By Maura Keller
Today, petroleum companies of every size are re-ordering their priorities and re-examining their dispatch and delivery processes with a single goal in mind; to streamline the fuel dispatch and delivery experience and gain the competitive advantage.
Dispatch technology has also made its impact on how transportation companies operate. From tracking the routes their drivers run to billing at the time of delivery, technology advances play a increasingly important role in the petroleum dispatch process.
Dan Warren
We interviewed Dan Warren, vice president of marketing and product management at SMARTLogix, a company that offers real-time wireless inventory control, dispatch and delivery solutions for petroleum distributors. As a leading provider of real-time petroleum management solutions, SMARTLogix has designed several service offerings including SMARTank (tank monitoring); SMARTruck (automated and paperless dispatch and delivery platform); and SMARTLYNX (automates the generation of route, scheduled, forecasted, degree day, and tank monitored orders).
Warren shared his insights on the status of the dispatching component of the petroleum industry, best practices petroleum marketers need to take, and what the future holds.
FMN: Historically speaking, how has the technology improved the dispatching process, even in just the last few years? How has it changed the efficiency of the industry?
Warren: SMARTank was our first product launched in the market over 13 years ago. At that time the standard was to pay an employee a salary or hourly wage to driver around and stick a dipstick in a tank, record the level and then report back at the end of the day. The problem is that they can’t get to all the customers in a day, and even after they captured the data it was already old by the time they got back. Fast forward 13 years and we still collect delivery data from prospective customers and consistently most customers are delivering at 45% capacity—so they are making twice as many trips as they need to and they incur the fixed cost of making that delivery each time and can only gain margin by the number of gallons they deliver per delivery.
Now tank monitors will gain delivery efficiency, so more margin per delivery, but then what about the non-monitored tanks? For example, in our case SMARTank feeds this data to SMARTLynx, which has a forecasting module that uses historic delivery data to calculate a tanks burn rate to estimate when it will be empty. This forecasting module also has a degree day module that uses a weather service to determine the empty date of home heat customers. A truck could load diesel but then deliver to a tank monitored construction site, a forecasted car dealership and then at John Smiths’ house all on the same route.
Technology allows software to calculate in seconds the most efficient deliveries within the same radius/distance so they an efficiently dense route as they are delivering more gallons in less time, and with fewer miles traveled. Dispatchers do an amazing job juggling all these variables in their heads to simply handle making sure their customers get gallons. But, historically (and in a lot of cases currently), they are setting up customers on a “Keep Full,” which means they are delivering on a consistent basis, or the customers is a “Will Call,” which means they will call if they need a delivery. Both of these methods are prone to allow the customer to run out and are poor customer service based on the technology that is available.
Now that we have automated the creation of the most efficient deliveries as groups, or areas to build density, we need to organize them in a logical order for the driver. I’ve seen it all in my 13 years. Some of the more “advanced” dispatching processes have been huge white boards with magnetic truck icons placed into region columns that are manually moved around throughout the day to know which driver is doing what. The drivers were handed a stack of papers; maybe in the order they were requested to deliver them but likely the driver determines what he’ll do first, because he’s “familiar” with the area.
The bottom line is there is a lot of knowledge in the heads of the dispatchers and drivers that is not easily transferable. So when they’re gone—so is the knowledge and the process. Every delivery has GPS coordinates associated with it and so do the loading terminals, so now the digitally created efficient orders can be optimized to be in a logical order and then the best load plan can be created to know where a driver should load for best price and when a reload should be scheduled based on when the system estimates the the customer will run out.
Technology “high grades” the dispatchers to not be order takers but to be logistics experts, as they let the software crunch the data and present a logic output and then they can apply the “human” factors to what is already an efficient route. They can now analyze and manage data days in advance instead of creating data and trying to be a critical thinker on the fly, which in the end always leaves money on the table.
Unfortunately, the petroleum industry is very unique so this scenario rarely, if ever, is true. Our industry is much more dynamic than a basic “pick up a package and drop it off,” like a UPS. In their industry there is a product that is a fixed size and weight when they pick it up and that product is still that product and is the same size and weight when they deliver it.
But in the petroleum industry a driver can load product’s A and B into the same compartment, then add a couple gallons of product C (winterized) and then call this product D, and then sell product D to 10 different customers—but the delivery ticket or invoice could say product A, B, C, D or even something completely different. We call this “Bought As Product,” “Blended Inventory Product” and “Sold As Product.” We then have to track both the gross and net volume of this liquid product because based on temperature the product can expand or contract, so sometimes they gain gallons and sometimes they lose them.
Each state has different rules and each client/end user has their own requests, so sometimes the petroleum distributor loads “gross” but may bill some clients “net.” They also might load net gallons and then do a gravity drop but have to bill gross.
FMN: How can companies make the most of today’s technology and with working with companies as it relates to dispatching?
Warren: Ultimately, they need to pick a software solution, produce a process or absorb a present process to implement the solution and make sure they have an internal champion that will lead the team through the change so they can establish a “new normal.”
