Last-mile Logistics Optimisation: Network Design and Technology
Last-mile logistics has moved from being a downstream operational concern to a board-level strategic issue. For organisations operating across Australia and New Zealand, the “last mile” is often the most expensive, most visible, and most complex part of the supply chain — and the part customers judge most harshly.
Whether it’s home delivery in metropolitan Sydney, servicing regional towns in New Zealand, replenishing retail stores, delivering healthcare supplies, or managing hospitality and food & beverage distribution, last-mile performance has a direct impact on customer satisfaction, operating costs, and brand reputation.
At the same time, organisations are facing rising transport costs, labour constraints, tightening service expectations, sustainability pressures, and growing complexity in delivery channels. The result is that many last-mile networks are no longer fit for purpose — often because they evolved incrementally rather than being intentionally designed.
This article explores how last-mile logistics optimisation can be unlocked through a combination of network design and technology, with a particular focus on the realities of operating in Australia and New Zealand. It also outlines how organisations can approach last-mile transformation in a structured, commercially grounded way.
Why the Last Mile Has Become So Challenging
The last mile has always been difficult. What has changed is the scale, speed, and visibility of those challenges.
Customer Expectations Have Shifted Permanently
Customers now expect faster, more predictable, and more transparent delivery. Same-day and next-day delivery expectations are no longer confined to major cities or large retailers. Service windows are tighter, tolerance for failure is lower, and communication is expected to be proactive rather than reactive.
Cost Pressure Is Intensifying
The last mile typically represents the highest cost per unit moved in the supply chain. Labour, fuel, fleet, subcontractor margins, and failed deliveries all compound quickly. In many organisations, last-mile delivery costs have grown faster than revenue, eroding margins even as volumes increase.
Network Complexity Has Increased
Organisations are servicing more channels, more locations, and more delivery profiles than ever before. B2B, B2C, store replenishment, click-and-collect, home delivery, and service-based logistics often sit within the same network — frequently with different service expectations and cost drivers.
Geography Works Against Simplicity
Australia and New Zealand present unique challenges. Long distances, low population density outside major metropolitan areas, and a heavy reliance on road freight make last-mile design inherently more complex than in many global markets.
Sustainability Expectations Are Rising
Customers, regulators, and investors are increasingly focused on emissions, vehicle utilisation, and waste reduction. Last-mile logistics is a visible contributor to Scope 3 emissions, placing additional pressure on organisations to improve efficiency.
What “Last-mile Optimisation” Really Means
Last-mile optimisation is often misunderstood as simply improving route planning or negotiating better transport rates. While these levers matter, they rarely address the structural drivers of cost and service performance.
True last-mile optimisation requires organisations to step back and ask more fundamental questions:
- Is the network structured in the right way to serve demand efficiently?
- Are delivery points being serviced from the right locations?
- Is inventory positioned optimally to minimise delivery distance and frequency?
- Are service promises aligned with cost-to-serve?
- Is technology enabling decision-making — or just reporting problems after the fact?
This is where network design and technology must work together.
The Role of Network Design in Last-mile Performance
Network design sits at the foundation of last-mile logistics. If the network structure is wrong, no amount of routing optimisation or system configuration will fully fix the problem.
What Is Last-mile Network Design?
Last-mile network design involves determining:
- The number, size, and location of distribution facilities
- The role of each node in the network (e.g. fulfilment, cross-dock, micro-hub)
- Which customers, stores, or service points are served from which locations
- Delivery frequency and service models by segment
- The interaction between linehaul, middle-mile, and last-mile transport
Importantly, network design is not a one-time exercise. Demand patterns, service expectations, and operating constraints evolve — and the network must evolve with them.
Common Network Design Challenges in Australia and New Zealand
Across both countries, Trace Consultants frequently sees similar network-related challenges affecting last-mile performance.
Legacy Networks Built for a Different Demand Profile
Many networks were designed years ago for pallet-based, store-focused replenishment. Today, they are being stretched to support high-frequency, small-drop, customer-direct delivery without being fundamentally reconfigured.
Over-Centralisation
Highly centralised networks can reduce inventory holding costs but often drive long last-mile distances, higher transport costs, and poorer service responsiveness — particularly for regional and remote locations.
Under-utilised Regional Nodes
Conversely, some organisations operate regional facilities that are poorly integrated into the broader network, resulting in duplication, low utilisation, and inconsistent service models.
One-size-fits-all Service Models
Applying the same delivery frequency, vehicle type, and service promise across all customers often leads to over-servicing some segments while under-servicing others.
Designing the Network Around Demand, Not Assets
A common mistake in last-mile optimisation is designing around existing assets rather than demand realities.
