10 Important Metrics You Should Track to Improve Last Mile Delivery Operations

While the rapid surge in eCommerce and B2C commerce is boosting the last mile delivery market, the NPS score of negative nine and volatile customer loyalties reveal the cracks in strategizing and planning. Stats reveal that 76% of customers expect businesses to accommodate their unique delivery needs and expectations, 83% seek proactive order status reporting, and 80% want free deliveries. Further, 55% of customers would shift to a retailer offering faster delivery, and bad digital experiences result in an 8% loss in revenue. 

These stats indicate how crucial the last mile delivery orchestration is for customer satisfaction, business profitability, and operational efficiencies. However, this level of operational excellence requires careful tracking and measurement of the performance of all last mile delivery components. Let’s quickly explore what those KPIs are and why they matter.

#1 – Percentage of Load Being Allocated to Various 3PLs

Having multiple carrier partners comes with crucial allocation considerations. Identifying the right 3PLs for particular shipments/areas/service requirements and allocating the orders accordingly is critical to ensure cost-efficient and on-time last mile deliveries. It’s important to balance the load among multiple 3PL partners, keep a close eye on their performance, and distribute load/orders among top performers equally.

Manual management of load allocation based on individual carrier strengths, profitability, and past performance is neither possible nor scalable. Intelligent automation platforms offer smart in-built functionalities such as automated order allocation among multiple 3PLs based on rule-based selection, 3PL prioritization, and shipment characteristics. This boosts the overall performance, helps businesses unlock greater last mile savings, and leverages unique carrier strengths for increased delivery efficiency and higher profitability.

#2 – Percentage of On-Time Deliveries

Statistically, slow/late deliveries drive away as much as 52% of customers. Measuring the percentage of on-time deliveries offers a quick yes/no analysis of the effectiveness of last mile delivery operations. It is also one of the easiest KPIs to track, and comparing the percentage for different periods of time helps businesses gain a better understanding of the overall success/failure of delivery fulfillment.

#3 – Number of Delivery Re-Attempts per Order

Each re-delivery attempt comes with multiple effects, namely – increased wait times for customers, compounded operational costs for the businesses, and ETA SLA breaches affecting the overall CX. Measuring the number of delivery re-attempts per order offers how successful and efficient the fulfillment processes are. Keeping track of the metric makes it easier for businesses to identify the most credible delivery or logistics partners and improve their delivery operations in a strategic manner.

#4 – Most Frequently Cited Non Delivery Reason (NDR) in a Particular City

Rapidly evolving eCommerce and on-demand delivery segments are pushing brands and businesses toward multiple carrier partnerships. Thus, businesses have different carriers for delivery and fulfillment in different cities/geographies. 

Measuring and tracking the most frequently cited NDR in a particular city/geography enables businesses to keep a check on the overall carrier performance. They can easily identify whether the carrier is delivering across the SLAs or whether they need to switch the existing partners. 

Another amazing benefit of tracking the NDR reasons in specific geographies is that businesses can identify the gaps in their delivery/fulfillment processes and customer expectations. Thus, they can easily figure out what is ailing their customer experience and work on improving their processes.

#5 – Most Recorded NDR at Hub-Levels or by a 3PL & RTO Percentage

Recent research shows that RTOs cost businesses as much as 66% of the original item’s price. Thus, tracking, measuring, and reducing the RTO percentage can have a critical impact on earnings. Tracking NDRs and RTO percentages at the hub level ensures a granular vision of the overall efficiency and productivity of a particular hub. 

Businesses can easily identify the particular reasons that are leading to higher returns or missed deliveries and can take strategic actions to tackle them. Further, measuring the NDR and RTO numbers against 3PL partners also shows how accurate and productive a particular 3PL partner is. The learnings can later be used to refine the 3PL selection/prioritization criteria for improving last mile delivery.

#6 – Order Dispatch Times

The time taken by a business to pack, stamp, invoice, and hand over an order is called order dispatch time. This is extremely crucial for speed and accuracy in last mile delivery because any error in labeling or invoicing can delay the delivery or misroute the shipment. Shorter order dispatch times give businesses a significant headstart and also help decrease delivery times. 

However, reducing order dispatch time requires extremely smooth and streamlined dispatch processes, such as order creation, label generation, carrier booking/allocation, etc. This is where intelligent delivery management automation comes in handy. With smart OMS integrations, automated label generation, and intelligent allocation routines, businesses can reduce order-to-ship time by 12% and increase on-time dispatch by 28%.

#7 – Fuel Consumption Rate (FCT) and Total Mileage

Instead of measuring the delivery costs broadly, like wages, fuel, vehicle lease, etc., start measuring the complex cost functions, such as fuel consumption rate and total mileage, which can clearly indicate how much money goes into the fulfillment of orders in a specific amount of time, given the current asset pool. 

For the quick commerce segment, the fuel consumption rate can be kept low by improving asset utilization, optimized routing, and smart delivery orchestration via multiple order clubbing and dynamic routing. In end-to-end logistics or long-haul logistics, the fuel consumption rate is a function of speed, the vehicle makes, and vehicle efficiency as well. 

Another critical metric is planned vs. actual mileage, which is the ratio of planned mileage for an asset (vehicle or rider) to the actual mileage reported or recorded. A higher actual mileage rate indicates poor routing, poor vehicle utilization, unreported or untracked driver movements, etc. All these costs help identify the loopholes and optimization pockets that are affecting the overall last mile delivery performance.

#8 – Capacity Utilization

Vehicle capacity utilization is one of the most critical last mile KPIs, as maximum vehicle utilization means reduced vehicle leasing and fuel costs, a lesser number of trips, and more orders delivered per trip. Apart from ensuring cost-efficiency, vehicle capacity utilization also steers businesses towards sustainability, which is increasingly becoming a focal point across industries.

Capturing the field data for leased and self-owned vehicles, integrating parcel details (weight, volume, size) in route planning, and smart vehicle load planning are some ways to optimize vehicle use. Measuring and improving this KPI requires leveraging smart AI/ML-powered solutions that automatically perform all these actions to ensure maximum utilization.

#9 – Average Service Time (AST)

Average service time (AST) refers to the total amount of time spent fulfilling a single order. It primarily consists of the time consumed for completing the pre-shipping tasks such as pick-ups from the warehouse, documentation, and dispatch, as well as the transit time and final delivery of the shipment at the customer’s doorstep. It is calculated by dividing the time taken at the store by the total number of deliveries to be made. 

#10 – Number of Pickups Done Within 24hrs

Early pickups are reliable indicators of highly efficient, agile, and streamlined last mile delivery orchestration as it is impossible to have less than 24-hour pickups if the pre-shipping and first mile processes are chaotic or poorly managed. Maintaining a higher percentage of less than 24-hour pickups can definitely reduce the overall ASTs, and dispatch times and can have a significant impact on delivery times. 

Tracking the pickup times enables businesses to identify the exact reasons for delayed dispatches and target the inefficiencies in pre-shipping and first mile phases that can easily snowball into delayed last mile deliveries in case they are not noticed. 

Measuring and tracking KPIs at such a granular level and deriving actionable insights for constant strategizing require intelligent technology. Smart last mile automation platforms like Shipsy facilitate process benchmarking, KPI configuration, and advanced analytics for making sense of all these numbers and unlock process efficiencies, such as 14% reduction in last mile costs, 28% reduction in customer complaints, and 26% increase in delivery NPS.