With gas prices soaring past $4 a gallon, and no foreseeable end in sight, jan/san distributors are feeling the pain at the pump with every fill-up.

As the national average rose to $3.96 per gallon for regular unleaded gasoline and $4.16 per gallon for diesel in the first week of May, distributors are being forced to become more savvy when it comes to their delivery fleets — especially when fuel costs represent as much as 10 to 15 percent of a distributor's total operating costs.

Today's situation is an all-too-familiar one that distributors found themselves in just a few years ago. When gas prices reached record highs in the summer of 2008 ($4.11 per gallon for regular unleaded and $4.84 per gallon for diesel) it crippled distributors' margins. For distributors who weren't managing their delivery fleets via routing software they quickly recognized that every mile taken off a scheduled delivery route or the time their trucks spent idling meant more fuel was being burned, which only drove up operational costs.

Fleet routing software has been around for some time, but it has historically been expensive and complicated to deploy. But as fuel prices continue to rise and the cost to implement the software has gone down, more distributors are encouraged to jump on board.

Routing software helps streamline the delivery process in that distributors are able to take the manual routing out of the hands of delivery drivers. Instead of poring over maps by hand, drivers are given their routes in a fraction of the time through the software. And coupled with GPS technology, the software guides drivers along their delivery route in the most efficient paths possible. With the software, distributors are also able to build routes that take into consideration certain variables such as driver schedules and customer delivery windows.

What's most enticing about implementing routing software is the fact that it can provide a return on investment in less than six months and immediately reduce fuel consumption for any size fleet. Thus, distributors of all sizes can find the software beneficial in reducing fuel expenses.

Maximizing Routes

At New Berlin, Wis.-based NASSCO Inc., when purchase orders are finished at the end of the business day, warehouse manager/transportation manager Mike Nennig and his routing team get to work. With hundreds of order tickets on any given day, he and his team sort through them and enter each order number into the company's routing software system.

Once all the orders are keyed in, the routing software takes the wheel. The software will pull each purchase order's address and plots it on a map, which allows Nennig and his team to view all of the orders for the next day.

From there, Nennig and his team can determine which delivery stops are best suited for certain drivers based on their territory. The routing software then suggests the most economical and efficient way to route the truck by listing the driver's estimated mileage as well as the projected time it takes to complete the entire route based on historical data.

Then the next morning, Nennig can access the routing software on his computer screen in his office and see exactly where any given driver is along his or her route.

"We're able to track our drivers, find out exactly where they are, we're able to see how they're progressing throughout the day because it will update and give an estimated arrival time for each stop," says Nennig. "It will update as they hit arrive and depart on their stops, and maybe they're running behind which is going to exceed their hours or maybe they're running ahead and the system captures that data and we're able to use that data when we do the next routing session because we start building history on the deliveries."

NASSCO has been able to reduce its mileage as a result of better route optimization and planning, and improve its driving efficiency with real-time vehicle tracking — all the while without compromising customer service, says Nennig. In fact, since implementing the software in November 2009, the company's route efficiency has improved by nearly 25 percent.

Like NASSCO, Davidson, N.C.-based JanPak Inc., has reaped the benefits of implementing routing software. Before the company installed the software in 2004, it could only speculate that any given delivery driver would take eight to 10 hours to complete a route.

"There was an unknown without the routing software. You didn't know," says Mike Janis, senior director of operations for JanPak. "You were trying to be as efficient as possible, but you didn't know."

But now with the routing software, JanPak is able to track its drivers via cellular phones with GPS technology.

"We're getting real-time information, we're able to get exact stop times, how long it takes to make a delivery at a certain stop," says Janis. "Now we're able top put more stops on a truck because we're getting accurate times and we know that with the stop times, it may take us six hours, so now we have two hours worth of work that we can possibly put on that truck."

As a result, the company has been able to not only reduce the miles its trucks drive each day, but also reduce the size of its fleet by eliminating one truck.

"We've been able to reduce our fleet and we've been growing," says Janis. "Ninety-five percent of our deliveries go out on our private fleet, so we're growing the business, but we're not adding drivers or equipment. That means we're running less equipment on the road, so that means we're running less miles and burning less fuel."

Taking a truck off the road allows distributors to eliminate stem miles; i.e. the amount of miles it takes for a truck to drive to a specific delivery route area.

"So if you're able to reduce one truck, you reduce all of those stem miles getting out to a delivery," says Janis. "You still have miles that you run in that delivery area, but you don't have to run two trucks, so you save the miles you run on one truck and the fuel expense on that."

Inside routing software packages are a variety of reporting tools that allow distributors to also instantly monitor things such as excessive idling, speeding and the actual path drivers are taking. These functions are allowing distributors to better maximize the use of their trucks and burn fuel more efficiently.

Slow Down

It's a given that driving at lower speeds is an efficient method of conserving fuel. Rapid acceleration and exceeding the speed limit will dent a distributor's pocketbook. According to the U.S. Department of Energy, a truck driving 75 miles per hour consumes 27 percent more fuel than if it were driving 65 miles per hour. Plus, every five miles per hour driven over 60 miles per hour is like paying an additional 24 cents per gallon for gas.

Some distributors such as Miami-based Dade Paper have found it rewarding to reduce the speed limit on their trucks as gas prices continue to escalate. The company governed its truck fleet a few years ago so its trucks cannot exceed 65 miles per hour, according to Randy Goins, operations manager for the company's Atlanta branch. Quoting the aforementioned Department of Energy statistics, Goins says that governing its trucks has led to significant savings because less fuel is being burned in its company-wide fleet of 150 delivery trucks.

For distributors who don't place a govern on their trucks, some are able to track their delivery trucks' speeds via their routing software. So if a driver is exceeding the speed limit, he or she will get flagged by the software, and the person in charge of the fleet will receive an instant notification.

"If a driver goes over the speed limit on a given road, we get an e-mail," says Antonio Brown, director of transportation for Eastern Bag & Paper Group, Milford, Conn. "So we can track our driver's speeds."

Eastern Bag also gets notifications from its software if its drivers are going off route by a certain amount of miles or are making an unplanned stop. If a driver is flagged for speeding or for other infractions, the company is able to take corrective action by sitting down with the driver and making sure these instances don't happen again.

"We have e-mails that come back to our transportation managers that they can go back and review on a daily basis and go back to the driver and get answers," says Brown.

Reduce Idle Time

Besides driving at high speeds, another major fuel killer is idling time. When a vehicle is left idling, it can consume one gallon of gas each hour. The American Trucking Association states that one hour of idling per day for one year results in the equivalent of 64,000 miles in engine wear when adding up all the contributing factors. For example, at $4 a gallon, with a fleet of five vehicles, the daily idling cost is $20, the monthly idling cost is $600 and the annual idling cost is $7,200. Distributors should note that these numbers are for fuel consumption costs only, and do not account for the extra repairs and maintenance costs that arise from excessive idling.

Dade Paper recently implemented a GPS tracking system as part of its routing software system that allows the company to monitor its trucks idle times. Although it is still too soon to recognize cost savings, Goins says the company expects to receive measurable savings.

"We will see significant savings because we'll be able to see if they are keeping the trucks cut off," says Goins.

As distributors continue to be mindful of every penny spent, reducing miles driven by better maximizing routes through the use of routing software will help keep operating costs at reasonable levels — and will help offset the high price at the gas pump.


Driving The Routing Process

For a behind-the-scenes look at how New Berlin, Wis.-based NASSCO Inc., routes its deliveries, click here.