Top 10 KPIs You Must Track & Improve for Last Mile Excellence

shipsy

Created on August 25, 2022

Over the years of working with brands and businesses of various scales and types, we have inferred one thing – the last mile is the longest mile. Be it cost, scalability, delivering across the SLAs, controlling efficiency, or ensuring smart task automation, businesses find it hard to tame the beast owing to multiple challenges. For one of our clients in the quick commerce space, challenges include scaling and ensuring effortless cash reconciliation while ensuring smooth working under huge order volumes. On the other hand, for a global pizza delivery chain, the list of last mile challenges was entirely unique and included management of full-time and ad-hoc drivers, scaling fast delivery operations, and slow order allocation.

Based on our learnings across multiple industries and business use cases, we have identified the core reasons for last mile confusion and chaos. Stemming from having zero vision into the last mile KPIs to having a poor understanding of tracking those KPIs, last mile errors, such as a wrong delivery (which is a really common occurrence) can amount to USD 17.2 per package!

Considering the average parcels shipped per second number to be +4160 (globally), the stakes are perilous. 

Here, we examine some of the most critical Last Mile KPIs that every business must track and discuss how to improve them for achieving a profitable, effortless, and robust last mile.

Last Mile KPIs to Track and Improve for Last Mile Success

1. Cost per Mile per Item and per Vehicle

Instead of measuring the delivery costs in a broad manner, like wages, fuel, vehicle lease, etc., start measuring the cost per mile; that clearly indicates how much money goes into the fulfillment of orders in a specific amount of time, given the current asset pool. It measures the profit distribution for a load and offers a clear vision of the expenses on your assets, orders, and fuel in relation to deliveries fulfilled.

However, measuring the cost per mile for each item and every vehicle requires a granular view, tracking, and measurement of asset movement. Further, once it is tracked, it needs to be improved consistently over time to ensure cost efficiency.

2. Order Accuracy

As shared above, delivering the right order to the right person at the right time is extremely crucial for avoiding losses. However, there are multiple ways for order delivery to get messed up, such as wrong delivery, wrong address, damaged products, lost packages, etc. 

Ensuring order accuracy requires a firm grip over every process of delivery orchestration, such as pickup, allocation, routing, image proofs, barcode scans, etc. It is measured by comparing the known inaccuracies of all the orders with all the shipped orders. Since there are multiple inaccuracies the best way to measure and improve this metric is to measure the accuracy rate by dividing the total orders shipped by the number of successfully delivered orders.

3. Capacity Utilization

Vehicle capacity utilization is one of the most critical last mile KPIs as maximum vehicle utilization translates into lesser 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. 

Capturing the leased and self-owned vehicle data, 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.

4. Empty Miles

Miles covered by the assets (riders and vehicles) carrying no load (deliveries or returns) while being on the shift are termed empty miles. Apart from being a loss on the fuel consumption front, empty miles are a drain of manpower and work hours.

Ensuring low or no-stoppage KPIs, the number of deliveries done, incorporation of the speedometer image proofs, and driver geo-fence are some smart ways to track and improve the empty miles’ KPI.

5. Fuel Consumption Rates

This KPI metric has a different meaning for different industries. 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, vehicle make, and vehicle efficiency as well.

6. Planned vs Actual Mileage

Planned vs actual mileage 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. 

Measuring and improving this KPI requires analysis of rider travel data, vehicle use and vehicle capacity data, and firm control over the riders’ movements once they are out for delivery. One way to do this is to get automated alerts once a rider deviates from a system-generated route and integrate image proofs or odometer reading with the delivery app.

7. On-Time Deliveries 

Measuring the ratio of on-time deliveries to the total deliveries done in a day or a month and comparing the results over a specific period of time ensures that businesses have a granular vision of how successful their delivery orchestration is. This is one of the easiest KPIs to track, which also offers a quick yes/no analysis of the effectiveness of the last mile strategy.

8. Damage Claims

This KPI is the ratio of the total number of claims received by a business to the total number of shipments sent. Measuring damage claims helps businesses ensure that no losses are incurred due to package loss or damaged products and business credibility is maintained for the customers. 

Improving damage claims KPI requires tracking and analysis of customer feedback, order movement monitoring, incorporating proofs of order quality (package photos) during delivery, etc.

9. Fake Deliveries 

From marking fake milestones such as “arrived at gate” or “pickup done” to marking “delivery done” before completing the task, are huge gaps in the overall delivery value chain. Tracking, monitoring, and controlling driver app actions and milestone events are some ways to trap fake deliveries and fake delivery attempts.

10. Customer Feedback 

Customer feedback is one crucial metric that can make or break your business, especially given the way customer demands are fluctuating across the industries. Collecting feedback for ETA SLAs, quality of delivery service, delivery experience (payment, condition of package, driver coordination), etc., and working on the feedback to improve the CX paves the way towards operational excellence and customer loyalty. 

Now, standalone solutions, like routing, tracking or rider management, or even process automation cannot solve the last mile profitability puzzle on its own, because businesses need a “set of keys” to solve the last mile complexities.

While smart end-to-end logistics management solutions definitely offer robust ways to configure, track and improve the last mile KPIs, businesses need to constantly update their KPIs as they evolve and scale. Achieving operational success and improving its excellence is a consistent job that requires smart business decision-making driven by advanced data and process analysis. Ensuring careful management of “hand-offs” between multiple parties involved in the last mile and creating a robust change management strategy is the way forward to consistent growth and profitability.

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