Logistics Optimization

Enhancing Last-Mile Delivery: Key Performance Indicators (KPIs) for Success

June 11, 2024

This is some text inside of a div block.

Delivery efficiency and customer satisfaction are critical in the logistics industry, with over 150 billion packages shipped annually. But how do you know if you’re performing well in these aspects? Tracking your performance is standard practice, however, knowing what’s meaningful and worthwhile to track is a trickier question.

Let's take a look at common metrics and how to interpret them.  

Optimize route planning and cost savings

  1. First attempt delivery rate (FADR)

Imagine nailing deliveries on the first try: It’s time, cost, and resource-efficient. A high FADR spells success by reducing operational costs and ensuring swift delivery without unnecessary retries, meaning your truck and its driver are onto the next delivery faster. 

  1. Average service time (AST)

Time matters in the last-mile delivery scenarios. Monitoring AST—from pick-up to drop-off —opens doors to optimization. It's the secret sauce for better scheduling, enhanced route planning, and an overall more efficient delivery process.

  1. Cost per mile, cost per vehicle, and cost per item

Money talks, especially in logistics. These metrics unveil the costs tied to distance, vehicles, or items delivered. Understanding and precisely calculating these costs and expenses reveal opportunities for savings, smarter resource allocation, and strategic pricing model decisions.

  1. Route efficiency

Optimized routes are not just about being shorter, they should be smarter. Route efficiency metrics minimize the fuel consumption, trim travel time, and cut the overall delivery costs. It is the roadmap leading to cost-effective and eco-friendly last mile deliveries. 

  1. Average distance per delivery

Every mile matters for the last mile delivery game. Monitoring the average distance traveled per completed delivery uncovers optimization opportunities, reducing unnecessary mileage and refining route planning.

  1. Technology Adoption Rate

Adopting suitable technology isn't just a trend; it's a game-changer. Higher tech adoption among drivers and staff translates to better route planning, seamless communication, and an overall uptick in operational efficiency.

Metrics that track fleet and resource efficiency 

  1. TCO

Total Cost of Ownership (TCO) provides a holistic perspective on the financial implications of purchases for last-mile delivery operations. It serves as a vital tool for grasping the genuine expenses involved above and beyond just the purchase of an asset, revealing avenues for cost reduction, aiding in informed purchasing decisions, and facilitating strategic long-term planning. Ultimately, TCO optimization enhances profitability by aligning resources, streamlining operations, and informing decision-making.

  1. Number of Deliveries Per Truck or Per Shift

Picture this: more deliveries without extra resources. That's the power of optimized resource utilization such as trucks and labor. The higher the number of deliveries per truck or shift, the better your resource efficiency. It's a direct path to cutting operating costs, reducing environmental impact, and boosting overall efficiency.

  1. Delivery completion rate

Delivery completion rate = (Total Completed Deliveries / Total Attempted Deliveries) * 100. Monitoring completion rates for each delivery helps uncover issues and fine-tues your delivery process. A higher completion rate means smoother operations and happier customers.

  1. Delivery attempts per stop (DAPS)

Every additional attempt adds up—wasted fuel, time, and resources. Lowering the number of delivery attempts per stop reduces costs, time, and the distance between pick-up and drop-off, streamlining your process for efficiency.

  1. Capacity utilization

Efficiency isn't just about moving goods; it's about maximizing space. Evaluating how efficiently your vehicle's space or load-carrying capacity is used minimizes the number of trips needed, cutting costs and environmental impact.

  1. Unnecessary stoppages

Imagine vehicles halting or idling without reason during deliveries. Those unnecessary stoppages affect efficiency, fuel consumption, and productivity. Reducing them not only streamlines delivery but also positively impacts overall productivity. 

Read more: Minimize parking time for efficiency and driver satisfaction 

  1.  Hours in motion

Active time matters. Monitoring hours in motion optimizes driver schedules, minimizes idle time, and speeds up delivery—essential elements for efficient last-mile logistics.

Metrics that track customer experience and satisfaction: 

  1. On-Time In-Full Delivery Rate (DIFOT or OTD)

This metric signifies the percentage of deliveries completed on or before the promised delivery time. To calculate it, divide the total number of deliveries attempted during a specific period with the number of deliveries made on time. It showcases the accuracy of delivery window predictions, ultimately enhancing customer trust, retention rates, and preventing negative experiences.

