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Keeping track of fleet efficiency is important. Characteristics like smaller volumes of deliveries and numerous destinations make last-mile logistics a strenuous work to every manager. How do we know if all capacity has been utilized? What part of the fleet do we need to work on? It is not an easy task, but thanks to the 5 key metrics below, we can better manage the performance of this last mile supply chain.
Let’s examine each measurement unit to better understand how they contribute to your efficiency improvement.
1. Cost per Km
The Cost per Km metric is an easy way to determine the cost it takes to drive a vehicle one kilometer. The formula is straightforward:
For example, in one particular day, the vehicle travels 100 km, the driver gets paid $5, the fuel cost is $20, the maintenance cost for the vehicle is $15, then the Cost per Km can be calculated as follow:
We can see that the Cost per Km, in this case, is $0.4. In other cases, the result will change according to a different driver, fuel, vehicle cost or distance. For the person in charge, keeping this information is essential, as he/she may want to make modifications to find the balance and produce the most optimal Cost per Km.
2. Fleet Capacity Utilization
It is common sense that a logistic company wants to utilize its fleet capacity as close to 100% as possible. A metric is needed to monitor how much capacity has been used up, hence the Fleet Capacity Utilization metric. For a fleet with a total installed capacity of 3,000 kg and used capacity, in reality, is 2,500 kg, the fleet capacity utilization metric is as follow
From our experience, to be considered acceptable, the capacity utilization should be at least 80%. Companies need to handle the real measurements of their cargo capacity, because any estimation without the support of actual figures, can lead to inefficiencies.
3. Legs per Trip, Km per Legs
A leg is the part of a transportation route that is between two successive stops, positions. It can be the distance to the stores that drivers make deliveries. These KPIs can help managers compare, revise and modify the daily planning of each driver. An example is the delivery courses of 2 drivers, each one is divided into 2 trips with a different number of stores and distance for each trip:
Driver 1:
Driver 2:
Even though both drivers have the same legs per trip, driver 2 has to travel further than driver 1. These numbers can have a significant effect on how we optimize the route, and how much we pay the drivers.
4. Average Service Time
Average service time can be defined as the average time it takes to serve a customer. In this business, it is the time spent at a store to unload cargo. To calculate it, we divide the total service time at the store by the total number of deliveries. Let’s look at this table with daily service time at a store to better understand it.
From the table, we can calculate the average service time at that store for 1 week:
It is important to keep this number consistent, as a change out of plan can affect the time accuracy of the whole trip.
5. Planned vs actual stops
The actual trip may not go according to what we expect. In some cases, drivers make an unplanned stops. Every time a driver does this, he is delaying the complete plan, changing time windows and decreasing service levels. We can avoid this big issue by keeping track of the ratio between planned stops and actual stops.
In the above example, even though according to plan, the driver should stop 50 times but in fact, he stops 58 times, maybe to rest, to have supper, or to fetch his children at school. To keep these unplanned events under control, we need real figures. The planned vs actual stops ratio is just what we need.
Last-mile logistics is about successfully delivering cargoes to your customers. But the rapid pace of urbanization comes with many last-mile problems like a complex network of traffic, rush-hour congestion, the rising price of fuel, etc. All these are issues modern logistic managers have to deal with. However, going hand in hand with these new last-mile problems is the technology developed to make the task of a logistics manager much less strenuous. At ABIVIN, we want to make your job easier by providing you with a tool to get the most out of your fleet and generate the highest efficiency.