How to Choose the Best 3PL Software for Last Mile

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After the 2020 COVID-19 pandemic, the global e-commerce market has witnessed a huge boost in online sales. According to Statista, global e-commerce sales are expected to hit $8.1 trillion by the end of 2026. With such a rapid pace of growth, many companies are outsourcing their logistics and delivery operations to the 3PL (Third-party Logistics) service providers. 

This is also driving the need for smart solutions, and businesses are struggling to find the best 3PL software for last-mile visibility. Research reveals that the global 3PL market is expected to reach $1.75 trillion by the end of 2026. This signals that the 3PL service providers are working harder than ever to adapt to the ever-changing market trends to improve their clients’ logistics performance. This is another crucial driver for the demand for smart 3PL management software.

The ever-growing customer expectations, increasing order volumes, and rising fuel costs are presenting challenges to the shippers and 3PL providers, making it difficult to provide fast and low-cost last-mile deliveries. 

While the problem set and 3PL management use cases for every business vary, there are some key considerations that can help in choosing the best 3PL software, irrespective of the business type and scale. Here, we explore these key considerations, the benefits of automating 3PL management, and much more.

What is 3PL Software?

3PL software is used to automate the management, communication, collaboration, tracking, and controlling of all the processes and operations related to third-party logistics service providers. Depending on the business use case, these solutions can help manage multiple functions and modes, such as packaging, inventory management, warehousing, transportation, and order fulfillment, on the part of the 3PL service provider.

Nowadays, shipping companies demand better order tracking capabilities, faster shipping times, and more efficient services from 3PL providers. To provide these services, 3PL companies need applications that help improve shipping times via route optimization and automation while offering last-mile visibility via data visualization, real-time tracking, and faster communication. 

What Last Mile Operations a 3PL Handles

Third-party logistics providers offer wide and varied services to take care of a business’s entire logistics operations. However, depending on the particular business requirements, a 3PL may also offer only the last mile services. 

Last-mile delivery operations that a 3PL manages include receiving orders from the shipper or e-commerce company, picking up the parcels from the nearest hub or distribution center, and delivering it to their final destination. After the delivery, the 3PL sends delivery status or updates to the shipper. 

Hence, the best 3PL software works on both sides, the 3PL service provider and their clients/retailers. Both parties can use 3PL software for efficient management, monitoring, optimization, tracking, and smart orchestration of operations. 

Top Five Delivery Challenges Businesses Face

Last-mile delivery plays a significant role in the entire logistics journey. A positive last-mile experience builds a strong brand reputation and brings in customer loyalty. On the other hand, a negative delivery experience can directly impact a brand’s image. Optimizing last-mile delivery operations manually not only requires a lot of effort but also requires a considerable amount of time. It can also lead to many last-mile delivery challenges.

Same-day Deliveries

According to the research, around 88% of all consumers are willing to pay more for same-day delivery. And the numbers are set to rise within the next few years. Keeping up with such expectations is one of the biggest challenges of last-mile deliveries. 

Manual task allocations, sloppy routing practices, and poor management of 3PL providers make it very difficult to reduce the delivery time and can even risk the whole shipping process.

Ensuring a careful utilization of the vehicle capacity is yet another challenge. Most same-day deliveries consist of small packages, which makes it difficult to utilize the full capacity of a delivery vehicle. After all, if the delivery services want to provide same-day delivery, they don’t have the time to wait till the vehicle is completely filled.

Increased Delivery Costs

Even though consumers are willing to pay more to receive faster delivery, many businesses still find it very difficult to execute it in a cost-effective manner. On top of that, the ever-changing trends and demands of different products make it tough to figure out how much inventory a business should hold, if they need to hire more staff, and many other aspects that influence the overhead cost.

Retailers also need to take care of other costs such as fuel, vehicle maintenance, warehouse, and labor expenses. What’s more, setting up a reliable in-house delivery system will cost them a lot of money. There are rescheduled delivery attempts that can easily double the last-mile delivery expenses. Also, the trend for free delivery is also gaining momentum across all types of deliveries. 

