How to Maximize Efficiencies by Eliminating Uncertainty
By Carolina Ruiz • Published June 3, 2022 • 5 minute read
To succeed in any business, a keen understanding of incoming and outgoing costs – and how they fluctuate – is essential. For petroleum and chemical distributors, while there’s a variety of options available to help track expenses like fuel and wages, the greater challenge lies in tracking costs at a granular level such as by customer and for each delivery route — but this is where uncertainty enters the equation.
If distributors don’t know exactly what it costs to make a delivery – or what the opportunity costs are for not optimizing the volume and frequency of deliveries (i.e. delivering more volume less frequently) – then business decisions are being made by gut instinct, rule of thumb, or based on demand such as when a customer calls and notifies them that they’re running out of a product and need a rush order. These scenarios, unfortunately, increase operating costs and allow space for operational inefficiencies.
What is uncertainty costing you?
Too many distributors today rely on manual processes and fixed schedules, where they visit the same customers on a rigid delivery schedule to top off tanks, repeatedly. These set schedules don’t account for potential changes between runs that could impact fill levels.
To no surprise, the manual component of this approach – of identifying and supplying different types of products such as fuels or chemicals to tanks based on a set schedule and/or instinct – introduces inefficiencies and redundancies as there’s too much assumption associated with it.
Unfortunately, the current industry average for delivery efficiency is 45% when companies have un-monitored tanks and non-forecasted inventory usage data. In other words, distributors are filling tanks on delivery routes when the tanks are only 45% empty. This also contributes to increased fuel consumption and carbon footprints as distributors are unnecessarily driving more often to top off tanks that don’t need it.
As pressure for more sustainable practices mounts, and as companies start to assess processes that are falling short more closely, this is one approach that should change.
Eliminate the guesswork
A shift to traditional methods of operating can be difficult because it also requires a shift in mindset and navigating perceived unknowns associated with new technologies, new systems, and so on. However, distributors who take that digital step forward and adopt and implement tank monitoring solutions will quickly realize three operational and environmental benefits in short order:
- Increased visibility: Tank monitoring systems eliminate delivery planning errors, remove unnecessary stops, and reduce mileage. For example, the right system can help to increase delivery efficiency to more than 75% on average, rather than the current 45%, by providing real-time visibility of tank levels and accurate forecasting to distributors. By having improved visibility of usage data, distributors can forecast demand and plan deliveries based on optimal schedules, while also mitigating the risks of runouts and emergency deliveries and providing fuel savings.
- Optimized workflows: Distributors can use tank monitoring technology to automate and optimize workflows in order generation, dispatching, and routing. With comprehensive planning and dispatching capabilities, users are able to maximize route density in terms of gallons delivered per stop, and they can synchronize demand with trucks, drivers, and shifts to create optimal route plans. Dispatchers also can print routes or send them directly to the assigned drivers using a mobile dispatch application.
- Improved customer experience: With modern technology, distributors don’t have to call customers for tank readings to know how full they are or wait for customers to call-in orders. They’ll have this information readily available, which allows them to automatically generate orders and optimize routes, and give time back to their customers by having less manual coordination to manage. What’s more, distributors can easily verify that the number of gallons that customers ordered does not exceed the maximum tank fill levels, which helps to prevent spills and “product retains,” where customers pay for more gallons than they receive.
Choose the easy path
It’s due time to embrace technology and modern solutions that remove guesswork, eliminate uncertainty, and provide greater confidence and assurance for both distributors and their customers. The benefits of doing so are too great to pass up. Contact SkyBitz to start your digital journey today.