Supply Chain Analytics: Key Importance Explained

As the American baseball league is about to begin, let us remind ourselves of the one book that transformed baseball, sports, and even business management in the past two decades, “The Art of Winning an Unfair Game” by Michael Lewis.

You can easily relate to the movie that was inspired by this book- Moneyball. All it took Billy Beane from Oakland A’s to break the myth that more money can win more games was data.

Optimal decisions are necessary for your businesses to compete among big names in last-mile fulfillment and win over them like Billy Beane.

Last-mile delivery is a number-crunching game filled with hyper-complex mathematical operations. It is nearly impossible to manually chart the best plan for complex and time-consuming last-mile delivery, even in simple contexts.

Your business needs data that reflects on-ground reality to build cost-effective plans for the final mile, and the need for advanced supply chain analytics arises here!

5 signs you need advanced supply chain analytics to make better last-mile decisions

Before Billy Beane, all baseball clubs thought more money was critical to winning big and having the edge over the opponents.

Billy Beane felt baseball suffered from an epidemic failure due to baseball theorists, age-old myths, and prejudices. This led him towards last mile delivery analytics to make optimal decisions in selecting and managing players.

With e-commerce user penetration expected to surpass 80% in 2023 and close to 85% in 2027, businesses need operational flexibility to manage vast volumes of shipments. Investing in advanced analytics helps your companies manage these high volumes of shipments flexibly and efficiently.

Last-mile decisions without data are mere guesswork that can add to costs and kill your brand reputation. If your businesses are struggling from one, a few, or all of the five problems below, it means your business needs advanced supply chain analytics.

1. High last-mile delivery costs

Online sales are capturing customers’ attention like never before. And the numbers prove it. Before the pandemic hit, retail e-commerce sales were 3.35 trillion dollars. A study says retail e-commerce sales will reach 8.1 trillion dollars by 2026.

When there is a sudden increase in online sales and your business does not focus on optimizing the delivery costs, it can heavily impact your profitability. A Capgemini study has found that absorbing a part of last-mile delivery cost and not optimizing it will hurt retailers’ profitability by 26%.

Cost is the primary obstacle to attaining a healthy profit margin from last-mile delivery operations. Final-mile delivery contributes to 53% of the total cost of shipping. A few bottlenecks and inefficiencies can make it more expensive and reduce profit margins.

Advanced supply chain analytics is the need of the hour to spot these bottlenecks and inefficiencies and work on them. It helps you find answers to some plaguing questions about increasing delivery costs. A few of these questions are:

• What was the hour of the day that had the highest number of deliveries?
• What time of the day are deliveries made quicker and more cost-effective?
• Which delivery zone or region incurs high last-mile delivery costs?
• What is my time per delivery?
• Is my order accuracy rate getting lower due to missed deliveries?
• How much cost is my business incurring due to inefficient schedules?
• Are there any inefficient or manually planned routes contributing to high delivery costs?
• Which driver has the highest average idle time?
• Is cost per mile increasing during peak season?
• Who are the drivers outperforming and underperforming?
• What was my Service Level Agreement (SLA) adherence during peak season?
• How much does it cost to service and visit all the stops on the route?
• How much fuel do vehicles consume in a day?
• What is the profit per mile for a route?

By using advanced supply chain analytics, you can get answers to critical business questions in the final mile. It is a unique microscope that allows your business to obtain a comprehensive picture of your last-mile logistics costs. It assists your stakeholders and delivery managers to make informed decisions, rectify logistical weaknesses, and improve delivery efficiency, by minimizing delivery costs.

2. Increasing delivery delays

With increased consumer interactions on social media, businesses must be honest and responsive about delivery delays. So today, a few delayed deliveries can snowball into a fall in your brand reputation.

Road closures, traffic, vehicle breakdowns, or incorrect addresses contribute to delivery delays. It is crucial to consider these issues for your drivers to make on-time deliveries. Only data can help you find what stops your on-ground workforce from making deliveries on time and solve them.

Advanced analytics is the magnetic compass that rightly shows where your delivery delays are happening. It provides critical delivery insights through different metrics and some of which include:

With the help of advanced supply chain analytics, you can easily track the percentage of First Attempted Delivery Rates (FADR). This helps you know if your first attempted deliveries are on time and reduce the likelihood of reattempted deliveries.

3. Difficulty in serving customers in their preferred time slots

A major concern for customers is when they perceive that a business does not value their choices. This can cause them to feel anxious about the delivery of their product or service, ultimately hindering the growth prospects of the business.

Before going further, we will touch upon the meaning of delivery anxiety. Delivery anxiety is customers’ prolonged fear after placing an order when they aren’t provided timely updates on order fulfillment. This can be extended to not sharing drivers’, and delivery agents’ details and not providing the customers with options to reschedule deliveries even after their dispatch. Further, not giving customers a choice to select their time slot for receiving orders makes deliveries unpredictable.

