AUTOMATION DELIVERS

DIANE BOTNICK

Transportation executives who have been aggressively pursuing automation in fleet operations -- and enjoying the fruits of their labors -- have two pieces of advice for their more timid counterparts: "don't wait" and "integrate."

Retailers and wholesalers investing in computer-based systems that chart routing schedules and monitor deliveries are documenting efficiency and service-level gains. At the same time, the programs are yielding new data essential to further program enhancements.

The resulting improvement in fleet management -- including fuller loads and flexibility in deliveries -- coupled with the increased use of electronic engines, is also squeezing out significant fuel savings.

Such performance dividends accelerate the return-on-investment cycle for these systems, according to retailers such as King

Soopers, Denver. Bill Deckman, director of distribution, told SN the company's computerized routing system paid for itself two to three months after it was installed.

The system also allowed the retailer to reduce dispatcher labor costs and the number of deliveries without affecting service levels. Previously, "it took 25 different runs to get to 68 stores, and this appears to have cut that number 15% to 20%," Deckman said. "We now use 20 trucks instead of 25."

King Soopers uses the onboard monitoring system to further streamline operations by integrating it with other software programs.

"Initially, our onboard computer was used more for performance monitoring," he said. "We've now interfaced it with the payroll system so billing and routing systems are running on a parallel basis. It's all automated now, and that was done in-house except for changes the vendor made to allow the software programs to interface."

Steve Lumsden, vice president of warehouse and transportation at Nash Finch Co., Minneapolis, also decided to integrate transportation and billing systems. The company can now calculate cost per customer per delivery and uses the data to develop fee structures for extra services customers may want.

"If the customer is willing to pay for a particular service, why not provide it? We've been working on an activity-based cost management system for two years and it makes good sense," he said. "We're not finding out anything we didn't already have a sense of, but this validates what we already knew."

Wayne Lankford, fleet manager at Fleming Cos., Oklahoma City, also is working on an in-house program linking financial and fleet management software.

"We've used it since 1982 for driver and equipment control, and we've seen savings from greater productivity and lower maintenance, tire and fuel expenses," he noted.

With 2,600 tractors and 4,700 customers, Fleming also has eliminated paperwork because drivers now use electronic logs.

"With a manual system, the driver can write anything down, but it's not necessarily accurate," said a source at another supermarket company, who asked not to be named. "With the computer, I know how long he stopped at every store, even if he didn't punch in his location card, because we can check his route. The information can't be falsified."

Getting drivers acclimated to the new procedures involves some extra training, retailers and wholesalers acknowledged, but should not prevent companies from implementing new technologies. Companies also should not be reluctant to invest in new systems just because they have not fully matured in the market, said Nash Finch's Lumsden.

"We've had our third [truck monitoring] upgrade in 12 years," he told SN. "But if we had waited for the perfect system, just think how much we'd have lost in savings along the way."

Moving forward with technology advancements is important, agreed Robert Pugh, project manager at the Greensboro, N.C., distribution center operated by Harris Teeter, Charlotte, N.C.

"We were one of the first to jump on the bandwagon with [radio frequency technology] when we put in our system eight years ago. It was obsolete after six months. There were changes, just like with cars, but at some point you have to say, 'We're going to go for it.' "

Both a vision of where the business is headed and the long-term strategies to get there are needed before operations can really take advantage of recent advancements.

"You could go broke today buying money-saving opportunities," said Lumsden at Nash Finch. "You have to have a strategy that says this piece makes sense for us.

"Find the opportunity and what you can afford to do, and look for a good payback," he added. "Because of changing technology, you have to operate with a payback in 18 months; after that it's obsolete."

Brookshire Bros., Lufkin, Texas, which installed a computer-based routing system four years ago, saw a return on investment "in a very short time," said Edgar Burton, director of distribution and transportation.

"The payback has been in improved efficiency -- better handling of stores' needs, better use of trucks, more timely deliveries to stores and more orderly distribution," he added.

Burton uses the system to route trucks and schedule warehouse pools for his fleet of 50 vehicles.

"It drives the whole outbound system," he added. "We don't waste miles when we're hauling because we use more efficient routing and carry more tons per mile. You can't do that manually."

Another tool Brookshire Bros. uses is electronic engines, which have proven cost-neutral, he said, "but the increase in fuel efficiency and vehicle performance is expected to improve mileage by one to 1.5 miles per gallon."

The computer chip-driven engines offer longer life and require less maintenance. Use of electronic engines is on the rise, with about 82% of companies specifying them in 1994, according to a study by the National-American Wholesale Grocers' Association, Falls Church, Va.

Companies enjoying the best productivity gains and cost savings are those who take the "big picture approach," implementing systems that work together at various levels of distribution.

"Too often people separate transportation, distribution and warehouse, but it's one process all the way through. You have to make it flow," said Burton at Brookshire Bros.

"Technology has to be integrated," pointed out Richard Kochersperger, a professor with the food marketing department at St. Joseph's University, Philadelphia, who authored the 1994 NAWGA Transportation and Fleet Maintenance Report. "Most are stand-alone systems. Trip recorders and onboard monitoring [can] lead to data overload. People are overwhelmed -- they need to get one paper [report]. Make it simple."

A wealth of new data, left unmanaged, can create more problems than it solves, observers acknowledged. However, effective coordination yields information helpful in secondary areas, such as driver performance monitoring and documentation.

"We use the onboard monitors as a grading system, looking at miles per gallon, safe driving, fuel efficiency and time," said one executive, who asked to remain unnamed. "We look at the numbers to set goals and see if they're reached."