There is serious growth predicted in the last mile market. To ride this wave, a strong bottom line is vital. Insulating your delivery business from unpredictable shocks, and paving the way to scaling successfully.
Achieving this stability starts with a detailed understanding of your business reality. Strengths, areas for improvement, opportunities for expansion and innovation. Data lights this pathway to strategic decision-making, business-wide.
Whether you’re making the case for change to internal colleagues, your driver fleet or investors, analytics insights are key. But where to begin? We’d suggest tracking KPIs in the most influential area for your bottom line: the last mile.
Why is it important to track last-mile KPIs?
For end-to-end optimisation, the ultimate goal is embedding analytics in every business layer. However, the last mile is the place to start. Why? Delivery is the most expensive link in your operational chain. It also takes up the most hours. But it’s what customers demand from you, so making this stage as efficient as possible remains a top priority.
With last-mile KPI insights, you can effectively begin to optimise performance, efficiency and costs. Then, you can work backwards to elevate business processes and strategies. From scaling cost-effectively to identifying potential new business avenues. Eventually, the goal is end-to-end, data-backed business efficiency.
What KPIs should you be tracking?
There are many KPIs you could potentially track. And your immediate KPI monitoring needs will, naturally, be clearest from within your business. However, to gain the best possible overview, we’d recommend tracking the following six.
1. Distance per stop
The length of drive per stop impacts multiple areas of your delivery business:
- Driver work hours and salary
- Fuel usage and related costs
- Vehicle wear and maintenance needs
- Number of deliveries made per hour
The shorter the distance between stops, the more efficiency gained across these factors. Drivers can deliver more packages per hour. Your fuel spend can be optimised. Enabling such efficiency begins with insight into the average distance your drivers travel per stop. That’s the first step towards shortening it as far as possible!
Deliveries per hour (DPH)
Do you know how many deliveries you’re making each hour? The higher your DPH, the higher your operational efficiency. This also impacts your cost per delivery — more on this below.
Delivery status and success rate
Tracking the status of each delivery in your orders enables you to monitor your delivery rate. You might log categories as follows:
- Successful delivery
- Package handed over in person
- Package left outside the delivery address
- Unable to deliver
- Partial delivery
Through tracking these results, you’ll gauge your successful-to-unsuccessful ratio. In other words, your delivery success rate. You’ll also be able to see how this changes as your business evolves. Naturally, the ideal success rate is 100%. While this isn’t always feasible in reality, it’s crucial to maximise your first-attempt deliveries. This avoids the cost and delay of drivers returning to locations for re-delivery.
Cost per hour
Ascertaining your cost per hour builds on the elements above. Essentially, maximising successful deliveries per hour primes minimising expenses per hour. Here, efficiency is everything. In tracking cost per hour, we’d factor in both ‘variable’ and ‘fixed’ cost. Variable cost covers driver salary, average fuel usage, etc. — easy to calculate per hour. Fixed cost covers your behind-the-scenes spend. Your warehouse, distribution centre or dark store costs, for example. Here, you’ll need to ‘engineer’ a per-hour rate. Splitting your warehouse expenses over total orders, perhaps. The exact calculation depends on the insights your business needs!
Service time is the gap between a driver arriving at an address and completing the delivery. Ideally, you’ll minimise service time to boost DPH and streamline cost per hour. So what’s the best way to keep service time down? Firstly, ensuring customers provide quality delivery instructions for their addresses. Secondly, giving drivers a way to easily contact customers.
Here, we’d highlight two main KPI areas to start tracking:
- Customer rating
What do customers think of your delivery experience? Try combining quick, easy 1-to-5 ratings with open-text feedback fields. Tying feedback to a number provides you with hard data to average. Plus, more customers will respond if the rating takes just a few seconds. This will give you a larger rating pool, for greater insight and accuracy.
Open-ended feedback then nuances the picture. Hopefully, detailed feedback will deepen your customer understanding and highlight areas to improve. Remember, don’t just look into your lowest ratings to inform changes. Your higher ratings will provide key insights into what customers value about your service. Build on what you do best!
- Time window accuracy
What percentage of your orders are delivered within the promised timeframe? Logically, you’ll want this to be as high as possible. Delivering as promised is crucial to keeping customers happy — and coming back!
How to get started with tracking your KPIs
1. Understand your expenses
Assess your current operational landscape. From the data you have now, what are your delivery costs? Where are you most profitable? Where are you least efficient or losing money?
Key factors to consider include:
- Vehicle purchase and maintenance
- Storage costs
- Driver salaries
- Fuel costs
- Own fleet vs delivery partner costs
On this final point, have you considered adapting to work with delivery partners? If you’re currently using your own fleet, looking into streamlining costs via partnership could be worthwhile. Conversely, it’s worth investigating whether your current partnership model is still your best bet. Could you save costs by using just your own fleet? If you’re already combining your own fleet with partner vehicles, learn more about which approach costs more.
2. Look into historical data (or start building)
From a good grasp of your as-is spending, begin to look further back. How efficient are your operations, considering the key factors we’ve been exploring?
We’d highlight two additional factors here. Firstly, looking into past route data primes you for route optimisation. With the right tech in place, this can enhance your operations beyond just delivery speed. Secondly, it’s vital to understand driver performance. They’re the faces of your business, after all! So enabling them to work at their best is key. Diving into your historical route data can point to solutions for bottlenecks.
Then, the potential benefits of these insights rapidly multiply. From improved DPH, cost per hour and delivery rate to enhanced customer satisfaction. Building on this data-backed foundation, intuitive tools for their daily drives are a vital asset.
3. Leverage customer input for delivery success
Engaging customers helps enhance deliveries in two parallel areas. Firstly, gathering customer feedback helps you evolve your offering. For example, do customers really want same-day delivery, or are they happy to wait a little longer? Would they be happy with free 1-hour delivery windows, rather than paying for a 15-minute slot? These insights can support building flexibility into your operations, and reduce costs. Yet you’ll still respond to customer wants and needs, continuing to build all-important loyalty. Secondly, ensuring customers update their delivery preferences enhances your efficiency. This makes it easier for drivers to deliver the first time, minimising costly re-deliveries.
When it comes to gathering customer feedback, an all-in-one solution is handy to have. You can instantly link customer feedback to specific orders, drivers and delivery locations. This primes connecting the dots between customer experience, route optimisation, driver performance, and more.
4. Start small and smart
You can’t track everything at once! Zoom in on 3-4 KPIs that will provide your most-needed insights. Start with these data points to design and/or grow your KPI tracking. Evolve these 3-4 KPIs as far as needed. Then, utilise the learnings to iterate and improve as you widen your KPI tracking scope.
5. Design for data-gathering ease
The vast majority of data-centric projects fail, mainly due to over-complication. So keeping things manageable and usable is vital as you begin tracking KPIs. Ensure your internal team knows why you’re making changes. Most importantly, what benefits will the goal state bring them? Likewise, ease of data input is key. We touched on this above, in the context of customer feedback. The same applies if you aim to gather more input from your drivers, for example. Quick and easy is key, with the option for added depth.
Optimise your last mile with Gordon Tech
Seeking software to enhance last mile efficiency, driver management and customer experience in one? Try Gordon Tech for free.