Tips For Last-Mile Logistics Providers On The Road To Digitalization

Simon Seeger, Managing Director of Bettermile, a last-mile delivery SaaS solution that dynamically plans and optimizes delivery routes.

Consumers have outgrown the era in which they bought something online and patiently waited for their package to turn up at some point in the following days. When we recently surveyed more than 1,300 e-shoppers, 64% expected to be able to track their purchase in real time on delivery day—and 77% of these “real-time trackers” said they aligned their plans with its estimated time of arrival.

This surge in what customers expect from last-mile carriers has been driven by digital pioneers that started in other industries. Amazon, for example, perfected online retail and brought its strengths to the last mile with Amazon Logistics in 2015. Uber perfected the digital pairing of taxis and passengers—and these “gig contractors” have since spread to delivering inanimate things, from food and freight to last-mile packages.

These newcomers to the delivery business have been able to harness data to optimize processes and user experience. Amazon Logistics has become the third-biggest parcel carrier in the U.S. in a few short years, and local delivery markets are teeming with gig drivers bidding for get-and-go deliveries on Uber, Shipt, Instacart, Post-mates or DoorDash (which recently added package pickup to package drop-off services). “Newbies” they might be, but they display a digital maturity that too many last-mile incumbents still only dream of.

Used to low-profit margins, transportation industry stalwarts have traditionally been reticent to invest in new technology. A survey by McKinsey of 80 North American distributors showed that nearly 1 in 2 had not put money into digital automation (like warehouse or transportation management systems)—and 14% were still using manual planning spreadsheets. But a survey of 600 logistics executives by Accenture concluded that the pandemic and geopolitics had underscored the need for the industry to “rapidly accelerate” its digital transformation. One suggestion was to enhance capabilities with tracking tools.

To accelerate transformation, last-mile delivery businesses have to engage with their digital maturity by driving structural and cultural shifts in the company as well as the adoption of tech solutions. Digital transformations are only successful when the people who have to work with innovative technological solutions are intrinsically motivated and equipped with the right skills to use them. They need to see the benefit of introducing new tools and feel the freedom to familiarize themselves with a product at their own pace.

Having supported various companies in their digital transformation, we have experienced that drivers—in many ways, the key stakeholders in our partnership with logistics service providers—initially exhibit excitement and curiosity but soon face the reality of significant changes affecting their routines. But the better the structural and cultural shifts in the company go, the more quickly these curves meet.

We’ve seen that companies employing a bottom-up change management policy were quicker to roll out our delivery and navigation app for drivers. Introducing such a solution for last-mile delivery significantly impacts operational processes. It’s important to listen to driver feedback, train drivers regularly and train managers on how to help their employees adapt. We had great success with our train-the-trainer approach, where a large last-mile service provider rolled out the app to all of its terminals in less than six months.

Small- and midsized logistics companies ask themselves how they can improve their technology stack and level up. SaaS solutions are a cost-effective way to achieve digital maturity quickly and keep up with the technological leaders in the industry. They offer tried-and-tested best practices as standard features, can be up and running in a matter of hours, connect to other cloud-based services and scale up continually as the company’s business grows.

To be able to implement technologies like automation, analytics, or artificial intelligence, having accurate and accessible digital data is crucial. It is important for delivery companies to unlock real-time data to make their operations more efficient and create a better customer experience.

In the end, it’s not only the customers voicing their demands. As driver shortages and fluctuation continue to hem the industry, transportation companies need solutions that make onboarding new drivers faster and support existing drivers with an improved delivery experience. If drivers are not provided with adequate solutions, they tend to search for tools themselves. Google Maps is a common workaround for drivers in last-mile delivery, and new apps are entering the market. Drivers download them from the app store and upload delivery data to plan their routes.

Data sovereignty is an important topic in the package delivery industry. If drivers choose their tools individually, the company loses control of sensitive data. By retaining their data for their own use, logistics companies will tee themselves up to leverage machine learning and AI for further process optimization.

These tips should embolden last-mile logistics providers to tackle the daunting-sounding task of driving digitalization—because the last-mile delivery space is changing fast.