The last mile is a critical link between a business and its customers. For businesses in the food and beverage sector, the competition over the last mile is fierce. It’s a battle for customer loyalty and operational efficiency. With demand for last-mile delivery set to surge 78% globally by 2030, fine-tuning this aspect of the business with emerging technology is more of a necessity than a luxury.
In this context, artificial intelligence (AI) is a potential solution to many of the challenges businesses face in the last mile. Admittedly, it is not the silver bullet that eliminates all logistical hurdles. Nonetheless, the technology can make a world of difference over the final mile.
Application of AI in Last-Mile Delivery
Route Optimization
Route optimization is one of the most common applications of AI in last-mile food delivery. It has dual benefits. First, optimized routes speed up deliveries and reduce wait times. The result is usually an uptick in customer satisfaction. Retaining a customer is far more cost-effective than acquiring a new one. Studies show it can cost five to 25 times more to acquire a new customer. Faster deliveries build loyalty, which makes retention easier and more affordable.
Second, AI-driven route planning cuts costs by minimizing fuel consumption and reducing unnecessary mileage. More efficient deliveries mean lower operational expenses. This means businesses to scale sustainably while maintaining profitability.
Predictive Analytics for Demand Forecasting
No two days are ever the same in business. However, discernable patterns usually help you prepare better if you know where to look. AI-powered predictive analytics helps with this. It transforms raw data into a crystal ball for D2C businesses like restaurants to forecast demand. With these insights, businesses can optimize inventory and ensure they have the right resources for peak periods and surges.
Personalized Customer Recommendations
In food delivery, every additional item sold isn’t just extra revenue. It’s a chance to offset last-mile costs. AI-powered recommendations drive more sales by suggesting high-margin items at checkout without complicating deliveries. It can suggest meals, promotions, or delivery times tailored to individual customers. This level of personalization boosts customer engagement and increases repeat orders. When customers feel understood and valued, they are more likely to stay loyal to your brand.
Autonomous Delivery Vehicles
AI is at the core of autonomous delivery vehicles (ADVs). It enables them to navigate streets and make real-time decisions devoid of human intervention. These AI-driven robots and drones offer a faster, more efficient alternative to traditional delivery methods.
One major advantage is that they reduce traffic delays. ADVs also lower labor costs by reducing dependence on human drivers. Additionally, they support sustainability efforts. In 2022, transportation accounted for more than a quarter of total U.S. greenhouse gas emissions—the largest share of any sector. ADVs won’t wipe out the emissions entirely. However, their use can help cut some of these emissions.
Challenges and Limitations of Incorporating AI in Last Mile Delivery
The impact of AI is undeniable. However, integrating it into last-mile delivery comes with some challenges and limitations:
- High Implementation Costs: Developing and deploying AI-powered solutions, such as route optimization software, require significant investment. Small and mid-sized businesses may struggle with the upfront costs of AI adoption.
Pro Tip: Delivery management software like FULFLLD bridges this gap by offering businesses AI-driven logistic management software without requiring heavy infrastructure.
- Data Privacy and Security Concerns: AI relies on vast amounts of customer and operational data to function effectively. Ensuring data privacy and protection from cyber threats is a growing concern.
- Infrastructure and Regulatory Barriers: Many cities lack the infrastructure to support AI-driven delivery solutions. Additionally, regulations on drone deliveries and AI-powered logistics vary widely. This creates compliance challenges for businesses.
- Accuracy and Reliability Issues: AI models depend on data quality. Inaccurate or outdated information can lead to reliability issues that impact efficiency and customer satisfaction.
- Workforce Displacement Concern: As AI automates various aspects of last-mile delivery, concerns over job displacement arise. While AI creates new opportunities, it may also reduce the demand for traditional delivery roles.
- Technical Limitations and Maintenance: AI-driven systems, including autonomous delivery vehicles and drones, require ongoing maintenance and software updates. Technical failures, weather conditions, or unforeseen obstacles can disrupt deliveries.
The Future of Last Mile Delivery
AI is here to stay and will continue to refine last-mile logistics for more efficient deliveries. Advancements in machine learning, autonomous delivery, and predictive analytics will further streamline operations. While challenges abound, AI’s role in last-mile delivery is only set to grow. Businesses that embrace these innovations early will stay ahead in an increasingly competitive business environment.
Join leading businesses using FULFLLD’s on-demand delivery management software to streamline last-mile operations. Book a demo today!