Businesses need advanced analytics on time slots that customers prefer to serve them better. With analytical insights on time slots, it becomes easier to assign the right fleet and fully use it.

Is there a way forward to get this done? The answer is a definite “Yes”.

With the help of delivery-linked checkout, customers can choose their preferred time slots. As these time slots are connected to fleet’s capacity usage and availability, it becomes easier for dispatch managers to deliver orders to customers at their preferred time while fully utilizing fleet capacity.

4. Need for prediction and forecasting

As a dispatcher or stakeholder, it is necessary to contribute to the strategic decisions of your business. To build a strategic framework and roadmap for last-mile delivery, your business needs the help of data. It’s necessary to have critical forecasts and predictions to help you chart the right plans for your upcoming deliveries.

There are some periods in a year when demand for deliveries increases. It may be during weekly holidays, special government holidays, or the much-celebrated peak season. To plan for these critical times and direct your resources, you need some crucial forecasts and predictions for the last mile like:

• Operational fleet size for the next month
• Fleet mix for the coming peak season sales
• Number of drivers to handle demand peaks
• Expected Time of Arrival between each stop
• Number of stops that drivers may serve for the next quarter
• Total vehicle capacity required for high-order volumes
• Average service time planned for the next week

Advanced supply chain analytics helps you know if your weak spots or areas of concern will improve shortly. With its predictive capabilities, you may know where immediate intervention is required and anticipate shifts in demand. It also enables you to find delivery exceptions of Service Level Agreement (SLA) breaches that are likely to occur. This helps you alert customers when there are possibilities of delays for upcoming deliveries.

5. Inefficient routes

If your vehicles take longer distances and incur high costs and more time to travel, it means you are spending costs on wasted time and miles. As you work on a manual route plan, you end up spending unnecessary hours on the process of planning routes. This leads to delays in picking and packing operations from the warehouse, which incurs overtime costs. But route optimization can provide answers to these issues.

Providing the route with the shortest distance is not what an optimized route is all about. With insights into numerous delivery constraints, advanced analytics from route optimization software acts as a pillar to plan the optimal routes for your drivers. Some of the insights on real-world delivery constraints include:

• Multiple time windows per stop
• Regional regulations of local authorities
• Maximum number of stops per route
• Route distance
• Route duration limits
• Proximity to the depot
• Loading and unloading time
• Driver breaks/ Unavailability
• Vehicle capacity utilization
• Scheduling of return orders from customers
• Expected Time of Arrival (ETA)
• Customer-preferred time windows

As drivers pick up multiple orders from multiple sources and deliver them to multiple destinations, there is a higher chance of orders getting mixed up. What is the solution to this issue? The answer lies in multi-stop route planning.

With multi-stop route planning, your business can ensure that there are multiple orders for one pickup or multiple pickups for one dropoff leading to minimal mistakes. It generates real-world-ready optimal routes after factoring into the data of all real-world constraints. Combining its power with advanced analytics, multi-stop route planning makes it easier to deliver multiple orders to multiple locations without orders getting mixed up.

Advanced analytics: Bedrock for better last-mile decisions

With demand for last-mile delivery expected to grow by 78% by 2030, the number of delivery vehicles in the top 100 cities will increase by 36%. This increase in delivery vehicles will increase congestion by 21%. – The future of the last-mile ecosystem, World Economic Forum 2020.

As the demand for last-mile delivery is expected to steep, enterprise businesses are looking to digitalize their last-mile logistics operations. With enterprises leveraging automation for repetitive tasks and regular decisions, data-driven decision-making will occupy the center stage soon.

The best way to make data-driven decisions is by investing in a technology that assists the dispatch management efforts of your business. One such technology that supports dispatch management operations is Locus.

With Locus’ dispatch management software, your stakeholders can quickly source on-ground data and delivery metrics to evaluate delivery performance. It helps your delivery managers to create engaging visual representations of actionable insights. These insights help your business elevate the productivity levels and efficiency standards of deliveries. Finally, its key delivery metrics help your business identify and rectify the bottlenecks and make upcoming deliveries better than the previous ones.

Want to use advanced analytics to plan, manage and strategize your last-mile delivery operations ahead of time? Talk to our experts now!

References:

https://www3.weforum.org/docs/WEF_Future_of_the_last_mile_ecosystem.pdf
https://www.statista.com/statistics/379046/worldwide-retail-e-commerce-sales/
https://www.capgemini.com/wp-content/uploads/2019/01/Report-Digital-%E2%80%93-Last-Mile-Delivery-Challenge1.pdf
https://www.insiderintelligence.com/insights/last-mile-delivery-shipping-explained/