Distribution Metrics Agenda 1. Continuous Improvement/Productivity 2. Distribution Activities and Effectiveness 3. Accounting Data and Efficiency 4. Combining Effectiveness and Efficiency 5. Results 6. Factors Ensuring Metrics Success 1
Continuous Improvement/Productivity Think, Act, Measure and Repeat Think – what is your Strategy? Act – start with Distribution. Measure – develop company Baseline. Repeat – repeat, repeat and Repeat. 2
Distribution Activities and Effectiveness It's All About Time – identifying minutes per Activity Beginning and End of Day Time – driver manifests and route schedules Driving Time – miles driven per day Stop Time – number of stops per day Cylinders Delivery Time – number of cylinder delivered per stop Data Required (Avg. - Miles per Gallon, Fuel Cost per Gallon, Miles per Hour) 3
Accounting Data and Efficiency Wages/Benefits, Vehicle, Fuel and Other Total Compensation – includes wages, OT, benefits and taxes Vehicle – includes depreciation/lease costs, maintenance, insurance, license and other vehicle costs Fuel Other – miscellaneous vehicle costs Data Required – gas distribution costs by Mode(Tube Trailer, Microbulk and Cylinder Truck) 4
Combining Effectiveness and Efficiency Major Assumptions $25 million Distributor with 45%/55% Gas-to-Hardgoods Ratio Total Number of Trucks/Routes 8 Stops per Truck per Day 8 Cylinders per Truck per Day 72 Work Minutes per Day 480 minutes per day AM/PM Time 60 minutes per day Stop Time 80 minutes per day Driving Time 169 minutes per day Cylinder Delivery Time 171 ~2.4 minutes per cylinder 5
Combining Effectiveness and Efficiency Average Cost per Stop - $99.06 Average Cost per Cylinder Delivered - $11.01 Miles per Cylinders Average AM/PM Stop Stop per Stop AM/PM $7.99 1.0 Stop Hours 10.66 1.0 Hours Driving 57.59 10.5 Hours Delivering 22.81 9.0 Total per Avg. Stop $99.06 Initial Target Reduction of $1.64 per Cylinder Delivered - $223,000 6
Results Increase Cylinders Delivered per Stop by 1 Go from 9 to 10 Cylinders per Stop - Saves ~$55,000 Reduce Stops by 10% - No Other Charges Reduce 1,500 Stops – Saves ~$54,000 Increase Drive Time Average by 5 MPH Go from 30 MPH to 35 MPH - Saves ~$48,000 Reduce Miles by 5% - No Other Charges Reduce 8,000 Miles – Saves ~$43,000 Reduce Morning and Evening Paperwork Time 5 by Minutes Each Reduce Paperwork Time Total of 10 Minutes per Day Per Person - Saves ~$23,000 7
Factors Ensuring Metrics Success Understandable – drivers know what actions are required Easy to Implement – agreed upon metrics and easy to calculate Connected to Strategy – drivers and management agree Buy-in and Engagement 8
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