Background and Setting
This client delivers fuel to its customer tanks using multiple stop delivery trucks located at 400 districts nationwide, employing 1000 delivery trucks and drivers (about 25% of all employees).
Client Business Objectives and Benefits
- Reduce operations costs:The operational challenge is to schedule deliveries so that maximum customer fill rates (% of tank capacity filled per delivery) are achieved without increasing out-of-gas occurrences. The number of gallons delivered per hour, will be increased by 40% by delivering less frequently and sequencing deliveries so as to minimize time on the road, while decreasing out of gas occurrences (empty customer tanks). We estimated savings at over $10 mm annually in labor productivity alone.
- Reduce capital costs
The number of delivery trucks required can fall in proportion to increases in gallons delivered per hour unless the trucks are utilized to serve additional customers.
- Dramatically increase profits through increased revenues:Truck drivers whose time is freed up will have incentives to add new customers located nearby to existing customers. This freed up time if filled with deliveries to nearby new customers would generate additional profits of $100 mm annually.
- Develop additional operational information for use at all management levels:
- Currently the number of customers overwhelm the ability of the company to individually manage each account. This system will permit account management by exception with the information available at district, regional, and national levels.
How did UIA Help?
Developed a system which maximizes the gallons delivered per hour by the delivery fleet
A system based on two new sources of information collected by hand held terminals (HHT’s) on the delivery trucks is under development. Deliveries to all customers with sufficient delivery history are triggered by forecasts of tank levels based on individual customer consumption history. Deliveries to the remaining customers are triggered by deriving their consumption from families of customers with similar consumption profiles. Day to day delivery routes for all customers are planned so as to minimize daily driving time utilizing the travel time history also captured by the HHT’s. The system simultaneously maximizes the customer tank inventory fill and minimizes delivery time at acceptable customer service levels (% out of gas).