How costs add up when you don’t plan the final mile

The final mile is a delicate stage: small details have a phenomenal impact. Enhancing your final mile organisation can rapidly generate significant savings.

The final mile is a delicate stage: small details have a phenomenal impact. This presents a risk — and an opportunity. Yes, a lack of planning means costs can rapidly spiral. That’s the clear downside risk. Yet the upside opportunity is no less powerful. Enhancing your final mile organisation can rapidly generate significant savings.

Let’s take a moment to unpack this risk/opportunity balance in the final mile. Given it’s the most expensive link in the delivery chain, it closely influences your bottom line. And there are interlinking factors that, alone or combined, can hit your bottom line hard. Say you’re under-utilising your fleet. Or missing chances to optimise your routes, losing time and money in the process. Or your delivery fees are simply too low to be viable. Just one of these elements can quickly rack up your costs. And if you’re dealing with a few of them at once? That’s bottom line damage from which you won’t easily bounce back.

On the flip side, tweaking a single factor can have a positive knock-on effect. Small changes, one by one, make all the difference. Factors can snowball to hammer your bottom line, true. But they can also snowball to make it far more resilient — if you strategise well. There’s no need to change everything, all at once. Small improvements in just one or two areas can quickly turn the tide. Take optimising your routes, for example. Once that’s in place, you can increase drops per hour. Which gives you leeway to deal with increased costs in other areas. Easing the pressure and handing you a more comfortable margin; a safety net to handle unexpected expense. That’s one small change, making waves.

In short, rethinking your final mile can be a daunting task. But it’s a vital step towards staying profitable and safeguarding your business health. The most important thing is actioning that first, wave-making improvement. So, we’re sharing strategies to keep control of your final mile costs. It all starts with knowing your as-is numbers. From there, route optimisation, fleet management and customer loyalty are the major players. Both short-term and looking further in your business development, every tweak counts!

Start by knowing your numbers 

When it comes to optimising your final mile, your strategy will be unique to your business. There’s no catch-all answer on where to start! However, gaining a clear overview of your numbers is key. Planning without a solid understanding of your business data is a recipe for difficulties down the road. But from a well-analysed foundation, you’ll be set to make the right data-backed decisions.

Are you tracking final mile KPIs?

To forge this analytics foundation, focus on your final mile KPIs. This is usually the most expensive part of delivery operations. As a result, it’s a good place to start pinpointing areas you can improve.

Of course, your insider take on your business will reveal your KPI tracking needs. But as a general rule, we’d recommend getting started by tracking:

  1. Distance per stop
  2. Deliveries per hour
  3. Success rate
  4. Cost per hour
  5. Service time
  6. Customer satisfaction

Roll out route optimisation

Optimising your routes enables delivering as rapidly and efficiently as possible. But that’s just the surface benefit. Looking deeper, route optimisation ensures you can maximise deliveries per vehicle. This saves time, cost and emissions simultaneously. How? In a nutshell, better routing means you need fewer vehicles on the road. That brings down both maintenance and fuel costs, as well as your carbon footprint. And with a smart routing platform, this can all be organised with driver welfare built in.

Digitalising your routing also means you’re set for growth. As your delivery destinations and order numbers scale, your delivery operations will be ready to keep pace. In fact, it’s worth investing in routing tools as early as you can. Starting out with just a few orders? It’s still wise to get a reliable operational structure in place. With low-cost options available, it’s a smart long-term investment. You’ll be set up for growth, ready to scale as customer demand does!

The knock-on advantage of last-mile optimisation

Well-planned deliveries can create a positive ripple effect on your operational chain. This starts with foolproof tracking of deliveries per driver and per optimised route. Ace this, and you have a launchpad to evolve elements from warehouse operations to customer support. A smart routing platform can help ensure no vehicle leaves a depot without all its programmed orders. It’ll also provide both end customers and your support team with live driver updates.

Route optimisation saves office hours — not just driving hours

There’s another key advantage of smart route optimisation: reduced admin workload. With the right software, the old manual work and brainache will be eliminated. For your operations/logistics team or e-commerce manager, this is a vital time-saver. Taking an additional task off their already full plates!

For organisations with large logistics teams, ensuring workflows are streamlined is also crucial. An all-in-one platform can help, ready to handle high order volumes and intricate planning. Yet smart routing’s clarity and alignment are valuable for smaller teams, too. In these companies, people likely wear multiple hats. As just one example, take an e-commerce manager who’s also tasked with route planning. The less time they can spend on it, the better. Time saved = cost saved, no matter the size of company or business area you’re in.

Going electronic isn’t the same as going digital

Moving from manual route planning to electronic route planning is a vital first step. But Excel and maps will only take you so far! With increasing order volumes, you’ll need a platform that can do the work for you.

With intelligent routing software, you won’t just be able to plan efficient routes exponentially. You’ll also access the crucial time-saving we’ve touched on. Even in Excel and maps, consider the time it takes to plan routes. Adding orders, configuring journeys, checking for errors. It’s a lengthy process!

With the right routing tool, an optimised 100-order route can be generated in minutes. What’s more, AI and ML components in leading software mean it learns as it goes. For enhanced routing, every time.

Tailor your fleet management

Beyond route optimisation, how you organise your fleet has a major impact on final mile expenses. Running your own fleet entails high fixed cost — so perhaps there’s another way?

With a steady order stream, a private fleet ensures you can meet demand. Your vehicles are also reliably needed. With fluctuating orders, though, the landscape shifts. There’s no sense in maintaining a peak-volume fleet which stands unused when orders tail off. Working with a delivery partner can solve the problem, streamlining expenses while ensuring you meet demand.

Maximise your returning customers

Why do returning customers make for cost-effective deliveries? Simply put, the longer a delivery takes, the more it costs. This is the reason route optimisation is vital — and the same goes for customer loyalty.

The first time a driver visits an address, it takes a bit longer to deliver successfully. They need to find their way, park, and locate the front door itself. The next time, however, those learnings would be in a smart routing platform. Ready for that driver to revisit, or set a fellow driver up for success. The more deliveries made to an area or address, the faster and more successful they are overall!

For safeguarding your bottom line in general, returning customers are key. Ensuring this ties back into route optimisation. Smart planning means you can offer accurate time windows, avoiding customer dissatisfaction. You’ll have set the right expectations, and be able to update in real time. Ensuring on-time deliveries to happy, loyal customers.

Operational resilience starts with a single step

From the first to the final mile, all your processes impact each other.

This means a cumulative effect can quickly occur — both negative and positive. If one of your processes is inefficient, it can bring others down. Yet if you make just one improvement, it can elevate everything with it!

It’s taking your first step towards end-to-end efficiency that matters. Whether it’s route optimisation, fleet management or your customer base, enhancing one will pave the way to enhancing the next.

There’s a vital difference to be made, wherever you focus first. Every tweak will reinforce your bottom line — for impact potentially more significant than you foresee. For guidance on where and how to get started, reach out to our team. We’ll be glad to talk!

Rasmus Hallgren Sánchez

Rasmus Hallgren Sánchez

Marketing Manager at Gordon Tech. Rasmus is passionate about all things marketing, e-commerce, and digitalisation. Has an almost incurable predilection for hockey and tacos.

Gordon is a cloud-based platform that empowers retailers to manage, track, and optimise their last mile deliveries.