of dedicated software solutions to manage deliveries, including last mile deliveries, ensures business efficiency, automation and the application of the latest technologies (artificial intelligence, blockchain technology, Internet of Things IoT in logistics).

In the current economic climate, reducing costs along the supply chain is key to success for companies. And more! Lower logistics costs also mean lower costs for the end customer, who can become a loyal customer. This is an important benefit that drives carriers to invest in last mile delivery solutions, communication infrastructure and even outsourcing to specialized last mile distribution providers for operational optimization and the best long-term contractual relationship.

If you would like to learn more about our xTrack TMS solution, you can contact us by sending us a message using the form below. We look forward to your questions.