The final mile logistics management has always been the most expensive and risky part of shipping. Lacking visibility and the inability to track and understand the final mile contributes to an assumption of risk. However, the rise of final mile technology offers an opportunity to collect data and generate insights, despite the lack of a touchpoint for a scan until a package arrives. Final mile metrics must provide insight into the efficiency and reliability of final mile processes. Failure to track metrics in this stage will open the door to risk and lead to higher costs.
This is the most crucial final mile metric. Shippers track this metric by taking the total number of on-time deliveries and dividing by the total number of deliveries, including those that were missed entirely. As the result decreases, the rate of on-time delivery declines.
Measuring the volume of in-house deliveries versus outsourced processes is another final mile logistics unit of measure that can provide insight into operations. Divide the number of shipments conducted with the in-house fleet by the number of outsourced final mile deliveries. Depending on performance goals for the organization, the result indicates the ratio of deliveries sent via in-house and outsourced logistics. For companies that wish to decrease the use of outsourced service, look for increasing values over time. The same idea can be applied in reverse to move away from in-house operations too.
Final mile involves the most stops and opportunities for error. It is vital to track the ratio of in-motion time versus stationary hours. These values indicate whether drivers are taking too long to deliver packages. In addition, higher in-motion hours may indicate poor route optimization.
Fuel costs remain a critical part of logistics management, and they are typically higher in the stop-and-go nature of final mile logistics. As a result, shippers and carriers should track the fuel cost per mile/Km, and if combined with the total labor cost, shippers can determine the total cost per mile. This is an excellent way to evaluate whether customers should pay more for final mile delivery, and if necessary, it can be used to build the business case for investing or outsourcing final mile logistics.
The number of legs per trip affects efficiency and costs in the final mile too. The number of legs is not necessarily the same as the number of stops. For example, making multiple stops within the same neighborhood is still a single leg. Fewer legs in final mile delivery amount to greater efficiency and lower costs.
The final mile may include the use of white-glove services, involving the installation of heavy, bulky items and setup. According to CCJ Digital, the use of such services will increase as final mile shipments continue to grow in size. E-commerce puts anything at the hands of online customers, and shippers, as well as carriers, must have the processes in place to handle such needs. Of course, tracking the use of white-glove services as a portion of total deliveries can help shippers recognize when additional white-glove services are needed.
The final metric exists in all shipments—customer returns. Even if the delivery goes smoothly, customers may still opt to return an item, provided the return policy allows for it. Shippers must track the volume and causes of returns for items shipped to the home, allowing for the ongoing refinement of the supply chain.
Tracking the right final mile metrics allows for ongoing performance measurement and improvement in the final mile. More information is power, and those that track final mile in detail can realize key benefits of improved customer service, faster, more natural delivery and expansion of new revenue streams. Of course, successful final mile tracking requires modern systems, capable of applying metrics through analytics and deriving actionable key performance indicators. In fact, those KPIs will be discussed in detail in the next blog.
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