The logistics and delivery industry is a major facilitator of trade between several other industries around the world. Through the transportation and delivering of goods using B2C or B2B supply chain networks, the logistics industry has seen enormous growth, making it a vital factor in international trade.
In 2021, the logistics industry had a worth of over $8.4 trillion dollars, growing to $10.7 trillion in 2023 with an expected worth of over $14 trillion dollars by 2028. To consolidate this crucial and exponential growth, several logistics businesses and companies worldwide are putting measures in place to measure and monitor key metrics in their performance in areas like delivery accuracy, cost, and productivity, as well as customer satisfaction scores.
For most logistics companies, Last mile delivery — which involves transporting packages from the nearest distribution center to customers’ location, is arguably the most essential aspect of the delivery chain. As such, it requires proper attention and analysis to reduce failed deliveries, minimize costs, and improve customer satisfaction and overall efficiency.
By measuring and keeping track of the statistics, figures, and key metrics, logistics and delivery professionals, supply chain managers, and businesses involved in delivery operations can now have an objective picture of their entire logistic operations, reduce expenses, increase visibility, and strategically position their last-mile delivery operation for better efficiency, success, and productivity.
So, if you’re looking at optimizing your last-mile delivery processes, or you’re a logistics and delivery professional, supply chain manager, or a business involved in last-mile delivery operations, this article has all you need to know about last-mile delivery metrics and the key metrics to monitor for better efficiency.
What is Last Mile Delivery Metric?
Before we look at the important last-mile delivery metrics you need to track, you need first to understand what delivery metrics are and the role they play in optimizing your delivery process.
Last-mile delivery metrics are the quantitative measurements that can provide you with a thorough insight into the efficiency angle performance of your delivery process. When collected, this data contributes to your business growth by helping you determine key performance indicators or KPIs.
By analyzing the metrics and data from last-mile delivery, fleet managers, logistics and delivery professionals, and businesses offering last-mile delivery service can identify areas that need improvement and make data-driven decisions to optimize the process for better performance.
For instance, in a last-mile delivery process where the final lap of the delivery journey from the warehouse, distribution center, or physical store to the customer’s location is vital, it becomes imperative to track the right metrics. The metrics will give you a clear understanding of how well your operation is going, the efficiency of handling deliveries, and whether or not customers’ expectations are met.
Importance of Tracking Last-mile Delivery Metrics
Monitoring data in your fleet operations and last-mile delivery, especially, is not only a good practice. With about 32% (one in three customers) saying they will walk away from a brand they love after just one bad experience, tracking your last-mile delivery metrics is necessary to succeed in the current dynamic nature of the delivery business and industry.
Below are some of the necessary and compelling reasons why drivers, fleet managers, and businesses looking to optimize their last-mile delivery need to monitor and track these metrics.
- Optimized operations
By analyzing metrics on fuel efficiency, delivery times, and routes, fleet managers and businesses looking to optimize their operations can easily identify problems, bottlenecks, inefficiencies, and key areas requiring improvement. This enables you to make decisions based on this data to streamline your routes for better fuel consumption and ensure maximum resource utilization for a more optimized operation.
- Data-driven decision making
Making decisions out of assumptions or a gut feeling can be risky and catastrophic to your business’s progress in a data-centric world. Delivery metrics help you take away the guesswork. It gives you access to quantifiable and objective data and information with accurate figures that lead to a more definitive problem or issue. That way, you can easily make the right decision based on the data available, leading to an increased chance of a successful outcome.
- Competitive advantage
The eCommerce and logistics industry is highly competitive. As a result, B2B and B2C last-mile delivery services need to have a differential factor or edge to stand out from the competition. By leveraging the power of tracking metrics, you can easily improve your overall performance and offer a much better service, giving you an advantage over others. Last-mile delivery companies that constantly deliver goods on time, effectively manage costs, and optimize their route are more likely to stand out, win their customers’ trust and loyalty, and retain them.
