The last mile can present both a financial opportunity and a risk for new FedEx ISPs, Amazon DSPs, or 3PL owners. According to the Capgemini Research Institute, it is the shortest part of the delivery process, but it is also frequently the most costly and complicated, making up over half of the overall delivery expenses.
Many first-time delivery operators find it difficult to turn a profit despite putting in a lot of effort. This blog explains what they frequently do incorrectly and how to fix it.
We’ll go over how to choose the best final mile logistics software to optimise your return on investment, increase driver productivity in the last mile, and optimise delivery route efficiency.
What Is ROI In The Last Mile, And Why Does It Matter
The amount of profit your company makes from the cost of making deliveries is known as return on investment, or ROI, in last-mile delivery. It assists you in comprehending how your expenditures on drivers, vehicles, fuel, and systems affect your profitability.
Why it matters:
- Poor Routing Results In Excessive Expenses: Unoptimized routes use more fuel, cause delivery delays, and increase labour expenses.
- Missed Deliveries Affect Your Image: Your reputation is impacted by missed deliveries because they result in more reattempts and disgruntled customers.
- Higher Losses Result From Scaling Without Profit: You will only increase inefficiencies if you expand your fleet without first increasing ROI.
Understanding your ROI enables you to stay competitive in a high-pressure logistics environment and make data-driven decisions.
How To Measure ROI In Last-Mile Delivery
You can determine whether your operations are profitable by calculating ROI in the final mile. A few important facts can provide insightful information.
Key performance indicators to monitor:
- Cost For Each Stop: This calculates how much it costs to make a single delivery. Your profit margin rises when you cut this expense.
- First-attempt Delivery Success Rate: The cost of a single shipment is doubled for subsequent delivery attempts. Keep track of how many times your drivers are successful the first time.
- Fuel Price Per Route: Growing fuel prices have the potential to rapidly reduce margins. Track which routes use more fuel and why.
- Driver Idle Time: The more time your drivers spend sitting still, the more money you spend on wasted time.
- Average Number Of Stops Per Hour: 18 to 25 stops per hour are found on high-performing routes. Please flag anything below for review.
- Downtime And Maintenance Costs: Missed routes and increased repair costs can result from unforeseen malfunctions.
- Customer Satisfaction Ratings: Poor service, delays, and complaints affect your chances of retaining or extending contracts.
Logistics firms that monitor operational metrics every week are 23% more likely to report higher profitability year over year, according to McKinsey.
Common Mistakes New Delivery Operators Make
Many novice operators unintentionally engage in ineffective behaviours that reduce return on investment. Let us examine the most prevalent ones.
1. Making use of manual routing
Unpredictable delivery windows and lost driving time are the results of routing using spreadsheets or simple GPS apps. Delivery route efficiency declines in the absence of automated planning, resulting in higher mileage and decreased productivity.
2. Ignoring driver performance
It is not possible to control or enhance driver behavior without tools to monitor it. In addition to lowering the number of deliveries per shift, untracked breaks, missed scans, or needless stops have a detrimental effect on last-mile driver productivity.
3. Not considering missed deliveries
Costly retries are frequently necessary for unsuccessful deliveries, particularly if proactive customer coordination isn’t done. This results in increased fuel consumption, increased vehicle wear, and a decreased return on investment.
4. Postponing technology investment
Adopting final mile logistics software too late restricts your capacity to assign routes effectively, track performance, and give customers precise ETAs. Additionally, it makes fleet scaling much more difficult.
Improving Delivery Route Efficiency For Higher Profit Margins
One of the quickest and most effective ways to increase profitability is to optimise your routes.
1. Utilise tools for route optimisation
To automatically generate efficient routes, modern software takes into account
real-time traffic, delivery time windows, vehicle capacity, and driver shifts. This increases the number of stops made each hour and drastically cuts down on driving time.
2. Group deliveries by zone
To cut down on needless travel, group your stops within smaller geographic areas. Reducing “dead miles” and maintaining a high route density are key components of an efficient delivery route.
3. Examine previous routes for bottlenecks
Examine the routes from the previous few weeks to find any ineffective or recurring delays. School zones, gated communities, and parking-constrained areas are common problems.
4. Turn on live rerouting
There are unforeseen delays. Selecting tools that enable real-time route updates will help you reroute drivers to avoid collisions, road closures, and inclement weather.
Delivery times and fuel consumption are reduced by 25–35% on average for fleets that use advanced routing technology (Source: Geotab Fleet Trends Report).
Top Strategies To Boost Driver Productivity In The Last Mile
One of your biggest operating expenses is drivers. To increase ROI, they must operate effectively all day long.
1. Establish And Track Important KPIs: Establish goals like the number of stops per hour, scanning speed, break duration, and punctuality. You can identify your best and worst performers and take early corrective action by keeping track of them.
2. Offer Microlearning While Working: Provide brief training sessions that emphasise customer interaction, safety, and delivery procedures. By promoting these procedures, delivery errors are reduced and roadside efficiency is increased.
3. Provide Real-time Input: After every shift, give feedback using driver management systems. Emphasise the positive aspects and areas that require improvement. Long-term increases in driver productivity are fueled by this in the last mile.
4. Employ Rewards To Encourage Excellent Performance: Reward drivers who perform well regularly with bonuses or recognition. This maintains a positive attitude and motivates everyone to reach or surpass their daily goals.
Within three months, companies that adopt structured driver productivity programs report a 15% increase in delivery output (Source: DispatchTrack).
Best Final Mile Logistics Software For Small Fleet Owners
Better planning, more intelligent monitoring, and quicker delivery are all made possible by using the appropriate final mile logistics software. It provides you with the authority required to oversee an expanding fleet without adding more employees.
1. On the fleet
Within a single dashboard, this platform offers proof-of-delivery tools, customer communication, real-time driver tracking, and route planning. Excellent for expanding fleets.
2. Routific
Routific provides route optimization with an intuitive interface, making it ideal for smaller teams. For novice operators seeking basic automation, it’s perfect.
3. Bringg
Bringg’s dispatching, customer feedback, and multi-client delivery management tools make it ideal for 3PLs and extensive courier networks.
A more recent but robust platform with an emphasis on data security, real-time monitoring, and logistics visibility is Argus by Genix Cyber. Excellent for fleet operators who are concerned about operational risk and compliance.
Key features to consider:
- Route planning that is automated.
- GPS tracking and route updates in real time.
- Digital evidence of delivery (timestamp, signature, and photo).
- Dashboards for drivers to monitor productivity.
- ETA and SMS alerts for clients.
Businesses that use final-mile logistics software report a 22% increase in delivery speed and a 30% decrease in failed deliveries (Source: Bringg, 2024 Report).
How MetroMax BPM Helps New Operators Succeed
At MetroMax BPM, we assist FedEx ISPs, new Amazon DSPs, and 3PL owners in avoiding early-stage pitfalls and achieving profitable, scalable operations.
- Increasing delivery route efficiency through customised audits and route restructuring is one of our specialities.
- Increasing last-mile driver productivity through organised training and monitoring resources.
- Using software for last-mile logistics to automate and optimise your processes.
- Providing weekly KPI reports to enable data-driven decision-making.
- Assisting with payroll, HR, and dispatch so you can concentrate on expansion.
Conclusion
Managing a last-mile business involves more than just making deliveries; it also entails doing so effectively, consistently, and profitably.
To lay a strong foundation:
- Concentrate on increasing the effectiveness of delivery routes.
- Invest in monitoring and training to increase last-mile driver productivity.
- Select the best software for final mile logistics to scale and automate.
Your ROI is a measure of how well your systems are designed to expand, not just a financial number.
