Information Management
The World Has Changed: Many
Will Not Adapt, But Some Will /company/angus-energy
We are all coming out of some of the darkest
times we have ever known. What you
don’t need is yet another article about the
catastrophic health or financial impact on our lives,
families and communities. What we do need is an
understanding of what lies ahead.
You are, first and foremost, a delivery company.
Most of the operational expenses you expend every
year relate directly to the delivery of fuel: trucks,
insurance, gasoline/diesel, maintenance, drivers,
dispatchers and the like. Some items, like delivery
trucks, are expenses that exist regardless of how many
days per year you use them.
Clearly, if you could deliver all your gallons with
fewer trucks, you would. However, you always seem to
need every truck during those coldest weeks in January.
Those fixed costs are factored into your operations
and are the reason you seem to “lose money” during
the summer, while “making money during the winter.”
Imagine finding a way to run your business with fewer
delivery trucks—without increasing the risk of “runouts.”
You also have a good amount of variable expenses.
Each time you route a truck, you are paying for fuel,
driver wages and wear-and-tear on the vehicle. Deliveries
and dispatched trucks impact profits. Imagine if
you did not need as many of either?
A solution
Imagine no more. By marrying your data with the
power of algorithms that can lower the amount of
trucks needed to deliver fuel, you can lower the number
of trucks and dispatches needed. The first step in
Philip J. Baratz
Angus Analytics
pbaratz@angusanalytics.com
/AngusEnergy
@AngusEnergy
having fewer trucks on the road is to understand why
you need them in the first place. The answer is always
the same: January. January is typically the peak
month for everything—deliveries, routes, gallons, drivers,
revenue and trucks. The reason is that we deliver
based on the weather, as opposed to delivering based
on our costs.
We are all ingrained with the notion of averages: the
average customer consumes 900 gallons per year, the
average customer has 1.7 service calls per year, the average
customer has a K-factor of 5.4, etc. (the K-factor
calculates how quickly a home is consuming the fuel it
uses to produce heat). However, none of your customers
are average. Averages let us make decisions more
easily, but not more effectively. K-factors might average
5.4 (for some dealers), but often 30% of customers
have Ks that are under 4.0, and 30% have Ks that are
over 8.0.
Yet, we still say things such as, Let’s deliver 175 gallons
to a 275-gallon tank, whether that user consumes
15 gallons/day or 3 gallons/day in January. If you
actually delivered to your customers based on their Kfactors
(aka usage), as opposed to their tank levels, you
would make deliveries that matched up against usage
and avoided a run out.
In many cases simply matching up, or “right-sizing,”
deliveries to the time of year and the customers’ K
would seem to be enough. However, diving deeper into
the data and “averages” show that there are programmable
ways to shift deliveries—sometimes making
them earlier than you might think—in order to lower
the number of trucks needed.
Remember: own a truck in January; own it in July.
If you could move deliveries so that there were fewer
trucks needed in January, you would not have to pay
for all those trucks year-round. In addition, we found
that even with some “smaller than optimal” deliveries,
the costs savings were still substantial.
There is an end-to-end fully-integrated solution
available that dynamically shifts your delivery planning
in a way that can dramatically cut down on
your delivery costs—and we are ready to show you
exactly how it can work for your business. Angus
Delivery Efficiency Planning Tools (ADEPT) can help
address concerns about having the right amount of
drivers.
Imagine delivering all your gallons with far lower
expenses and without increasing your risks. Now you
can. ICM
30 ICM/July/August 2020