Fuel cost needntt make delivery a loser

DEFINE YOUR PROFITABLE DELIVERY AREA. For most dealers this is an area with a diameter of under 30 miles. This means a 60 mile trip is about maximum. Costs are about $1.35 per mile to operate a 2-1/2 ton flat bed truck without a driver. Figure $1.75 to $2 with a driver. At $2 per mile, it costs $120 for the trip. At 50/o for expenses, you must have $2400 in sales value on the truck in order to pay for the 60 mile trip. Trips over 60 miles lose money. Loads valued at less than $2400 lose money. The average truck leaves the yard 400/o empty.

THE COMPLETE PACKAGE IS YOUR BEST BET when you make deliveries, but there is ample evidence that exceptions killyou. After monitoring and auditing thousands of trips made by drivers all over the country, the data collected indicates that seldom does a single delivery exceed $500 on average. There are nominally eight or nine deliveries required sequentially for each house package. At $500 each, the total house sales value would be $4000 to $4500. The materials for even a modest home will run $10,000 to $12,000. The problem here is that complete packages for framing, roofing, etc. are not being delivered, which makes the cost per home higher than need be.

THE WORLD'S MOST EXPENSIVE DELIVERY is the pick-up. A pick-up is a free delivery made twice. The second handling is usually manually loaded, making it easy to identify such activity as being three times more costly than a single delivery for which you get paid.

YOU CAN'T MANAGE IF YOU DON'T MEASURE. Over the years the evaluations we've made of delivery operations have shown that over 900/o of our clients lost monev on

Story at a Glance

Average dealer spends 5olo of de livered sales on delivery costs. fuel accounts for only lVlo of that check list of prac* tices that cut your costs and raise profit.

By Wally Lynch President Builders Express, Inc.

delivered sales. For openers, such transactions are made with contractors demanding and getting sales discounts, delivery and credit. Add to this loss from bad debts and shrink and it's easy to make a case for costs of doing business with delivered customers exceeding l5% when compared to the cash and carry trade. Isn't a separate P & L worthwhile to segregate and identify real costs and actual sales. Normally it will show large profits percentage wise on very low cash and carry sales. Generally, the conclusion is that delivered sales are subsidized bY non-competitive take-with sales. If you really know your costs you can do lots of good things with such knowledge.

almost universal with absolutely no justification other than neglect or failing to manage. Another bad actor is "turn time." There's no load, when properly staged, that can't be loaded within 15 minutes. Prove this to yourself in two ways. It won't take more than a few days. Have a Polaroid photo taken of each truck from the rear at bed level as it leaves the yard and note how full or empty it is. At the same time, have the driver mark a time card when he returns and leaves on each trip.

a simple delivery. Are you getting $80 to $100 for such services?

There Are Some Real

DOGS IN THE YARD. The soulof retailing is the marketing approach - give customers what theY want. Your main customer goes to work at '7 a.m. This means that if you are interested in that customer, Your "first out" is about 6:15 a.m. The normal, comfortable handling is two trips per truck daily, one in the forenoon and one in the afternoon. Basically out at 9 a.m. and back at I I a.m.; out at l:00 p.m. and back at 3 p.m. Starting and managing from 6:15 a.m. changes one's comfort zone and bottom line. Overtime is

DELIVERY AND DELIVERY SERVICES ARE TWO DIFFERENT THINGS. Therefore you must know not only what you're doing, but what your competitors are uP to as well. Service calls are akin to delivery costs in that they cost about the same to make. A service call in the town where I live costs $40 to $50. You can make book that a delivery in your town costs about the same if the costs were really known. Using this analogy, ask yourself if you recover enough when you charge for delivery, pick-ups and services like unloading shingles and wallboard. Delivery companies don't unload and they charge demurrage if you don't do it fast enough. When you unload for customers, your truck and additional people are generally utilized twice as long as for

THERE'S AN EQUIPMENT OVERKILL ON THE LOOSE. You may or may not be guilty, but here are some examples that may be helpful. Specialized equipment is nice if it pays for itself. Boom trucks that cost from $80.000 to $100.000 to handle wallboard, shingles, railroad ties, timbers, etc. will not pay for themselves hauling this bulky low margin merchandise because the average to large yard doesn't sellenough of it in a year to pay the vehicle operating expenses. Tandem axle vehicles (10 wheelers) are created to carry heavy loads or to deliver into mountain areas, but there aren't enough heavy loads or runs to the mountains to justify such equipment economically. Finally, compute the average sales value of your deliveries for a 90 to 120 day period in season. If it's $400 or under, you most probably can operate with I ton vehicles and 12' beds as opposed to 2 or 2-1/2 ton units. These cost half as much to buy and operate for one-third less.

Something may be killing your delivery, but the chances are pretty good that it's not fuel costs. If you can hang your hat on one of the problems I've identified, you should be able to save ten times what current fuel cost increases have been.