Transportation network optimization is a crucial process in streamlining supply chain operations. Business leaders aim to reduce costs, improve service delivery, and enhance overall network efficiency by mastering transportation network optimization. As a result, the global last-mile delivery market is projected to reach USD 340.56 billion by 2032, registering a CAGR of 9.8%.
Last-mile delivery, which accounts for 53% of logistics costs, requires transportation network optimization to reduce inefficiencies and improve customer satisfaction. Holistic logistics network optimisation can lead to better routing, scheduling, and resource management, directly benefiting businesses and customers alike.
what are we up against?
The optimisation of last-mile delivery faces a number of challenges that logistics managers and supply chain professionals must navigate.
- The complexity of urban environments, with congestion, roadworks, and fluctuating demand, makes it difficult to maintain timely and cost-effective deliveries. The last mile can significantly impact the profitability of businesses.
- There is the challenge of consumer expectations. The rise of same-day or next-day delivery services has raised customer expectations, demanding even faster and more reliable service. Logistics network optimisation, therefore, needs to include efficient routing and predictive models to manage real-time delivery conditions, such as traffic congestion and weather disruptions.
- As with any disruptive innovation, the integration of new technologies and systems can be a hurdle. Many businesses still rely on outdated infrastructure and manual processes, which hinder efficiency and the ability to adapt to dynamic market demands. Overcoming these barriers requires a comprehensive strategy that incorporates predictive analytics, real-time data, and automation to refine the entire delivery process.
building blocks of last-mile delivery optimisation
The different components of last-mile delivery optimisation address unique aspects of the logistics process. The key components include:
- Route optimisation: Using algorithms and real-time data to determine the most efficient routes, reducing fuel costs and delivery times.
- Real-time tracking: Allowing customers and logistics managers to monitor the progress of deliveries, ensuring transparency and better control over the process.
- Automation: Implementing automated systems for warehouse management and delivery dispatch to reduce human error and improve speed.
- Fleet management: Utilising advanced tools to manage fleets, optimise vehicle usage, and ensure that the right resources are available at the right time.
- Customer communication: Enhancing customer satisfaction by providing accurate delivery windows and notifications of delays or changes.
strategies for last-mile delivery optimisation
Several strategies can enhance last-mile delivery optimisation, each addressing different aspects of the logistics network. Here are the most effective methods for businesses looking to improve their last-mile performance:
dynamic routing
Implementing AI-powered dynamic routing is one of the most effective strategies for last-mile optimisation. By leveraging real-time data, these algorithms adjust routes in real-time based on traffic conditions, weather disruptions, and road closures. This adaptability helps ensure that drivers always take the fastest route, reducing delivery times and fuel consumption.
predictive analytics for demand forecasting
Predictive analytics in logistics involves using historical data, market trends, and real-time conditions to forecast demand more accurately. By predicting customer demand and delivery volumes, businesses can better plan their resources, including fleet sizes, warehouse stock, and personnel. Predictive analytics also helps anticipate disruptions, allowing for contingency planning.
multi-modal transportation
Multi-modal transportation combines various transport methods, such as trucks, drones, bicycles, and even walking couriers, to optimise delivery times, costs, and environmental impact. This strategy is particularly beneficial in urban areas where congestion and traffic delays can make underoptimisation fatal to delivery schedules. By integrating multiple transport options, businesses can reduce costs and speed up the final leg of delivery.
partnerships in transportation network optimization
Partnerships in last-mile delivery optimisation refer to using local independent couriers to handle smaller, last-minute deliveries. This approach offers flexibility, reduces costs, and allows businesses to scale their operations without investing in a large fleet. Crowdsourced platforms can integrate with existing systems for seamless order fulfilment. Couriers can leverage local knowledge, ensuring more timely deliveries.
optimising delivery hubs and micro-distribution centres
Micro-Distribution Centres (MDCs) are small, localised hubs positioned closer to high-demand areas, helping to shorten the distance for last-mile deliveries. By optimising the placement of these centres, businesses can reduce the time it takes to get packages to their final destination.
sustainability
Sustainability is becoming increasingly important in logistics, particularly in transportation network optimization. Implementing eco-friendly delivery methods, such as Electric Vehicles (EVs), cargo bikes, or even pedestrian couriers in dense urban areas, can reduce the carbon footprint of last-mile operations. It also appeals to environmentally conscious customers. Adopting green logistics practices can enhance a company’s brand image and meet regulatory requirements.
customer-centric delivery options
Offering flexible delivery options, such as same-day or time-slot deliveries, allows customers to choose what works best for them. Providing multiple delivery options, such as in-store pickup, locker pickup points, or scheduled deliveries, improves the overall customer experience and reduces missed deliveries.
how can Infosys BPM help with transportation network optimization?
With the right tools and strategies in place, businesses can ensure that their last-mile delivery operations are successful. Infosys BPM helps businesses reduce costs, improve customer satisfaction, and build a more resilient supply chain. The integration of these technologies will drive the future of logistics network optimisation, making last-mile delivery faster, smarter, and more efficient.
