The largest expenses for heating oil and propane distributors are those related to deliveries. Fixed fleet costs including trucks, insurance, and maintenance, as well as variable costs of wages and fuel during the heating season that always seem to be on the rise.
The trick… deliver all your gallons with fewer trucks during all four seasons.
The first step in having fewer trucks on the road is to understand why you have so many in the first place. The simple reason is that we deliver based on the weather as opposed to our costs.
We are ingrained with the notion of averages: the average customer consumes 900 gallons per year, the average customer has 1.7 service calls annually, the average customer has a K-factor of 5.4, and so on. However, none of your customers are average. Averages enable us to make decisions more easily but not more effectively. For example, Ks might average 5.4 but 30% of deliveries are to customers with Ks under 4.0 and 30% to customers with Ks over 8.0. Yet, the impulse is to say things like, “let’s deliver 175 gallons to all our 275-gallon tanks” whether those customers consume 15 gallons a day in January or 3 gallons a day. If you delivered based on your customers’ usage instead of their tank level, you would be certain there was enough oil in the tank to avoid a runout.
In many cases, simply “right-sizing” deliveries to the time of year and the customers’ K would be enough. However, there are programmable ways to shift deliveries and reduce the number of trucks needed. If you shift deliveries so there are fewer trucks needed in January, you won’t have to pay for those trucks all year round.
Our industry now has tools that combine data, processing, and a little AI (Artificial Intelligence) – allowing you to consider many options and make smarter decisions. One example is ADEPT®, which uses your data to reduce the number of trucks and routes you need for your deliveries.