- Cost management
Running a delivery business is quite expensive due to the several expenses involved, from maintenance to fuel to labor and vehicle value depreciation. By keeping track of key metrics like the cost of delivery per mile and fuel efficiency, drivers and fleet managers can have a proper idea of how they’re doing financially and identify opportunities to manage costs. Apart from increasing profit, it also allows for investments in modern technology and upgrades.
Last Mile Delivery Metrics To Track
Overcoming last mile delivery challenges can be a huge task. However, proper analysis and understanding of which metrics to track can make a key difference in your output, such as improving your delivery performance, delivery completion rate, and customer satisfaction. Below are some of the most important key metrics to keep track of to properly optimize your last-mile delivery, improve efficiency and customer satisfaction, and increase your success rate.
On-Time Delivery Performance
In the delivery business, especially during the last mile, delivering packages on time is vital in ensuring maximum customer satisfaction and retaining their services. About 55% of customers say they will stop shopping with a retailer after receiving a late delivery two to three times, with a further 17% saying they will stop after one late delivery.
With this in mind, monitoring key performance indicators of departure time, routes, and drop-off time can help delivery drivers and managers measure how they and their fleet keep to delivery schedules. Constantly missing delivery schedules can result in unsatisfied customers, extra operational costs, and even loss of income and potential customers. To avoid this, tracking key metrics will help prevent potential causes of delayed delivery.
On-time delivery rates can be ascertained by multiplying the timely delivery percentage by the total number of deliveries made. Then, to improve the on-time delivery rate, regularly track metrics relating to delivery performance like time of departure and delivery, time spent on stops, and first-attempt delivery success. Compare the data obtained with industry-standard benchmarks, personal set targets, or customer expectations obtained from surveys or feedback. That way, you can easily identify areas that need improvement.
Additionally, using delivery management software with features like route planning and optimization, real-time tracking, inventory management, and real-time communication can help increase the percentage of timely deliveries.
Delivery Time Variability
When the average delivery time of packages varies too much, it becomes an issue. The average delivery time is basically the time used in delivering a customer’s goods from the distribution center to the customer’s doorstep or location. However, due to several factors, including traffic conditions and multi-stop, the delivery time might vary.
The delivery time of a package plays a huge role in influencing customer satisfaction. Most customers often anticipate a prompt delivery of their items and might become impatient and unsatisfied when the time takes longer than expected. Since delivery times often vary, the variation can be averted by tracking the time it takes to complete a delivery to a particular geographical location.
By doing so, businesses can achieve a mean average time of delivery that can be communicated to customers to prevent future dissatisfaction arising from a variation in the ordinal expected time. Time variation can be reduced by using route optimization software to plan routes with similar distances. It can also be reduced by properly sorting packages to be delivered in the order of the nearest to the warehouse or distribution center. That way, drivers can avoid spending too much time unloading packages, which can cause a delay for the next person on the list or the last.
Delivery Completion Rate
Failed deliveries are common in the logistics business and have become a growing problem. In fact, about 99% of eCommerce companies have confirmed that they’ve experienced failed deliveries at some point in their orders. With 24% admitting that one out of every ten orders is not delivered on the first attempt. The economic impact of a low rate of delivery arising from failed delivery of packages is far-reaching. Retailers experience a loss of $197,730 per year due to 8% of their first-time delivery failing.
To prevent such catastrophic loss to the business, fleet managers need to monitor metrics relating to their delivery completion. The percentage rate of delivery completion can be obtained by subtracting the number of attempted deliveries from the number of successful deliveries and dividing the figure by a hundred. By ascertaining the rate of completed deliveries, businesses can easily identify how much they’re losing to failed or re-attempted deliveries as well as the causes, enabling them to take proactive steps to reduce them.
From the metrics obtained, reducing missed or failed deliveries can be implemented through proper communication and preparation to increase delivery completion. That is, ensuring accurate order processing, effective planning, accurate delivery information, proactive real-time communication regarding any changes in delivery specifics, and optimizing strategic areas of the delivery process.
