How you can save on delivery costs Gt

Questions on delivery costs? Send them to this magazine at 4500 Campus Dr., Suite 480, Newport Beach, Ca. 92660. Wally LYnch will answer them in future lssues. This is your chance to take advantage of his expertise in cutting your delivery costs.

QUESTION:

What's a good method to use to determine when it is really necessary to add a truck to a delivery operation on a per' manent basis?

ANSWER:

This question often is heard at this time of the year, but you don't state what kind of truck and for what specific purpose you use it, nor do you indicate any anticipated changes in volume. This information is necessary to a dealer when pressures are exerted upon him to augment his fleet. Most dealers will be concerned with a basic 2V2 ton flat bed dump which, in today's market, is an $18,000 to $22,000 outlay.

Our first answer to such a question always is-don't add a truck unless you are hauling an average of $l million with each of the trucks you already have. You also must be able to identify about $l million in new delivered volume to make a new truck effective. If the volume rate isn't being met at present it is reason for another study, but if the facts determine that you should add to the fleet, check costs first. There are two major areas of cost concern. The following illustration is taken from data supplied by several clients, located from coast to coast, on their experiences within the past 18 months' There were over 100 trucks involved in computing averages.

(I) OWNERSHIP DOT,. COSTS

I,OCAL using different pre-tax profit percentages and the annual costs developed above.

When figures are developed locally they will quickly provide decision making information for management. No one adds equipment to reduce profits, so take the actual pre-tax profits achieved and capitalize the added annual expense into sales needed. Listed below is this exercise

This information tells management what is needed in terms of sales and profits to maintain the company's pre-tax profit status quo when an operational delivery truck is added.

"Management SumeYs the Black Hole of Delivery," divided into three separate dollar volume manuals, under $2 million, 82-5 million and over S5 million, is available for $45 from Builders Express Inc., tt550 Plano Rd., Dallas, Tx. 75243'