Fighting Rising Fuel Costs with Technology

Routing and real-time execution software systems, alone, will not make the rising costs disappear; there must be internal champions and a willingness to change many operational practices that are ingrained in organizations. This means changes in delivery, sales and operational policies – some of which may be painful at first.

What can routing software do for you? The goal of all routing software is to create optimized routes for a driver. By optimized route, we mean a route that maximizes vehicle capacity and minimizes windshield time there by reducing mileage.

What can real-time execution software do for you?

Creating a plan with routing software is great start – you've now set an expectation for a driver with regards to the sequence, amount of miles that should be driven and the arrival and departure times. The next step is monitoring the plan – how well did your drivers runt the plan? Are they within the allotted mileage for the route? Are they running in sequence? Are they speeding? This is all information that you can get when using a routing and real-time execution software packages together.

But how does a distributor save on fuel costs?

Anyone can buy and use software, the real question is can you use it like a power user? Power users leverage all the tools an application has to offer. The most often neglected tool is the report module. Reports are what makes the transportation group powerful and provides the necessary data to show where improvements can be made. There's a handful of reports that with the proper analysis huge savings in fuel costs can be found.

Five Key Reports to Examine1. Off-Day Delivery Report – this report shows who is receiving a delivery on a day that is not their normal delivery day.

  • Why is this important? – Off day deliveries are expensive and often take drivers off their normal routes thereby increasing daily mileage. By making an off day delivery, you are potentially reducing that customer's profitability by half (if not making it negative for that week!). Something to think about. If you have 10 routes and make one off day delivery per route each day you deliver, that's 2,610 additional stops per year. If, on average, there are 10 miles between each stop at $1.50 per mile that's $39,150 in extra expenses just for mileage and that doesn't include overhead. Did you make more than that of off day deliveries?

  • What to do? – Work with sales to reduce emergencies, charge a premium service on off days.

    2. Actual vs. Projected by Route – This report shows any variance in execution from the delivery plan.

  • Why is this important? – Are drivers running the route as you say they should or are they picking their own route? Not following the plan without a valid reason is the same as stealing product from the warehouse and should be dealt with in the same way.

  • What to do? – Coach drivers on the importance of having a daily plan and meeting those goals. Show them the impact on the bottom line – everyone understands money.

    3. Driver Productivity – This report ranks and rates drivers according to mileage, service time and drive time.
  • Why is this important? – No one likes to be last, it's a natural way to make drivers become more efficient both in driving and servicing the customer.

    4. Exception Report – this report highlights exceptions that you asked to see as a result of real-time execution software.

  • Why is this important? – It will show route path deviation, speeding, and unplanned stops – all of which contribute to additional mileage and increased fuel expense.

    5. Location (Customer) Delivery Cost – This report shows the cost to deliver to each customer.

  • Why is this important? – Often times, we will go out of our way to drive extra miles to make a customer first. Should that customer be first? Have they earned that privilege by being a good and profitable customer? Many extra miles are often run because of the perception of someone being a good customer. The definition of a good customer is one where the profit margin is large and the cost to deliver is low.

  • What to do? – Examine customers with high delivery costs. High delivery costs often means that they have a time window or priority associated to them that causes the route to be run in a fashion that is not optimal from a cost or mileage perspective. (This doesn't mean that your software isn't doing its job, you told it to do that.) Many extra miles accumulate because of incorrect attributes tied to a customer.

    Lastly, expose information to the entire organization. Transportation information is not just for transportation anymore. The more you share information, the more people will be willing to change. Data, or proof, in any organization is the only way that change will be accepted. If you can prove that you're driving too much, you'll easily be able to off set fuel costs.

    Rising fuel costs are a fact of life today. Sadly, it could put many businesses out of business if each process that consumes fuel isn't examined. If the time is taken to understand and use the tools that technology provides, rising fuel costs can become a minor hindrance.

    Cyndi Brandt is the marketing manager for UPS Logistics Technologies, which specializes in delivery management software. Most recently, she spent five years as a product manager for UPSLT, specializing in route planning products. In her role as a product manager, she developed strategic and tactical plans for the Roadnet Transportation Suite based upon interactions with various transportation functions.


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