Delivery Cost per Mile or Unit:
Most delivery drivers and businesses often determine their delivery prices based on other similar businesses. While that is a good practice, it’s vital to understand delivery cost per mile to set your own prices. The cost per mile of a delivery is the measurement of the cost involved in each mile traveled while making a last-mile delivery.
The cost of delivery plays a huge role in the delivery business. The need to make a profit in the last-mile delivery operation greatly influences the cost of delivery. As a result, the high cost of delivery can lower profit margins and jeopardize the business viability. When calculating cost per mile, it’s essential to consider fixed and variable expenses. Fixed expenses include driver’s salary, cost of vehicle maintenance, renewal charges, and insurance. On the other hand, variable expenses include cost of fuel and vehicle repair costs.
Keeping track of the cost per mile for your delivery gives you the essential insight necessary to calculate your business’s overall operating cost. It provides you with an almost accurate summary of expenditures that can help you calculate average delivery distance, average cost and service time, fuel consumption, vehicle cost, and more.
While delivery costs can’t be eliminated, measures can be taken to reduce them. Tracking delivery cost per mile is necessary to ensure an effective operation with a profitable outcome. As a delivery business owner or fleet manager, you can adopt route optimization to reduce fuel consumption and distance covered. You can also implement effective vehicle selection, load consolidation, and proper warehouse management to lower the delivery cost per mile.
Customer Satisfaction Scores
The success of a delivery can be measured by how well the customer is satisfied. So, tracking this metric is crucial in understanding how well each driver meets customer expectations and identifying areas requiring improvement. In doing so, you can easily retain recurring customers and gain new ones.
Feedback, ratings, and reviews can also be used to measure success and service quality. They provide valuable insights into the weaknesses and strengths of your delivery service, allowing drivers and managers to make data-driven decisions to improve the overall service quality.
Route Optimization Metrics
Route optimization is arguably the most essential aspect of the last-mile delivery process. It plays a huge role in determining how pleased or satisfied customers will be when they get their package. It’s also used in ascertaining the performance of drivers. However, since route optimization often allows you to find the shortest possible route and the most efficient, it’s important to keep track of its metrics.
By tracking route optimization, you can have an in-depth understanding of the time your driver spends on each trip, the number of stops taken, and the time spent due to traffic and other unforeseen road circumstances. That way, you can easily incorporate these changes into your route planner to provide a more efficient route that helps you improve your order capacity, reduce fuel consumption, and improve customer satisfaction.
Driver Productivity and Performance
Driver performance and productivity are vital KPIs that measure drivers’ efficiency while on the job. It shows how well drivers are utilized during their available work hours, their rate of on-time deliveries, customer feedback rating, delivery accuracy, and adherence to road safety regulations.
Low driver performance or productivity might indicate bottlenecks like poor route planning strategy, excessive time-wasting or idleness, or inadequate workload distribution. By tracking driver performance metrics, fleet managers can easily identify areas that require improvement and implement necessary strategies to optimize drivers’ schedules and improve productivity.
It also allows fleet managers to identify and reward top-performing drivers, give constructive criticism to low-performing drivers, and execute training to improve all drivers’ performance.
How Detrack Can Optimize Your Last-Mile Delivery
The last mile is the most important phase or stage of the delivery process. Therefore, proper care should be taken to optimize the process for better results. By tracking important and key metrics mentioned in this post, drivers, fleet managers, and delivery business owners can easily make informed decisions to improve their service and enhance growth.
You can also use Detrack’s delivery management software with technological advances and a better understanding of customer behavior to optimize your operations. We can find the best solution for you or your company’s needs by collaborating and utilizing resources. Our management software includes several features that can help you deliver packages on time, plan routes effectively, and increase customer satisfaction. Try Detrack Today for effective route planning that gets more done in less time!