WITH the installation of a new fuel purchase and routing optimization program, Stevens Transport of Dallas projects saving as much as $800,000 a year in fuel costs and a 100% return on its investment within as little as three months. In addition, the program should contribute significantly to driver satisfaction by routing them to fuel stops ranked according to the available amenities such as shower availability, food quality, and service facilities.
Stevens Transport is based in Dallas, Texas, and is one of North America's widely recognized irregular route refrigerated truckload carriers and an asset-based logistics provider. It serves the contiguous 48 states, Mexico, and Canada from 14 service centers.
The improvement is expected to result from implementation of OptiYield Fuel&Route from Logistics.com Inc. Based in Burlington, Massachusetts, Logistics.com provides shippers and carriers with technology to buy, sell, manage, and optimize land, air, and marine transportation. Its software products include OptiYield for carriers and OptiManage and OptiBid for shippers. Logistics.com has received financing, strategic guidance, and operational support from Internet Capital Group. In July 2000, Forbes magazine named Logistics.com one of the most promising B2B companies in its Best of the Web: B2B edition. In addition, the company has been named to the Computerworld Top 100 Emerging Companies list, the InternetWeek 100, and the Inter@ctive Week 500.
OptiYield Fuel&Route is an add-on software module that integrates with a carrier's existing dispatch and communications systems. Using data from a carrier's fuel purchasing agreements, the program provides fuel purchasing and routing optimization for trip planning and operational cost control.
Logistics.com suggests that the program can cut annual average fuel costs as much as three to five cents per mile; however, Stevens is projecting a savings of only 1/2 cent per mile. Assuming that a tractor can log 110,000 miles annually, that half cent will result in reduced fuel costs of $550 per tractor, says Matt Welding, Stevens' director of quality assurance. Stevens operates more than 1,400 company tractors plus almost 300 independent contractors. The first year savings for the company fleet should be approximately $800,000. Savings from the system for owner-operators will flow directly to their individual balance sheets. Once the system is fully implemented, we expect to realize a 100% return on our investment in two to three months, Welding says.
In addition to saving money, the program should help Stevens route equipment to truckstops with amenities favored by drivers, thus increasing driver satisfaction. That's something very important to our company culture, Welding says.
Stevens will use the new system to generate routing and fuel stop recommendations. It uses information already available to give management better visibility into a company's approved fuel stop network, allowing them to make business decisions based on comprehensive data analysis. OptiYield Fuel&Route considers multiple factors such as fuel price, driver amenities, out-of-route miles, state taxes, miles on toll roads, and on-time deliveries to recommend an optimum route. It not only recommends where to buy fuel but also how much to buy at each stop. The program considers the price of fuel where loads terminate to ensure that trucks are not stranded with nearly empty tanks in areas where fuel prices are high.
For instance, the software could recommend purchasing a full fuel load in an area with low prices if that purchase would allow a driver to reach his destination and return to the area of low prices without making another fuel stop. An alternative recommendation might be to purchase low-priced fuel, deliver a load in an area with high prices, and purchase only enough expensive fuel to reach an area with lower prices. It also considers company terminal locations with fueling facilities. These recommendations would be determined by the software and transmitted directly to the driver using Stevens' on-board communications system.
Fuel stop recommendations also are based on driver satisfaction. Because the system accounts for amenities like shower availability, food quality, and service facilities, drivers are more likely to follow its recommendations. The software also can consider intermediate stops at drivers' homes or company maintenance facilities. This will help reduce out-of-route mileage in addition to lowering fuel costs and increasing driver satisfaction.
The ability to check with other users before implementing the new program was important to Stevens, Welding says. Logistics.com has a mature, referenceable client list, he says. The importance of references is critical because this is the first time that automation technology will be used to optimize our routes.
OptiYield Fuel&Route is an add-on program that runs with a carrier's primary computer system, says Mitch Hixon, vice-president, truckload and rail sales for Logistics.com. It does not change existing fuel purchase contracts; it simply processes data in a way that gives a carrier the opportunity to purchase more of its required fuel at the lowest available prices.
Installing the program takes two to three months of extensive data collection to ensure that it is completely customized to a carrier's operations. Once all the data is collected and analyzed, the physical process of installation can be complete in about a week. The data collection process is vital, Hixon says, because the program must be implemented with as little disruption to driver routines as possible to ensure acceptance and utilization. If only 80% of drivers follow the fuel purchase and routing recommendations, the system will result in a successful drive to reduce costs, he says.
For more information about Stevens Transport, visit www.stevenstransport.com. Additional information about Logistics.com and its range of software systems can be found at www.logistics.com.
