Logistics optimisation: How businesses can mitigate distribution costs with location intelligence

December 15, 2020 12:12 PM

Logistics for MSMEs: For transport and logistic companies navigating through a quagmire of multiple carriers, service providers, physical locations, etc. it is pertinent to maintain a balancing act between new ways of doing business, all the while optimising costs as well as the efficient running of the supply chain.

For businesses that are looking to gain a competitive edge and mitigate the distribution costs, location intelligence can play a major role.
  • By Ashish Raj

Logistics for MSMEs: There has been increasing pressure on the logistics industry. Given the rising costs, a dwindling labour force, coupled with high customer expectations regarding prioritised deliveries, the pressure is monumental. While industries continue to scale, and sales continue to increase, delivery costs are increasing at a much rapid rate – even global e-commerce giants like Amazon are not untouched by these changes. Between the year 2017 to 2020, the e-commerce retailer’s shipping costs skyrocketed from almost $22 billion to a whopping $40 billion. Adding in the disruptive factor of an ongoing pandemic, mitigating distribution costs has become the need of the hour.

Challenges associated with logistics optimisation have always been notoriously difficult to circumvent around. However, with the help of spatial data science and location intelligence businesses can now gain access to data models that can simulate existing network conditions, thus providing them with insights regarding constraints, inefficient territorial assignments, etc.

For transport and logistic companies navigating through a quagmire of multiple carriers, service providers, physical locations, etc. it is pertinent to maintain a balancing act between new ways of doing business, all the while optimising costs as well as the efficient running of the supply chain.  Uncovering undetected business challenges with the help of real-time contextual geographical data, can help businesses in taking better control of their internal operations and gain a competitive advantage. To this end, here are a few ways in which location intelligence can help businesses in mitigating costs:

  • Fleet Management: Dealing with a variety of strategic issues such as diverse topography, complex road regulations, rapid technological changes, etc. fleet managers can cope with the help of in-vehicle cameras and location tracking techniques that will end up giving them greater insight into the operations, real-time traffic as well as weather conditions. Customised mobile solutions that have been embedded in vehicles can help in the integration of re-routing, geo-fencing, etc. This will also help in tracking driver behaviour, additionally helping in mitigating accident rates and also increasing driver retention.

Also read: Breaking down Reliance vs Amazon: The epic battle for Indian e-commerce bragging rights

  • Last-Mile Delivery: Transportation of products from distribution centers to customers is the utmost priority for most delivery companies. By using cloud-based location algorithms that utilise aerial and satellite imagery, HD maps, can help in the evolution of last-mile delivery processes as orders can get clustered automatically, drivers can avoid traffic and hence streamline deliveries. With the help of predictive alerts, fleet managers can also plan out much more efficient delivery routes based on segmentation criteria such as travel time, road tolls, fuel costs, which will go on to optimise the supply chain in its entirety.
  • Optimisation of First-Mile Delivery: Even though businesses are currently obsessed with last-mile delivery, in order to create an efficient business model and secure customer loyalty, optimising first-mile delivery is an arena that remains untapped. Generally, the challenges that a fleet manager faces with small deliveries are beyond his control – ranging from unpredictable loading times, custom delays, etc. can end up cascading into last-mile challenges such as short orders, stockout, etc. Hence, having location platforms that are innovative, can provide accurate insights into the availability of packaging centres that are the closest. Apart from this real-time location monitoring, mobile apps can provide logistics lenders in businesses and overarching control over the entire supply chain.
  • Transport Management Systems: Looking at the complete picture, location intelligence can help fleet managers as well as drivers in getting an accurate precise, and intuitive view of exact destinations as well as navigation experience on the road. With precise interactive maps and geo-coordinates, companies will be able to calculate distances as well as ETA for the shipments that are being taken, all the while ensuring that drivers are taking the optimum route, which can help in driving down costs.

Making location intelligence a part of your distribution strategy means moving towards a hyper-connected world with disruptive technologies and accompanied location data, which in the end enables transport and logistics companies in harnessing extra business value with efficient logistics planning. For businesses that are looking to gain a competitive edge and mitigate the distribution costs, location intelligence can play a major role by getting them actionable business insights that can facilitate better decision making.

Ashish Raj is the Chief Operating Officer at Transerve. Views expressed are the author’s own.

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