Thus, providing systematic and faster delivery services while keeping expenses low is one of the most critical challenges every e-Commerce and delivery business faces.

Logistics Complexities

Businesses need to simplify their complex delivery logistics to more efficiently provide last-mile delivery services. The companies have to optimize their end-to-end fulfillment accurately while keeping the last-mile expenses on the lower side. 

They need to untie logistics operational knots to create a simplified order-to-delivery system via dynamic routing, proper scheduling, order tracking, and managing outsourced vehicles. Solving all these logistics complications manually is impossible.

Optimizing Delivery Routes

Traditional routing models often depend on manual processing, making it harder to consider all the aspects that affect the creation of highly productive routes. For example, with manual routing models, it would be a very difficult and time-consuming task to modify the delivery routes in real-time to deal with factors like bad weather, sudden road closures, and traffic congestion.

What these businesses need is a proper last-mile technology that would be able to create dynamic routes efficiently to deal with delivery problems in real time. However, optimizing delivery routes in real-time is next to impossible with the traditional routing models, which ends up negatively affecting both the delivery cost and the shipping time.

Lack of Real-time Visibility

Real-time visibility is an important part of the delivery process. Whether it’s a retailer, carrier, or customer, real-time visibility allows them to track the location of a package and help them figure out when the package will be delivered. Providing such services significantly reduces customer queries, saving both time and customer service-related expenses. 

However, without proper 3PL software, providing real-time visibility can become a big trouble. The lack of real-time visibility can easily lead to the loss of packages, unnecessary delays, and customer dissatisfaction, which any retail or carrier company must avoid.

How Does 3PL Software Overcome the Last Mile Delivery Challenges 

3PL software automates repetitive manual jobs and finishes all delivery-related tasks in no time. It also eliminates the risk of errors. The software overcomes last-mile challenges using the following methods:

Automated Task Allocation

The best 3PL software for last-mile delivery offers efficient task and resource allocation planning to minimize last-mile costs. It automatically plans the delivery routes, pinpoints driver locations, and allocates a certain number of packages and tasks to the drivers to ensure high efficiency at all times.

It improves task completion efficiency, saves time, and can help businesses reduce the number of drivers and vehicles needed to deliver a certain number of packages. This significantly reduces the costs related to last-mile deliveries while increasing the delivery speed.

Optimizing Delivery Costs

By adopting the best 3PL software for last-mile deliveries, businesses can enjoy automatic task allocations, efficient routing, real-time tracking, and more to minimize delivery time using fewer resources. 

As they need fewer drivers to deliver a certain number of packages and can find the shortest and most efficient routes automatically, it significantly lowers the delivery cost without compromising the delivery speed. They can reduce the number of empty miles and also set custom parameters for the automated selection of the most profitable carrier partners. 

Real-Time Tracking

Today, consumers who order their products online want to know where their packages are all the time. According to research, 91% of customers actively track their packages. The best 3PL software comes with in-built tracking systems that provide complete visibility of a package’s movement. 

This way, both the retailers and customers can track where the packages are in real time. Once the packages arrive at the warehouse near the customers and the delivery agents bring the packages out for delivery, the customers are informed via messages when the package will be delivered.

Route Planning and Optimization

Finding the perfect route to a specific location to deliver an order in the lowest possible time is one of the biggest challenges that every delivery company faces. The best 3PL software for last-mile helps the logistics managers track the delivery vehicles in real-time to help them follow dynamically optimized routes.

The last-mile delivery platforms can trigger alerts in real time if the delivery vehicle gets off the optimized routes or stops in a location for a long time. The smart software also takes traffic congestion, weather conditions, shipping urgency, and many other factors to alter the delivery route in real-time if it’s necessary. 

It also takes vehicle capacity and fuel consumption into account to orchestrate highly optimized delivery operations.