Effective network design starts with:
- Understanding demand by location, channel, and time
- Segmenting customers based on service requirements and cost-to-serve
- Modelling different network scenarios to test trade-offs between cost, service, and risk
- Considering flexibility and scalability, not just current volumes
For example, introducing micro-fulfilment or urban consolidation points may significantly improve service and cost outcomes in dense metropolitan areas — but only if demand density and operating models support it.
The Role of Technology in Last-mile Optimisation
Technology is a critical enabler of last-mile performance — but only when deployed in support of a well-designed network and operating model.
Moving Beyond Static Planning
Traditional planning approaches often rely on static routes, manual adjustments, and historical assumptions. Modern last-mile environments require more dynamic decision-making.
Technology can support:
- Dynamic route optimisation based on real-time conditions
- Improved delivery sequencing and load optimisation
- Visibility across drivers, vehicles, and delivery status
- Proactive exception management rather than reactive firefighting
Key Technology Capabilities That Matter
Rather than focusing on individual systems, organisations should think in terms of capability.
Transport Management Systems (TMS)
A fit-for-purpose TMS supports carrier management, routing, cost visibility, and performance measurement. The key is configuration aligned to the network and service model — not just system deployment.
Route Optimisation and Scheduling Tools
Advanced routing tools can significantly reduce kilometres travelled, improve drop density, and support tighter delivery windows when integrated properly with order management and dispatch processes.
Real-time Visibility and Execution
Mobile applications, driver visibility tools, and automated status updates improve execution discipline and customer communication while reducing administrative overhead.
Data and Analytics
High-quality data enables better decisions around network changes, service segmentation, and continuous improvement. Without clean, structured data, optimisation efforts stall quickly.
Why Technology Alone Often Fails
Many organisations invest heavily in last-mile technology but see limited benefits. This usually occurs for one or more of the following reasons:
- The underlying network design is suboptimal
- Service promises are misaligned with cost-to-serve
- Data quality is poor or fragmented
- Operating processes are not standardised
- Change management is underestimated
Technology amplifies whatever operating model it supports. If the model is flawed, technology simply makes those flaws more visible.
Integrating Network Design and Technology
The most successful last-mile transformations integrate network design and technology as part of a single, structured journey.
This typically involves:
- Establishing clear service and cost objectives
- Understanding current-state performance and constraints
- Modelling network design scenarios
- Defining the future-state operating model
- Selecting and configuring technology to enable that model
- Embedding governance, metrics, and continuous improvement
Crucially, decisions are made with an end-to-end lens rather than optimising isolated components of the supply chain.
Sustainability and the Last Mile
Sustainability is becoming inseparable from last-mile optimisation.
Network design decisions directly influence:
- Total kilometres travelled
- Vehicle utilisation
- Fleet mix and electrification readiness
- Delivery frequency and consolidation opportunities
Similarly, technology enables better measurement and management of emissions, supporting more informed trade-offs between service and environmental impact.
For many organisations, improving last-mile efficiency is one of the most practical ways to reduce emissions while also lowering costs.
Practical Steps Organisations Can Take Now
For organisations looking to improve last-mile performance, the following principles are consistently effective:
- Take a network-first view rather than jumping straight to technology
- Segment customers and service models deliberately
- Use scenario modelling to understand trade-offs
- Align service promises with economic reality
- Focus on data quality and decision-making discipline
- Treat last-mile optimisation as a continuous capability, not a one-off project
How Trace Consultants Can Help
Trace Consultants supports Australian and New Zealand organisations to optimise last-mile logistics through a pragmatic, analytically rigorous approach that balances cost, service, and sustainability.
Rather than pushing predefined solutions, Trace works with clients to:
- Diagnose last-mile performance issues across network design, transport, and operations
- Model alternative network scenarios to quantify cost and service impacts
- Define fit-for-purpose last-mile operating models aligned to demand and strategy
- Support technology selection, configuration, and integration
- Improve visibility, governance, and performance management across last-mile execution
Trace Consultants brings deep experience across retail, FMCG, healthcare, government, manufacturing, and hospitality supply chains — with a strong understanding of the unique geographic and operating challenges in Australia and New Zealand.
Importantly, Trace’s approach is independent and solution-agnostic, ensuring recommendations are driven by what works best for the organisation rather than by technology or asset bias.
Looking Ahead: The Future of Last-mile Logistics
Last-mile logistics will only become more complex. Urban congestion, labour constraints, sustainability expectations, and customer demands will continue to reshape how goods move from network to doorstep.
Organisations that treat last-mile logistics as a strategic capability — grounded in strong network design and enabled by fit-for-purpose technology — will be far better positioned to compete, scale, and adapt.
Those that rely on incremental fixes and reactive solutions will continue to struggle with rising costs and declining service performance.
The opportunity is there. The challenge is approaching it with the right structure, discipline, and insight.
