How route optimization improves efficiency in last mile delivery

By Praveen Salitra

In e-commerce, last mile delivery describes the journey that a product takes from a retail hub or warehouse to reach a customer. It encompasses several technological and logistical areas such as fleet management, transportation, and route optimization. By analyzing and planning last mile delivery, e-commerce retailers can improve efficiency and minimize costs when delivering products to customers.

An increasing number of people across the world prefer shopping online. Consumers prefer buying not just products like electronics and clothing online, but groceries, too. Ensuring timely delivery of these goods is crucial for attracting and retaining customers. Research shows most consumers would consider shopping from a different retailer if their normal grocery store does not provide a same-day home delivery or curbside pickup option.

The challenge for many retailers is creating efficient last mile delivery. Some approaches that work at a small scale, like static routing algorithms, are difficult to grow effectively. In logistics, static routing algorithms refer to a single plan produced for a future period based on specific factors and an average order volume. It is easy to set up, but as a retail organization scales, static routing introduces several new challenges.

A static routing technique can lead to inefficiencies such as under-utilized trucks, exceeding time windows, or overloading trucks if the volume for the next period increases significantly. This is why route optimization, or dynamic routing, is the best method for efficient, scalable last mile delivery.

Dynamic routing helps retailers adapt to changing demand over time. Dynamic routing uses algorithms to create last mile delivery routes based on actual order volumes and delivery timeframes. These can even be altered in real time to obtain the best match for delivering products quickly to customers. The outcome is improved truck utilization while staying within capacity constraints — and delighting customers with timely delivery.

Knowing where the market trends are heading is crucial to helping inform route optimization. For retailers, this means having historical data of purchase patterns and the ability to forecast orders in the near future. An omnichannel approach is key to setting up this forecasting ability. This way, retailers can avoid information silos by integrating multiple streams of data, making it easier to organize information and generate insights into market trends.

With the ability to predict demand, retail organizations can anticipate any last mile challenges and make the necessary fleet, warehouse, and route optimizations well in advance.

Adding real-time monitoring to dynamic routing improves efficiency even further. It empowers retailers to know where all of its fleet is located, understand how warehouses are being used, and see current warehouse capacity. With these insights into fleet management, retailers can understand how many trucks are needed to keep up with demand. It can make the difference between paying for one truck instead of three , which means reduced costs on fuel, maintenance, storage, and operations.

Are you ready to improve delivery efficiencies and create new possibilities for your retail organization? Contact Egen today.

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