Better Operational Visibility

The ability to control ground-level delivery operations is very important for last-mile delivery. And to gain this ability, shippers need better operational visibility. Using the features of an intelligent 3PL software, they can get 100% visibility of their internal logistics operations as soon as the orders are placed by the customers. 

The logistics managers can track all the ground-level activities whenever they want, to make sure everything is going well or to take immediate action if inconsistencies in logistics operations appear.

Excellent Customer Experience 

Last-mile delivery is not just delivering the packages to the customers. It’s about delivering the packages to the consumers while providing a superior customer experience. Executives need to see it as an extension of their company’s brand image. So, they should pay more attention to last-mile deliveries and make them more customer-centric.

The best 3PL software for last-mile allows businesses to equip their customers with real-time order tracking, regular updates, and accurate delivery time estimations. This way, customers can always see where their packages are, which reduces their anxiety and improves their favorability with the company.

5 Factors to Consider When Choosing the Best 3PL Software for Last Mile

To serve businesses of all sizes, retailers and shippers should get customized 3PL software. Here are 5 points to keep in mind:

Easy to Integrate With Your Existing ERP/WMS/OMS System

3PL software needs the data points from the company’s database and other management systems to provide businesses with accurate and data-driven solutions. That is why if a last-mile delivery and management tool fails to integrate perfectly with their existing ERP, WMS, or OMS systems, it will only cause managers and executives the companies never-ending headaches. 

So, make sure to choose a 3PL application that is capable of collecting data with ease from various data management solutions. This way, it can provide the company executives, fleet managers, logistics workers, dispatchers, and other relevant people with the last-mile data they need from a single solution.

Potential for Scalability

Most e-commerce or shipping businesses look for a 3PL service provider because their businesses have grown so fast that they cannot effectively manage it with their in-house logistics department. And businesses will keep growing and evolving with time. 

That necessitates a 3PL software that can scale as the business grow. Best 3PL software solutions scale up and down as per the dynamic business needs and ensure high efficiency and optimized deliveries at all times.

Smart Delivery Management 

Make sure that the last-mile management tool comes with smart delivery management systems. Such applications are powered by AI and machine learning technologies to provide task automation, real-time tracking, route optimization, automated stock management, geo-fencing, and a lot more features to deliver packages to customers as efficiently as possible.

A Unified View of Operations

Many 3PL applications come with steep learning curves that make it difficult for the employees to get used to them in a short time. So, before selecting a last-mile delivery solution, make sure it comes with intuitive dashboards that allow people of all permission levels to use it with ease.

Admins or managers should be able to manage communications, operations, multiple carrier partners, service providers, shipment movements, customer communication, etc., from a single unified dashboard.

Automated Route Planning And Optimization 

The best 3PL software for last-mile delivery management should be able to manage all the shipping requirements of a business. The applications are increasingly equipped with AI-powered route optimization solutions that help companies find the shortest delivery routes by taking delivery time, fuel cost, weather, traffic congestion, and other important factors into account. 

This will ensure faster delivery of packages to the customers while minimizing the delivery cost.

Improve Delivery Efficiency and Minimize Delivery Costs with Shipsy’s 3PL Software

Shipsy offers the best 3PL software for last-mile and a bevy of other logistics automation solutions to ensure timely and accurate deliveries to the customers. The AI-powered logistics platforms integrate seamlessly with the existing data management tools and other data sources. This AI-enabled intelligent platform analyzes the system data to provide automatic task allocations, better operational visibility, real-time tracking, and superior route optimizations.

Shipsy’s smart 3PL management platform has helped businesses to unlock:

  • 23% decrease in last-mile delivery costs
  • 18% increase in delivery NPS
  • 28% reduction in customer complaints
  • 45% reduction in customer onboarding time

Connect with our experts today and request a demo to see how Shipsy’s 3PL software can improve delivery efficiency while minimizing cost.

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