Many food and drink companies try and implement an efficient delivery transport system, yet end up with headaches and cost blowouts. An important starting point for creating a high-performing delivery system, which improves your profitability and makes you look good, is understanding some key logistics metrics to measure success. John Boorsma from Ontime Delivery Solutions outlines metrics to include:
Your DIFOT score:
Delivered in Full On Time (DIFOT) is the percentage of deliveries that arrive with every single item correct, undamaged, and within the time promised. DIFOT reflects your reliability, drives your bottom line, and is influential for customer loyalty.
Consider that every failed delivery can double or triple your cost for a single order, as you pay for the initial trip, the return trip, and a second attempt.
Food and drink companies should aim for a high DIFOT score of 98% or higher. For reference, average DIFOT rates in Australia tend to hover around 88-91%. A DIFOT score below average often suggests systemic issues.
A DIFOT of 98% not only elevates you well above average, it is achievable for most companies, but there needs to be a high commitment to efficiency across the business.
Your cost-per-kilometre and per-delivery:
This is a simple calculation which requires knowledge of all delivery transport costs –aim to include every little cost to get a true picture.
The basic formula is: (Total Fixed Costs + Total Variable Costs) ÷ Total Kilometres Travelled = Your True Cost Per Kilometre
For example, if total costs were $30,000 for a van and your drivers travelled 20,000 km, the true cost is $1.50 per kilometre.
As delivery transport costs go, this is a good result: industry data shows a well-managed van should cost between $1.40 and $1.90 per kilometre (larger vehicles usually have a higher cost per kilometre).
This can be extended to show your cost-per-delivery: again, calculate all running costs for that vehicle, including management costs, vehicle depreciation or lease, rego, absolutely everything, and aim for a monthly figure. Divide the monthly dollar figure by the number of deliveries achieved in a month, and you have the cost-per-delivery.
When establishing these metrics you must consider various factors, such as whether deliveries are metro or regional, vehicle size, and the items being delivered, as these are hugely influential on performance.
Average delivery time:
Aim to establish a benchmark for urban routes. This will vary considerably depending on the items being delivered, and the delivery locations. For one company, two to three stops per hour might be a high performing benchmark, whereas another company might achieve six to eight stops per hour.
Establishing your average delivery time helps initiate smart planning to perform consistently. For example, tactics such as “reverse loading”, loading a vehicle in the reverse order of the delivery run so the driver can find each delivery quickly, can save significant time over a day.
Fuel consumption and mileage:
Every kilometre driven without purpose detracts from your profit. Fuel waste can be cut via route optimisation and optimising time at the stop. The important first step is understanding your delivery fleet’s typical fuel consumption and mileage.
A common optimisation method is zoning deliveries – grouping tomorrow’s delivery runs by postcode using a simple mapping tool. This visual representation allows for efficient scheduling, as you can see where routes crisscross or double-up.
Capacity utilisation:
A common way to burn cash is sending out half-empty vehicles. Capacity utilisation optimises the fleet by checking that the right vehicles are being used for the right delivery runs.
A professional fleet will understand the space they have to work with, and ensure each vehicle is performing close to capacity.
High functioning delivery transport systems
There is a lot that goes into running a high functioning delivery transport system in the food and drink industry. A critical first step is understanding these key metrics, to benchmark and measure for a successful future.
John Boorsma is National Delivery Services Manager at Ontime Delivery Solutions.
