While the entire shipping process, from the supplier toward the customer, remains an important part of logistics, there is one particular area that holds the major spot. This would be that “last mile”. The last mile starts the moment a package is updated as “out for delivery” and ends when the customer gets the package delivered at their front door. In fact, research shows that 53% of the total costs associated with shipping go to the last mile delivery process.
Within just the first two quarters of 2021, eCommerce sales reached $408.51 billion. This is a 21.9% increase when compared to the same time period in 2020. Due to the increase in eCommerce sales, more packages need to be delivered on a day-to-day basis, and this often results in longer delays in last mile delivery. Optimizing the last mile delivery process can have a drastic impact on business-enhancing customer satisfaction while also lowering transportation costs.
In this post, we will explore the current issues that companies face with last mile delivery and consider how AI can be used as a way of optimizing the routes and process itself.
The Rise Of Artificial Intelligence In The Logistics Industry
Artificial intelligence has gained significant popularity within fleet management and the general logistics industry in recent years. Several companies have already implemented AI technology as a way of automating certain functions - which leads to enhanced efficacy. Combined with machine learning, many businesses are also able to achieve a solution that automatically delegates and updates route for drivers.
There are also multiple use cases for artificial intelligence in logistics. These systems are developed to collect a large amount of data and information from the company trucking software, as well as any additional integrations that are used by the business. As the data are collected, the artificial intelligence technology automatically starts to analyze the information. Through the built-in machine learning capabilities, the system essentially "learns" about specific factors linked to the company. This may include common routes, driver performance, and frequent types of deliveries that are made.
The analysis helps the AI system identify specific patterns that seem to exist within the system. The technology is also capable of providing details on certain behaviors. Once the AI technology collects a sufficient amount of information, there are several benefits that it can bring to a logistics company.
The system is capable of identifying specific alarm points that need attention. These are the areas where the company is currently not exerting full efficiency. For example, the system may determine that certain routes taken by drivers result in higher fuel costs.
This is not the only area where logistic companies are utilizing AI. With the right system and enough time for the machine learning technology to collect and analyze data, the company can also gain an overview of future predictions. The system can provide details on operation efficacy, costs, and profits based on current data - and allow the owners to determine what they should expect with the current techniques in the near and far future. Additionally, the system can make suggestions while also backing them up with data based on what was analyzed previously.
The Role Of AI In Last Mile Delivery
Artificial intelligence now plays a role in multiple departments that exist within the logistics industry. One of these areas includes last mile delivery, a department that many trucking companies and businesses in this industry are currently having problems with.
Current Obstacles With Last Mile Delivery
The current issues faced with last mile delivery have a number of potential causes and reasons. Before considering how AI can be a helpful addition to this process, it is important to have a proper understanding of the current issues.
- One of the most common problems that currently exist is the high demand for free shipping options from online retailers. Customers are demanding zero-free shipping services, but also expect retailers to provide on-time delivery. A logistic company has a difficult time ensuring deliveries are fast and efficient when costs have to be cut in order to provide lower-cost delivery services.
- Even with same-day delivery services, many companies only provide the customer with an “out for delivery” notification. This is not an accurate view of when the package will be delivered, making it difficult for the customer to know when they should be home. In turn, this often results in missed deliveries, as the customer is in town or at work when the parcel arrives at their delivery address.
- There are also unpredictable factors that can have a major impact on the efficiency of last mile delivery. One example would be traffic congestion, which is a factor that cannot be accurately estimated at all times. Maintenance on roads can also result in an unpredictable factor, which ends up in delivery delays.
These obstacles are currently the most common factors that are causing packages to be delivered later than what the customer expects. This, in turn, results in customer dissatisfaction, which can be costly to the retailer, as well as the logistics company.
Can AI Help With last mile Delivery Route Optimization?
The question now is - how can artificial intelligence assist with delivery route optimization for companies in the logistics industry. According to one study, AI, particularly in the form of Vehicle Routine Optimization, can be a highly efficient addition when looking to improve the last-minute delivery process.
When it comes to this type of optimization using AI, it is important for the logistics company and retailers to work together. Consider the fact that the reputation of both can be adversely affected when last mile delivery is not efficient - whether that results in late or missed deliveries.
There are already multiple examples of how AI is being used as a means of optimizing delivery routes and, ultimately, providing an enhancement in last mile delivery. One publication provides more details on a recent startup that decided to develop a logistics system that focuses on taking advantage of artificial intelligence. The startup, SimpliRoute, was first developed in 2014 and continues to utilize the latest advancements in AI to bring more advanced features to logistic companies and retailers.
The primary goal of this company is to deliver a route optimization system that has a particular focus on last mile delivery. The latest technologies in machine learning are used to create route algorithms. When deliveries are scheduled, parcels are distributed to specific delivery vehicles. This is already where AI comes into play. Before parcels are distributed, the AI system needs to consider each area where packages need to be dropped off. This allows the AI system to identify the most efficient delivery route for each vehicle. By distributing packages based on these routes, delivery can not only be faster but also more efficient - while reducing the overall fuel costs at the same time.
This isn’t the only example of an AI system being used as a means of optimizing last mile delivery. Clearmetal, Robby, Detrack, Package.AI, and FreightOS are all additional examples of companies that are focusing on helping logistic businesses provide a more efficient last mile delivery service to both the customer and the retailer.
In addition to these techniques, live data updates can also become a useful function when using AI to speed up last mile delivery. Traffic updates are now available through multiple APIs, which makes it easier to provide an AI system with details on congestion, as well as road maintenance. In these situations, the system can automatically create a new route for the driver to follow. By integrating these systems with mobile applications on the customer’s end, it becomes possible to offer the consumer more accurate data regarding their delivery. This can help to provide a significant reduction in missed deliveries - another factor that costs both time and fuel. The application provides live updates and notifies the customer when their delivery is next in line, giving them time to ensure they are home to collect the parcel.
Conclusion
With a consistent increase in demand for eCommerce sales and home delivery services, trucking companies are facing a major issue with last mile delivery. The advancements in artificial intelligence have provided logistic companies an opportunity for more efficient delivery route optimization. There are several AI solutions already available to help trucking companies address current last mile delivery problems.
Not sure how you can fully utilize artificial intelligence and machine learning to optimize your last mile delivery process? Integratz has worked with numerous companies in the logistics department and helped optimize several systems to work more efficiently. We can help you identify current weak points in your last mile delivery system and integrate AI systems to provide you with a competitive advantage through optimization. Simply schedule an appointment to speak with one of our experts and learn what we can do for your trucking company.
References
https://www.businessinsider.com/last mile-delivery-shipping-explained?IR=T
https://www.digitalcommerce360.com/article/quarterly-online-sales/
https://www.teletracnavman.com/resources/resource-library/articles/ai-the-future-of-fleet-management
https://mexicobusiness.news/logistics/news/ai-better-last mile-delivery-services
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