Imagine you are sitting at a blackjack table with a $25 bet placed. The dealer is showing a 5, and you have been dealt a 6 and a 5. The hand is looking good, so what do you do? Anyone who has ever played blackjack, understands that while “the house” always has the edge for any gambling session, there are situations when the odds are strongly in the player’s favor. Having an 11 against a 5 is one of those times, and an experienced player would immediately “double-down” their bet and pull one card – understanding both the likelihood of pulling a 10 or a face card (resulting in a 21) and, given that the dealer is showing a 5, the likelihood of the dealer “breaking” (going over 21) and losing to the player.
What happens if you “do what you are supposed to”, pull a 5 and lose the hand? Did you make the right bet considering that you lost? The simple answer is YES – even though you lost. Making the right decision based on the odds or facts does not always lead to success, but when the odds are in your favor, it should work out well for you in the long run.
Historically, relying on K-factors (“Ks”) put “the odds in our favor”. They’d indicate to us how many HDDs it took to consume a gallon of fuel. We were comfortable making deliveries using Ks and could usually make a decent sized delivery without a large risk of runout. The more experience you have delivering to a customer, the better your Ks would be – and the better your odds for a predictable delivery.
Back to our blackjack table: What if you were informed that the deck of cards being dealt had the requisite 52 cards, but instead of having four 5s, it had 20 of them as all the 10s and face cards were replaced with 5s! Would your original plan to “double-down” still make sense? Of course not. The odds have changed, significantly decreasing your chances of winning the hand. So, if the odds you are used to suddenly change, you need to change the way you play the game.
We have a similar situation in our industry. Working From Home and Learning From Home (WFH/LFH) is occurring in more homes this winter than at any time in our collective memory and it will likely continue into the future at elevated levels. This will impact K-factor calculations and cause stress on everyone’s delivery planning. It is not as simple as just manually lowering Ks for all of your customers – while that might cut down on runouts, it will also make customers who are not part of the WFH/LFH revolution (still the majority of homes) receive more and smaller deliveries than normal. Best put: the cure might be worse than the illness.
We have done the analysis of customers utilizing both ADEPT and remote monitors, customers with remote monitors only, and customers without remote monitors. It is abundantly clear that tracking the data, the variances between planned deliveries and actual deliveries, and identifying those where adjustments are needed must be at the forefront of every company’s delivery planning. In addition, unfortunately we are seeing behavior by some companies and dispatchers (all well-intended) that can exacerbate the problems that are easily solved by monitors (and much more so with monitors complemented by ADEPT). The next few months will be tough. To assume that the world will simply go back to its historic consumption patterns for every house is not only short-sighted, but it will also be an incredibly expensive and painful assumption.
The game is changing, yet there are tools available to actively identify and manage the key delivery variables. Monitor acceptance has matured from “nice to have” to “scary to not have”. ADEPT, too, has taken a leap forward in value with its intrinsic investigation of individual customer tanks, not wholesale changes to the reserve level on all 275-gallon tanks, or some other across-the-board, knee-jerk response to the new delivery dynamics.
It’s a new game – Angus is ready, are you?
by Philip Baratz