In this article, you will learn about:
- Know the importance of last mile KPIs and why they are vital to measure success rate of last mile deliveries.
- Order accuracy and timely delivery go hand-in-hand when it comes to structuring a flawless last mile process.
- Number of deliveries and average delivery times are key factors in determining if you are performing well.
- Cost of warehousing, transportation costs, and average delivery costs play a crucial role as you need to reduce expenses so it doesn’t cut into profit margins.
- Find out if your vehicle capacity is being utilized efficiently.
- Always take damage claims and complaints into account.
Being the final stage of the delivery process, which involves the end-user receiving the package, last mile delivery is the costliest and most time-consuming part of the entire system. There are loads of hurdles to overcome such as longer distances between delivery points, heavy traffic, too many deliveries within tight deadlines, and so on. Fleet managers need to collate data across delivery operations to measure if the last mile delivery model is successful or not. This is where last mile KPIs (key performance indicator) play an integral role, as these are used to track and monitor last mile processes.
Why are last mile KPIs important?
It is necessary to measure and optimize for the correct KPIs, or you might overlook areas for growth and improvement. For instance, you might monitor average delivery times from your warehouse to the customer, but you don’t have any method to assess how your performance in the area can be scaled. In this case, the absence of a delivery dashboard that provides detailed stats and data on buyer’s satisfaction levels can complicate situations. So, if businesses miss out on valuable information that offer transformational inputs across the entire supply chain process such as logistics, delivery operations, customer satisfaction, and impact of your brand, it can negatively affect profit margins.
Take a look at the top 9 KPIs for measuring success of last mile deliveries:
Maintaining accuracy of orders
It is vital to measure the total volume of orders being shipped and delivered, and also ensure they get delivered without errors. You need to ascertain if the package meets the specifications and expectations of orders. It lets you spot inaccuracies during the delivery process such as failed deliveries, wrong orders, and returned & damaged goods. Order accuracy rate is measured by subtracting erroneous orders from total orders to get the exact amount of successful deliveries, and then dividing them by the total number of orders. Using last mile software, fleet managers can point out errors in delivery cycles, and factor in customer feedback, to make the process more streamlined.
This KPI is the ratio of orders that have been dispatched on or before the shipping date. It helps to measure supply chain quality and performance in a more efficient manner. The time when the customer places an order till the moment, it is ready for the shipment shouldn’t be too long – the final delivery times give you a better insight regarding operational efficiency and effectiveness of the delivery strategy.
Number of deliveries
Even though this KPI is pretty straightforward, it is one by which several other metrics are measured. The number of completed deliveries is the total of all deliveries that are fulfilled in a week, month, quarter, or year. If your delivery management system is efficient, it can help to increase the number of deliveries, reducing overall delivery costs, etc. This KPI helps to calculate an average number of deliveries as well, which is necessary to identify potential areas for growth.
Costs of warehousing
There are quite a few expenses involved in managing goods from warehouses. It includes equipment costs like ordering, storing, and loading the goods along with labor costs. The warehouse is a key area of your business, so make sure you measure and review costs regularly.
Average service time required
This KPI means the total amount of time that is invested in fulfilling a single order over a certain period. It includes the time taken to pick up goods from the warehouse, completing pre-shipping documentation, and finally transporting and delivering the package to the customer’s doorstep. Divide the total delivery time by the number of deliveries to be made. It helps to track your supply chain’s effectiveness and implementation of planned delivery routes. Precise delivery time is a must if you wish to provide better customer service, boost order picking accuracy rate, and reduce returns. Compare different averages over equal periods to improve the delivery process.
This is an umbrella term as it includes other KPIs like total mileage, rate of fuel consumption, cost per mile, and preventable stoppages – basically, all costs related to each logistics operation from being in transit to final delivery.
- Total mileage
When an order is dispatched, a plan regarding its expected last-mile mileage is mapped out. But the actual mileage of the order might not adhere to this plan. You need to compare planned mileage and the order’s actual mileage, to find out if there are problems related to detouring, delivery schedules, or overall route planning.
- Rate of fuel consumption
When it comes to intermodal transport, computing the total amount of fuel consumption can be a tough task. Unfortunately, there is no precise technique to find out how much fuel is saved or wasted on a particular day. But if you calculate an average of fuel prices, per vehicle, per route, then it lets you figure out interval-based consumption costs.
- Cost per mile
The cost borne by a company to complete an order per mile, per vehicle, is a KPI that should be computed daily. The total number of shipments sent via a given route at a specific time and a certain price, have to be averaged. This number is the exact cost incurred to fulfill last-mile obligations.
- Preventable Stoppages
Stoppages mean the total number of stops made by a vehicle while delivering a batch of orders. If this KPI is more, it can increase overall fuel costs, while negatively impacting optimization practices. But if the KPI is less, it means your last mile operations are fast, reliable, and streamlined.
Average of delivery costs
The average cost of delivering products to the customer’s doorstep depends on distance, merchandise, and vehicle type. The sum of driver cost, fuel cost, and vehicle cost divided by total distance will give you your average delivery cost based on the distance parameter. If you consider the type of merchandise or vehicle parameter, the average delivery cost is the sum of driver cost, fuel cost, and vehicle cost (for a product) divided by the total number of deliveries. This KPI can be used to implement changes to service to reduce costs without affecting performance.
Utilization capacity of vehicles
This is the capacity of a vehicle that delivers products for its total capacity. It displays the idle space leftover for order fulfillment. Divide the available capacity with total fleet capacity, which gives you the vehicle capacity. If the number is high, it means there are loopholes in the loading process or route optimization needs to be more efficient. On the other hand, if the number is low, it indicates a lack of sufficient fleet, which should be expanded.
Damage claims and complaints
Even if your last mile model is extremely well-organized, and you have taken adequate precautions, goods in transit can get damaged. It means an enormous financial loss to the company while hampering credibility at the same time. Use this as a KPI – divide the total number of claims by the number of deliveries made, to ensure you can take actions to prevent items from getting damaged, as much as possible. Similarly, you can use complaint details as a KPI to improve delivery efficiency and customer experience. Divide the total number of complaints by the number of deliveries.
Understand last-mile logistics in a better way with the above mentioned KPIs – it helps to execute, track and optimize various intermodal movements, so that goods are delivered to the customer within the shortest possible time sans delays, thus increasing profit margins and providing better services, while building upon credibility and brand loyalty.