Posted by Guru Rao

If it ain’t broke, don’t fix it? Not exactly.

As customer standards continue to rise, retailers must also demand more of themselves and their delivery networks. Yesteryear’s hub-and-spoke model for last mile delivery might not be broken, but it is woefully obsolete in the age of e-commerce, two-day shipping and omnichannel shopping.

In other words, “good enough” is dead; Amazon killed it. If you don’t let go, it’s going to drag your business down with it. “Great” is the new norm, and you must hold your last mile operations to that standard, under threat of swiftly diminishing profit margins.

How delivery management evolved from static to dynamic route optimization

Delivery management used to be relatively straightforward: Load up a truck with as much cargo as is safe, dispatch it to a store, pick up any returns that need to go back to the distribution center while there, drive them back and call it a day. E-commerce delivery shattered this model, and scattered the new touchpoints (consumers’ homes) across the map. In response, many retailers developed a second supply chain for e-commerce operations, that, by and large, relied on online fulfillment centers functioning independently of brick-and-mortar operations, according to the Wall Street Journal.

Fast-forward to today. Big retailers like Walmart and The Home Depot, struggling to compete with Amazon Prime’s two-day and same-day delivery offers, realize that their brick-and-mortar footprint can be used to help fulfill online orders. If a customer who lives two miles from a store places an order for an item in that store’s inventory, why ship it from an e-commerce fulfillment center hundreds of miles away? Why not ship it from the store?

In theory, it makes perfect sense, but in practice, it’s a logistical nightmare. Accommodating this type of dynamic, downstream operation requires route optimization for multi-pickup and multi-delivery scenarios. The math involved is far too complex for manual route planning software. Throw in the fact that customers may have very particular delivery time windows for larger products such as furniture or home electronics, and you’re left with an impossibly complicated game of connect the dots. We’re talking the Uber model on powerful steroids.

And so, we arrive at dynamic route optimization.

A new age in delivery management

Today’s retailers should focus on doing more with their existing infrastructure rather than throwing CAPEX they don’t have into new infrastructure. Dynamic route optimization as part of a fleet management tool facilitates this endeavor by automatically factoring in all of a downstream operation’s existing resources and their availability, and then figuring out how to most efficiently utilize them.

Additionally, external factors such as traffic patterns and weather are considered in these calculations so that routes reflexively adjust in real time to keep drivers on the most efficient path possible.

These are the types of logistics that the big guns, including Amazon, already use. And thanks to cloud technology, they can be delivered as a service and utilized across any device that supports wireless connectivity.

Dynamic route optimization is not a cool tech trend or catchy buzzword. It’s a necessity to compete, and thrive, in today’s omnichannel retail arena.

Be great. It’s what your customers expect.

Dynamic route optimization: The new norm in delivery management