  1. Damage Claims

The volume or dollar value of claims filed due to damaged goods during delivery indicates potential areas for improvement, whether that be in handling, delivery, or driver performance. Reducing damage claims not only bolsters customer satisfaction but also prevents financial losses.

  1. Customer Complaint Rate

By calculating the ratio of complaints received to the total number of deliveries made, businesses can pinpoint areas for improvement in their delivery processes. Addressing these issues promptly leads to higher customer satisfaction and improved service quality.

  1. Successful POD (Proof of Delivery) Rate

A high POD rate ensures accurate tracking and diminishes disputes over delivery occurrences. It serves as documented proof that goods reached their designated recipient, fostering transparency and trust.

  1. Order accuracy

Getting the right order to the right customer matters. A high order accuracy rate is the gold standard—it means customers receive exactly what they ordered in top condition. Precision in picking and packing is crucial for customer satisfaction.

  1. Peak Delivery Load Handling Rate

Measuring the capability to manage increased delivery demands during peak periods ensures smooth operations, preventing service disruptions and maintaining customer satisfaction even during high-demand periods.

  1. Late Delivery Notifications

Monitoring late delivery notifications evaluates communication effectiveness and provides insights on where reliability can be improved. Transparent communication about delays contributes to better customer experiences and can positively impact customer satisfaction scores (CSAT).

  1. Delivery Time Window Adherence

Adhering to specified delivery time windows is critical for meeting customer expectations and maintaining efficient scheduling. This KPI ensures timely deliveries, enhancing customer satisfaction.

  1. Driver Satisfaction Index

Measuring driver satisfaction is pivotal as content drivers are more likely to provide superior service, directly impacting customer experiences positively.

Sustainability Metrics 

Minimizing fuel consumption stands at the core of sustainable (and cost effective) practices in last-mile delivery. Environmental impact metrics gauge the carbon footprint and overall environmental repercussions of the delivery process. Tracking these metrics aligns with sustainability objectives, providing insights to curtail emissions and foster eco-friendly operations.

  1. Fuel consumption rate (FTR)

The Fuel Consumption Rate (FTR) serves as a key indicator, revealing the amount of fuel expended per distance traveled or per delivery task. Monitoring this rate helps pinpoint inefficiencies in driving routes, vehicle maintenance, and driver behavior. This analysis leads to cost savings and a decreased environmental impact. Moreover, FTR becomes a pivotal factor in route planning and optimization, aiding in the selection of routes that balance fuel efficiency and timely deliveries.

  1. Carbon emissions (Scope 1, 2 &3)

Greenhouse gas emissions can be divided into three categories for businesses: Scope 1, Scope 2, and Scope 3 emissions. According to the World Economic Forum (WEF), dividing emissions into three groups can help measure progress in making reductions as it can help businesses understand what is in their direct control. 

The WEF defines the different groups as follows: 

Scope 1 emissions: These are ‘direct’ emissions that a company causes by operating the things that it owns or controls, like driving the vehicles in your fleet.

Scope 2 emissions: These are ‘indirect’ emissions created by the production of the energy that an organization buys through your utilities providers.

Scope 3 emissions: These are also indirect emissions, however they relate to the emissions produced elsewhere along your supply chain, from the suppliers manufacturing the parts of your products to the customers using them.

Tracking and monitoring each dimension of the carbon emissions is a key performance indicator used in sustainable transportation and modern logistics businesses to measure and track the amount of greenhouse gas emissions produced by delivery operations. It helps to ensure compliance with environmental regulations, identify carbon footprint for emission reductions and improve brand reputation and customer loyalty. 

  1. Fleet electrification transition

The shift towards an electric vehicle (EV) fleet holds substantial promise in reducing carbon emissions for the logistics industry. Electrification not only diminishes direct emissions but also contributes to lowering operational costs and enhancing sustainability. The monitoring of carbon emissions from an electric fleet serves as a valuable metric for tracking progress toward emission reduction objectives.

Path to Your Future Success

These metrics aren't just numbers; they're your guide to leaner, more efficient logistics operations. Embrace the metrics that make sense to your business, to not only cut costs but also to improve and refine delivery processes, ensuring timely and cost-effective deliveries.

One of the largest hurdles to accurately tracking these metrics is data accessibility and transparency. Once you have that, you’ll unlock sophisticated options such as machine learning, artificial intelligence (AI), and simulation.