by Phil Baratz
- Is the number 1%, as in the chance of winning a raffle?
- Is the number 51%, as in the winner of a presidential election?
- Is the number 82%, as in the effectiveness of a vaccine against disease?
- Is the number 90%, as in the chance of rain before you take an umbrella?
How about 100%? What if you saw enough cases of something that you currently do, and then saw a different way that was better 100% of the time. Would that be enough to change your behavior?
As you probably know by now, we believe that data tells a story, and the more data you have the more accurate the story. We are also fervent believers that those in prior generations believed in data, as well. However, they didn’t have access to nearly as much data as we have now – nor did they have access to the processing speed that we have access to, in order to understand and interpret that data.
Your business as a fuel distribution company relies upon making the most efficient use of your assets to make deliveries to your customers in changeable and unpredictable environments. Your assets are both people and machines. Some people drive trucks, while others dispatch trucks. Some machines are the trucks, and some are the computer systems that help dictate which deliveries make the most sense. The “bookends” in our industry have always been the same: at one end is the need to do whatever is reasonably possible to not allow customers to run out of fuel, while at the other end is the need to be sure that deliveries are not so small that they require too many deliveries to be made over the course of the year. Calculating the costs per delivery, the gallons delivered per hour, the costs to deliver a gallon, and the miles driven per delivery have always been and always will be important. There we are, again, back to the data.
If there were a way to increase the size of your deliveries, lower your wage expenses, and get rid of some trucks – all without increasing the likelihood of runouts – I would think that would be something that would be interesting, no? But, how sure would you have to be that it would work? How much data would YOU need to embrace such a beneficial change? We have a number of clients who have started to use this “new way”, we call it ADEPT, and we still have many who have not (yet) started to. The reasons generally fall into one of a few categories:
- I could be better at my deliveries, I just need to …x, y, and z.
- I don’t believe that this would be better than what I am currently doing, a/k/a “but you don’t understand my customers/staff/fill-in-the-blank”.
- It sounds good, but I am really busy with other initiatives.
- It just sounds too complicated, my employees couldn’t handle it – and, anyway, my father did just fine without it.
I would like to look at all the above and see if we can help get you to 100%. If you are at 100% and still don’t change your behavior, then there is only one place to look – and that place is a mirror.
Back to the data…again.
We took delivery histories from a very broad group of heating oil dealers. We looked at the same information from each of them, to have a level playing field. We looked at full calendar years’ worth of deliveries into automatic delivery 275-gallon tanks. We covered:
- 50+ companies
- 325 combined years of deliveries
- ~4 million deliveries
- ~600 million gallons delivered
The results were very telling. All companies were very stable as to their delivery sizes from year to year – as an example, the first one we looked at had 6 years of data with averages of 142, 142, 147, 149, 143, 148
For good or bad, this company is set up to deliver 140-150 gallons to their customers.
The next one we looked at, with 5 years of data, averaged 154, 154, 152, 154, 151. I am pretty sure that we all know (actually, perhaps all of US – not sure about them – they might think that THIS IS THE YEAR that they will average 180 gallons) that in 2021 they will average in the 150’s.
Of the 50 companies, one averaged only about 110 gallons per delivery (ranging from 91 to 115 gallons) over 6 years, and one averaged 163 gallons (ranging from 154 to 165) over 5 years. While 100% of the companies ranged from 110 to 163, 70% ranged from 135 to 155. There is a very high possibility that you are in that later range, and almost a certainty that you are in the former.
If you average together ALL of the deliveries – over a half billion gallons delivered – the number comes out to 143.55 gallons per delivery, or 52% of the full 275-gallon tank size.
A quick sampling of clients who have adopted our new solution, ADEPT, have had the following averages through the first quarter of 2021: 171, 176, 184, 190, 194*, with over 150,000 ADEPT deliveries made, so far. The chart below shows all the averages, by company, in blue, as well as the results of the ADEPT planning, in red.
ADEPT delivery sizes were larger than 100% of all companies. ADEPT deliveries were about 28% larger than all companies. ADEPT’s worst performer was better that the best year that any company had – in other words, ADEPT in 2021 is better than 100% of the 300+ comparison cases.
If 100% is a number that doesn’t impress you, please stop reading, as we will now look to address the questions posed above:
- “I could be better at my deliveries, I just need to …x, y, and z”. Then why aren’t you? If it were easy, you would do it. If it were so obviously beneficial to the bottom line, you would to it. So, why not? Maybe you don’t know exactly how. Maybe it would take too much effort. Maybe your competition isn’t forcing you to – yet. Our solution is automated in a way that it is very easy – we do the lifting, the calculations, the BOS integration, and we set up the delivery process with very little changed on your end. You do the delivering and achieve the benefits.
- “I don’t believe that this would be better than what I am currently doing, a/k/a but you don’t understand my customers/staff/fill-in-the-blank” You need to understand that it would be impossible for us to improve above 100%. If you think that YOUR numbers are so different than the 325 years’ worth of data that we covered, let’s have a conversation. Maybe you are the one who will move us from 100% to only 99%!
- “It sounds good, but I am really busy with other initiatives.” Running a successful company is very difficult. Getting the new on-board computers or training the customer service reps on how to get customers onto a budget are both important initiatives. However, how many of them will give you a proven double-digit bounce in your profitability? You might have other initiatives but are they more important? Aside from that, our integration takes somewhere between a few hours and a day or two. So, we can have you back to your other initiatives in no time.
- “It just sounds too complicated, my employees couldn’t handle it – and, anyway, my father did just fine without it”. It is NOT complicated. Actually, in many ways it is nothing new. We optimize like you would optimize. We look at data like you look at data. We just have the ability to look at a lot more data than you can, and we have (proprietary) algorithms that process the information faster and, dare we say, better. As to “your father”, we have always found that founders were VERY innovative and always sought out the best technology of their day. You can’t compare Mark McGuire to Babe Ruth. You can and should always use the best tool available at that time. Your father (or grandfather or grandmother or aunt) didn’t use ADEPT because it didn’t exist, not because he or she wished to be less efficient.
So, let’s say you had actual information about your company and a sizable group of your competitors about the results of your deliveries, and theirs. Let’s also say that you recognize that the costs to deliver fuel are by far the top expense that you have in your business. Then, let’s say that someone showed you something that was dramatically better, easier, faster and cheaper – and that it worked in all cases.
Is 100% enough for you to make a change?
* small print. These are for clients who are live on our ADEPT platform and the numbers are representative of the deliveries made within a 5-day window as recommended by the ADEPT algorithm. More details are available upon request.