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Drive to Efficiency
You don’t have to run a huge fleet to save money through technology.
By Bob Gatty
Triple C Wholesalers, Inc., based on Baltimore, MD, doesn’t operate the biggest fleet of trucks in the world; in fact, there are only a dozen. Even so, running those box trucks in a fairly dense metropolitan area causes scheduling headaches that take more than aspirin to chase away.
"We’ve been doing it manually, but it’s become just too much," says Mike Brown, Triple C’s director of operations. "We needed to streamline our runs instead of having drivers just going where we always sent them."
So Triple C recently purchased a new computer-based routing and scheduling system that Brown believes will help make operations more efficient and less costly.
It’s an issue that confronts many convenience store distributors these days, and it’s becoming especially important as energy costs keep rising with apparently no end in sight. According to the U.S. Department of Energy, diesel fuel prices as of March 27, at $2.565 per gallon were up 31.6 percent over the same time last year. Gasoline, at $2.498 per gallon was 34.5 percent higher.
"Energy costs are high," notes Paul Noorda, president and CEO, Gem State Distributors, Pocatello, ID. "But the solution is eluding me right now." Like most every other distributor, it’s not just the fuel costs for running trucks, but it’s also the fuel surcharges that are being imposed by suppliers that are increasing costs overall and cutting into the bottom line.
While Triple C operates in parts of Maryland, Delaware and Pennsylvania, where population is dense and customers are fairly close together, Gem State serves a far different geographic area in Idaho, Utah, Wyoming and New Mexico. There, small towns are many miles apart and routes are not all that complex. Noorda’s fleet of about 15 26 ft. box trucks and straight vans covers a lot of ground, but much of it essentially is down the road and back.
"We have little towns with maybe 5,000 people that we service," Noorda says. "It doesn’t take a brilliant driver to figure out where to go first. Most of the customers are just along the highway."
As a result, the return on investment for electronic routing and scheduling software, like that just purchased by Triple C, is less clear to Noorda, who questions whether it would really help his company reduce costs and increase efficiency all that much. Although, he concedes, it might help with stops inside the larger cities, the biggest of which is Salt Lake City.
But the decision for Triple C was a little easier. There, those dozen box trucks make from 10 to 25 stops per day within a 200 mile radius, delivering candy, tobacco and other products to convenience stores, service stations and liquor stores served by the company.
The Goal: Increase Efficiency
For Brown, the primary reason was not energy costs—although he believes there is every reason to believe they will be reduced when the system is fully implemented.
"The main thing is that we wanted to increase efficiency – to make sure our trucks are routed in the most effective way possible. This gives us street-by-street directions and everything else, and we can customize it to fit our specific needs, to balance our runs and help minimize the use of our vehicles."
But, he adds, it should help us with fuel costs skyrocketing the way they are. If we are driving less wasted miles, it means we won’t be using as much fuel."
The system purchased by Triple C is "TruckStops" by MicroAnalytics, Inc. Ken Mitchell, an owner and one of the original designers of the software, the system is capable of designing the most efficient route configuration for the entire fleet, ultimately reducing miles traveled and perhaps even the number of vehicles required.
"You specify the number of pallets or cases, the capacity of the vehicle, the time window for delivery, and the program will design recommended routes. Even companies with as few as eight to 10 trucks can save money."
"One of the major benefits that users will see is that their trucks will not be on the road as much," says Dan Buttarazzi, director of marketing. "It will cut down on the miles that are traveled. With the average cost of $1.35 to $1.40 per mile to run a truck, that is an important consideration."
Another important benefit of such systems, Buttarazzi adds, is the accompanying improvement in customer service. "It allows the user to meet the time windows provided by his customer much better. Now, you can tell the person at the store when the truck will be there and they can plan on it."
While such systems can help many distribution operations with relatively small fleets that travel comparatively short distances and make many stops in a given work day, they also increase the productivity and customer service capabilities of larger fleets while helping to control costs.
Dedicated Transport, based in Cleveland, provides transportation management for more than 30 customers in the steel processing, paper/packaging and snack foods industries. The company provides both dedicated contract carriage and transportation management services, managing hundreds of loads daily for customers in a mixture of dynamic route, static route and just-in-time delivery environments.
"Our customers turn to Dedicated Transport because we can manage transportation more reliably and cost-effectively than they can," explains the company’s executive vice president, Tom McDermott. "We do that by hiring talented, experienced professionals and support them with leading-edge technology."
Dedicated Transport uses the TruckStops system to optimize daily deliveries for dynamic-route customers; create the most efficient routes for static-route customers; and prepare new business solutions for prospective customers.
For one customer, Dedicated consolidated operations that formerly used 27 tractors and six supervisors to 23 tractors and one route planner. The trailer fleet was reduced from 150 to 100, and the software enabled Dedicated to extend order cut-off times and optimize routes, reducing overall distribution costs, according to McDermott.
