Logistics and Transportation
05. May 2024
In home delivery, common KPIs such as First Attempt Delivery Rate (FADR) and Delivery Success Rate often fail to provide an accurate picture of delivery efficiency and customer satisfaction. Although these KPIs are widely used, they have significant weaknesses that can mislead companies about their actual performance. Here's a detailed look at why these traditional metrics are inadequate and why a new KPI, Direct Recipient Delivery Rate (DRDR), could better serve the industry.
Criticism of FADR and the Delivery Success Rate:
1. FADR and misleading definitions of “successful delivery”:
FADR considers a delivery successful if the parcel reaches its destination on the first attempt, even if it is diverted to a parcel store or Packstation because the recipient is not at home. This approach often serves marketing interests by artificially inflating success rates and masking the real inefficiencies of the delivery process. The real costs of repeated delivery attempts, detour and customer dissatisfaction are not adequately reflected.
2. Delivery success rate and unconsidered repeated delivery attempts:
The Delivery Success Rate counts each ultimately completed delivery as successful, regardless of the number of attempts. This metric ignores the hidden inefficiencies and increased operational costs associated with multiple delivery attempts, including wasted time, resources and increased labor costs.
3. Hidden costs and wasted resources from rerouting to parcel stores and packing stations:
Diverting parcels to parcel stores or packing stations incurs significant costs, including maintenance, operational expenses and the logistical effort to maintain these options. This makes the delivery process less efficient and more expensive than the KPI figures alone would suggest.
Introduction of a new KPI: Direct Recipient Delivery Rate (DRDR)
The Direct Recipient Delivery Rate (DRDR) provides a more accurate KPI that focuses on measuring the efficiency and actual success rate of deliveries made directly to the recipient or neighbor at the same address. This KPI would only count direct handovers as 'successful', providing a more accurate and insightful measure of last mile performance.
Why DRDR is important:
1. Accurate mapping of customer satisfaction: DRDR measures what really matters to customers - receiving their parcel directly, without detours to alternative locations. This not only improves the perception of service quality, but also has a direct impact on customer loyalty and satisfaction.
2. Optimizing resources and reducing hidden costs: By focusing on direct deliveries, DRDR highlights areas where repeated delivery attempts and redirects to parcel stores & packing stations waste resources. Companies can then address these inefficiencies by refining their routing strategies, improving communication with customers and investing in technology that increases first-time delivery success.
3. Improve operational efficiency: DRDR gives companies a clearer understanding of where their logistics are failing in the last mile. This KPI encourages companies to adopt smarter practices, such as better delivery scheduling, predictive analytics and improved driver training, all of which help to reduce costs and increase overall efficiency.
4. Increase security and reduce losses: the focus on direct handovers minimizes the risk of parcel theft or loss associated with unmonitored delivery locations. This not only saves replacement costs, but also protects the company's reputation.
A new standard in home delivery
The introduction of DRDR as a new standard for measuring delivery success could revolutionize the way companies approach last mile logistics. By directly addressing the real pain points in the delivery process, DRDR encourages companies to develop strategies that increase both operational efficiency and customer satisfaction. As companies increasingly aim to optimize their last mile operations, DRDR stands out as a critical tool that drives real improvements and sets a new benchmark in the industry.