How Last Mile Delivery is Becoming More Efficient with AI and Routing

Artificial intelligence (AI) is transforming the business world, in large part because of its ability to increase efficiency.

An AI-driven chatbot, for example, empowers companies to handle a higher volume of customer service inquiries at higher speeds with fewer human resources. Marketing efforts can also become more efficient when AI is used to uncover the most effective ways to attract and retain customers.

In virtually every area of business operations, AI offers opportunities for doing business better.

The area of last mile delivery is no exception. Last mile delivery is generally considered to be the least efficient phase of the delivery process, but by applying AI, leading companies have begun to address the inefficiencies inherent in last mile delivery, significantly boosting their profitability as a result.

The Science Behind AI

To understand the power of AI, one must appreciate the potential of data. Thanks to the digitalization of business operations, modern businesses accumulate mountains of data that flows in constantly, offering businesses a wealth of insights that can be used to increase efficiency. However, leveraging data to increase efficiency requires analysis. As mathematician Clive Humby stated, “Data is the new oil.”

Humby’s statement explains that data has great potential to fuel business, but not if left unrefined. The term “data mining” is often used to describe the process of turning the raw data that business operations produce into useful information that can drive more efficient business strategies.

As data grows, so does its potential to fuel insight. However, the volume of data that today’s businesses produce defies manual analysis — this is where AI enters the picture.

AI allows computers to analyze data much faster than the human mind can. By leveraging algorithms and iterative processing, AI can analyze data, draw conclusions from it, and make recommendations to increase efficiency.

Applying AI to Last Mile Delivery

Increasing efficiency in last mile delivery allows businesses to increase the number of deliveries they make without increasing the number of drivers, fuel, or time. To accomplish this, businesses begin with route optimization.

Routing is foundational to last mile delivery. The more efficient the routing, the more efficient last mile delivery can be. Route planning and optimization are some of the core ways AI is being used in the last mile delivery process.

AI-optimized routing leverages algorithms to bring together data on scheduled deliveries, delivery drivers, available routes, and customer requirements to determine the most efficient routes. These routes are mapped out at the beginning of the day, providing the information that is needed for loading trucks and establishing the order in which drivers must make deliveries.

Utilizing APIs that integrate with other business software allows for this process to be automated, which further increases efficiency. As orders are placed via e-commerce sites, routing software can combine data from sales with that provided by inventory systems and driver rosters to identify and create optimal delivery routes. Customer service and dispatch teams only need to get involved when problems arise.

Empowering multi-stop delivery management is one way that AI boosts delivery efficiency. By analyzing the destinations, delivery contents, and delivery times, AI-driven systems can provide the most efficient groupings for deliveries. This technology can be applied to both “one to many” delivery models, in which products headed to several destinations leave a warehouse, and “many to one” delivery models, in which drivers must pick up packages from many customers and get them to one delivery destination.

AI-driven systems continue to monitor and adjust for efficiency once drivers are on the road. If a customer updates their delivery details, drivers can be notified of route changes that must be made in real time. The same updates can be made if drivers experience issues during the delivery process. In addition, updates on weather and traffic conditions can prompt updates to delivery routes, which can also be communicated to drivers in real time. By providing these dynamic updates, companies can increase efficiencies in delivery time as well as fuel usage.

One often overlooked benefit of increasing route efficiency is the positive impact it has on driver satisfaction. Attracting and retaining competent drivers is a challenge that every business faces in the area of last mile delivery. Drivers who constantly face the stress of poor operational efficiency are quick to look for more satisfying work opportunities. Companies that leverage AI to provide drivers with maximum efficiency give themselves a competitive advantage in the recruiting and hiring process.

Leveraging AI to Forecast Future Needs

AI can also help businesses forecast their future last mile delivery needs. Analyzing data for trends can provide insights such as areas where the majority of deliveries are made, the types of vehicles needed for deliveries, and peak delivery times and volumes. These types of insights can empower businesses to take strides toward increased efficiency by decreasing operational waste.

Improving the efficiency of last mile delivery is something that all businesses should carefully consider, regardless of their size or the products they provide. Better delivery efficiency improves the customer experience, the employee experience, and overall profitability. AI-based tools provide a proven and accessible route for quickly implementing advancements in this area.

— Anar Mammadov is the CEO of Senpex, a logistics company that provides on-demand pickup and delivery services for businesses, including retail stores, grocery stores, restaurants, health companies, e-commerce shops, and marketplaces. Senpex is the company that was chosen by Stanford Medicine to empower the delivery logistics for its CATCH study. Anar has been featured in Tech Times, highlighting the uses of their AI-driven logistics software, as well as in Market Watch, LA Weekly, and also Tech Bullion which features the efficiency of Senpex software as a last-mile logistics service.