Vertrax’ SmartDrops Designed to Drive Profit

10/10/2006

It follows there are lower delivery costs, curtailed maintenance outlays, and more gallons delivered in less time using fewer resources. Translation: more efficiency means more bottom-line profit, which is what delivery management solutions provider Vertrax (New Haven, Conn.) maintains it can provide marketers.
Speaking during the technology track at the Pinnacle Conference in San Antonio in June, John Rosen, vice president of sales and marketing, said adopting route optimization creates drivable routes that maximize gallons delivered while minimizing delivery costs. “What gets measured, gets managed,” he counseled.
Logically, by driving tighter routes, drivers should drive less miles and have less “windshield time,” according to Vertrax, which has more than 60 propane and fueloil customers. Vertrax’ SmartDrops software is based on geographically coded (geo-coded) customer locations, enabling retailers to target households and commercial establishments that can be easily integrated into existing routes.
“With SmartDrops being used correctly, drivers will be able to do several more deliveries a day, with an increase in gallons delivered per mile and a decrease in cost per gallon delivered, or overall cost per drop,” according to Vertrax. “Drivers should be able to spend more time delivering gallons, increasing the daily gallons delivered.”
Delivery cost (truck and driver) per drop will decrease by more than 20%, and gallons delivered per mile driven will increase by more than 7%, it is claimed. In addition, the company maintains full implementation of its system results in 15% more efficiency and 40% more profit, as much as $5000 to $10,000 additional profit—per delivery vehicle—annually. A company’s return on investment is predicted in less than a year.
Dead River Co. (Bangor, Maine), a distributor of petroleum products to residential and commercial customers in northern New England, has been a Vertrax customer for three years. The company first installed the system at its Manchester, N.H. location. A year later its Waterville, Maine facility came online, followed by the Portland, N.H. location last year. The company’s Scarborough, Maine site is currently deploying the system, said Manchester manager Art Burns.
“Organically, this has been a big plus for us,” Burns said. “We’ve had many frank discussions among ourselves since we put the system in place, and our dispatchers literally beg us not to go back to the old way.” That “old way” had dispatchers manually sifting through piles of tickets and, depending on the experience of the driver, spending additional time and effort to plan routes.
“There’s no more shuffling through tickets,” Burns noted. “You get a manifest and your routes. You never have to guess. This has been especially helpful with our seasonal people and our part-time employees who only work on Saturdays.”
He added that SmartDrops’ advantages have been best highlighted with Dead River’s propane fleet. “Most of our fueloil customers are right in Manchester proper,” Burns said, “but our propane deliveries are much more dispersed over a wide-ranging area. It has been our experience that the more spread out you are, the more readily apparent the benefits. We have realized stronger returns, and we have been able to squeeze in two or three more deliveries per day [per bobtail] during the same number of hours since bringing the system onboard.”
SmartDrops generates street-level mapping and sequenced, turn-by-turn directions, which optimizes the driving time between delivery stops, eliminates vehicles crossing paths, and breaks down the imaginary boundaries imposed by “zone routing,” Vertrax notes.
Delivery sequences and routes are given to drivers at the beginning of their work day, eliminating costly time delays associated with drivers planning their own delivery schedule. SmartDrops generates automatic route development and automatic driver/route allocation. The system provides optimal delivery sequences and driving routes, in addition to route editing to add or delete stops.
Delivery management is customizable, either according to degree days, automatic period, Julian calendar, will call, phone order, or urgency. Vertrax’ solutions are designed to integrate into leading back-office general ledger systems. Resource management allows viewing, managing, and GPS tracking of driver resources, deliveries, and routes through graphic charts and digital maps.
“This is not an out-of-the-box solution,” Rosen stressed. “It’s a relationship that involves a lot of trust and commitment between Vertrax and the customer, and the results are impressive. Facilitating companies’ control of their delivery function is gratifying, but we are not going after symptoms here, we are tackling the disease and that can be scary. I can report that our customers sleep better at night.”
Vertrax’ integrated live tracking allows ongoing analysis of planned versus actual routes, in addition to generating ongoing reports regarding on-time deliveries and delays if the company has GPS tracking. The system is said to be invaluable for new drivers or those unfamiliar with a territory. Routes can also be sent to in-vehicle computers. As several Pinnacle attendees remarked, the largest revenue source for a propane marketer “leaves the plant unsupervised.”
Vertrax focuses exclusively on U.S.-based retail petroleum marketers who deliver home heating oil and propane to homes and businesses. This group, the company says, has been relatively slow to adopt delivery management and fleet productivity applications in the past. Vertrax cautions that without delivery management products, current manual, paper-based methods of resource planning, dispatching, sequencing of deliveries, and route development are rarely optimal and accountability of delivery management is low.
“Far too many assets are used to complete daily work, resulting in a very low return on assets employed. Due to inefficiencies, most companies are forced to over-forecast their vehicle capacity to deal with seasonal worst-case scenarios, thereby over building fixed expenses against variable revenues.”
Furthermore, it is difficult to hold specific employees accountable for productivity, measuring performance benchmarks on assets or employees is problematic, communication between vehicles and the dispatcher is unreliable, and there is no real-time monitoring or control of delivery and service vehicles.
Vertrax promotes the value proposition of its delivery management products by highlighting the potential for increased bottom line profits through improved delivery efficiencies and improved operations.
Delivery efficiencies include reduction in costs due to reduced miles and driving time and lowered expenditures for truck costs such as diesel and gasoline, maintenance and repair, and lower driver costs and overtime hours. Increased gross margin is realized from more gallons delivered to the same account base and achieving increased delivery capacity closer to the maximum allowable within the existing account base.
Increased profits through improved operations include either more gallons delivered to an expanded account base and/or reduced delivery costs associated with delivering to the account base with a reduced fleet.
“The more deliveries that are made per mile, the lower the relative cost per delivery. By focusing on urgency, geography, truck inventory, and mapping/routing logistics, a dispatcher can build significantly more efficient routes. All this leads to improved stops per hour, a recognized productivity benchmark in the petroleum industry. Ultimately, this leads to significantly reduced delivery costs.”
The company adds that SmartDrops may also increase the average drop size since a company has increased ability to perform true on-time delivery. Since companies may pull customer orders ahead of the degree day clock, they deliver fuel prior to an optimal drop time. This increases the number of times deliveries are made in a given year and reduces the size of the drop. Both of these factors drive up delivery costs and reduce profitability.
As one Pinnacle technology track participant noted, even though a driver may leave the yard with “30 or 40 tickets for a geographical area, the truck may still come back three-quarters full. I want that truck coming back empty. If I pump gas for every mile driven, I’m OK.”
“The system also includes a scorecard feature, similar to a pitchers ERA, that automatically determines the cost of the route in real dollars,” Rosen said. “The scorecard allows owners and managers to chip away at efficiencies and realize an increase in the gallons dropped per stop. Delivery management in a nutshell is creating drivable routes that maximize gallons delivered while minimizing delivery costs.
“There is now an industry-focused solution that helps companies deal with controlling their delivery function,” Rosen added. “Companies can’t control the cost of diesel, insurance, or paper clips, but they do have control over how they deliver product.”
Published in Butane-Propsane News, October 2006