Dedicated Transport also integrated TruckStops with its carrier management and satellite tracking systems, providing real-time visibility to its customers. "Our customers can track their shipments via a Web-based interface right from their desktop," McDermott says. "This is a real differentiator for us and gives us a competitive advantage."
Other Resources
Obviously, MicroAnalytics is not the only company providing such services. Competitors, according to Buttarazzi include UPS Logistics Technologies, Appian Logistics, Cube Route and others.
According to Appian Logistics, information technology combined with sound management processes help improve fuel economy and fuel purchases every day, In addition, the company says, deadhead, out-of-route miles and inefficient routes increase fuel costs, thus increasing the popularity of routing packages and tracking systems within the transportation industry.
The private 15-vehicle fleet of the Huddle House restaurant chain in the Southeast says it reduced its weekly mileage of 30,000 by about 5,000 miles after re-routing distribution to its stores through the use of Appian Logistics’ route optimization software system from.
Ralph Brander, vice president of distribution for Huddle House, says the fleet is saving at least $2,100 each week based on reduced fuel costs of $0.42 cents per mile ($2.50 a gallon at 6 miles a gallon). And fuel was only part of the total cost savings that resulted from more efficient routes.
"In addition to saving mileage, we were able to reduce our driver force by 33 percent and drop our equipment by 25 percent through better utilization," Brander says.
But achieving the route savings calculated by the model required about three months because of the difficulty of getting drivers to change their schedules. "We are requiring drivers to handle more freight and make stops," Brander says. "We achieved the savings as quick as the organization could accept the change".
UPS Logistics Technologies offers Roadnet, a tactical daily routing tool that the company says allows fleet operators to "optimize and balance delivery profitability and customer service through routing efficiency." Using advanced industry algorithms and custom routing passes, fleet professionals can create multiple intelligent route plans faster, thus maximizing the fleet performance and ROI.
The company says that Roadnet:
- Reduces distribution costs & fleet miles by creating daily routes using algorithms and street-level routing, plus individual company business constraints.
- Increases resource utilization by making better use of existing fleet resources.
- Allows companies to exceed customer service expectations when open/close or time windows change or an off-day delivery appears.
- Encourages sound business decisions, helping fleet managers know the actual cost per stop.
- Helps companies establish driver standards by creating route plans and gathering actual information , thus resulting in less overtime and better driver performance.
- Decreases routing time by allowing routers to spend less time configuring routes and more time assessing what-if scenarios to produce better, more efficient routes.
- Increases holiday week efficiencies by having the flexibility to alter route plans dynamically.
Like many systems that are available, Roadnet can produce a number of important reports, including:
- Driver Manifests, Maps, Directions and Itineraries
- Route Summary Statistics
- Off-Day Delivery Exception Report
- Resource Utilization Report
- Customer Delivery Cost Report
- Time Window Exception Report
- Actual versus Projected by Route and by Stop Reports
Meanwhile, Cube Route, Inc. says its product "geocodes, sequences and optimizes delivery routes," which are structured, based on street level digital maps. The system assigns estimated times of arrival (ETA) and sequences stops based on constraints.
Routes are then reviewed and deployed to the fleet. The module incorporates exceptions and recalibrates routes in the event of changes, making dynamic optimization, sequencing within a zone, and periodic zone rebalancing possible. This drives operational improvements that translate into real savings and improves service by narrowing the delivery windows, the company says.
"Cube Route has provided us with an affordable and effective way to stay on top of our delivery operations," says Tony Priaulx, IT manager at Reliable Food Supplies, a provider of frozen and refrigerated products to the foodservice industry. The company’s fleet of refrigerated trucks deliver more than 4,500 food items, ranging from fresh dairy and meat to frozen vegetables, from a central warehouse.
According to Priaulx, the company needed to gain further insight into its delivery cycles to improve overall productivity and efficiency. "Any exceptions, changes or problems in the daily delivery schedule were not reported until the following day," he says. "As a result, the majority of issues that came up remained unresolved."
The solution for Reliable Food Supplies was the Cube Route Visibility service, which provides real-time insight into dispatch and driver activities. Now the company can:
- Monitor driver activity and productivity.
- Manage exceptions and changes on the fly.
- Provide web-based access to current scheduling information.
- Engage in instant two-way communications with drivers.
- Reduce driver times per stop.
- Reduce administrative costs.
- Reduce customer service staffing requirements.
Obviously, such technology may not be the solution for every distributor candy and tobacco and c-store industry. But as energy and labor costs continue to rise, perhaps there are lessons that can be learned from others.
As Triple C Wholesalers hopes to prove, even companies with relatively small fleets can achieve benefits, save money, and achieve a positive return on investment.
At Triple C, they figure it’s worth the effort. After all, as the old saying goes, you don’t get different results if you keep doing things the same old way.
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