Cost Cutting With Technology
No doubt you have noticed the cost of fuel lately - no matter where you live it seems to be hitting new highs. And you have seen it show up on your financial statements as an increased cost of doing business. No additional return, just a greater cost. These kinds of costs dig deeply into our profits, and we have very little input into how they are set nor can we do much about them, except suffer the lost net income. What we can do, however, is re-examine our cost structure and find ways to pare down our current costs. Though they usually seem firm and unable to cut unless we drop some element of service or the quality of our service, both of which are unsuitable alternatives.
Maybe technology can help. Technology brought us simplified accounting, more effective dispatch capability, more accurate payroll and warehouse records, easier written communications, and a host of other time-saving and economically efficient processes. It even allowed us to reduce personnel costs.
If we could reduce fuel costs (other than complaining to politicians or oil companies) by using less and cutting our down-time expenses, we could make up for higher unit fuel prices and maybe even save more of our precious revenue. What it comes down to is increasing the efficiency of the billable hours we have to pay our technicians. So it is up to us to find ways to put technicians at a revenue-producing site as much as possible. Here's how technology contributes to cutting down time and fuel costs.
Global Positioning SystemsYou have read my previous columns about GPS and its amazing ability to locate, track and record movements of anything.
For the service and repair business, the use of GPS began with simple tracking systems so businesses could see the location of their trucks. This alone was a valuable service. And, of course, it was a lifesaver when trucks were stolen or misused by wayward employees.
Since we first looked at the use of GPS vehicle monitoring systems, much has been added in the way of services, plus costs are reasonable. How do we apply the services available to saving money? That's what's important for us now.
If we are able to not only locate trucks but to have detailed records of where they went, how long they were there and (get this) the speed they traveled at, which truck door was open and for how long, we have the data necessary to make effective management decisions. But there is much more.
GPS tracking systems now can monitor maintenance data, including:
- when an oil change is due;
when the last brake job was completed;
oil pressure; and
By having a ready source of maintenance data that is easy to monitor, trucks are easier to maintain. Preventive maintenance won't be overlooked. Maintaining trucks properly makes them last longer and ensures they are safe to operate. Both save us money - fewer breakdowns and less possibility of a wrecked truck.
Besides maintenance data, GPS can detect and record the time the truck was at a location and the route taken to arrive at the service call. Virtually any measure of efficiency can be documented by a GPS system.
There are other advantages, too. Anyone with the right password can get online and monitor all the data from anywhere in the world where computer access is available. That's real flexibility and real power.
How We Use ItAll of the potential of a GPS-based management information software system doesn't help unless we understand what we need and know how to use it. That means training and using the data we receive. The best way I have seen to use the massive amount of data provided by these systems is to integrate the data into the rest of the company's management information software. Specifically, we need to incorporate the information provided on our trucks into an automated dispatching system. By joining the two, the dispatcher absolutely knows the location of the trucks he is dispatching and how long they have been at a location - without having to contact the technician.
Integrated software packages work more seamlessly for the dispatcher. Sometimes a stand-alone GPS tracking system can be challenging for the dispatcher to operate effectively. He may be too busy to go through the extra steps necessary to do the job.
For example, good software will indicate the best selection of a technician and truck to make the next service call using many criteria, such as distance to the job from the current location, job status, etc. The technician can get directions to the jobsite so he can take the most direct route to the job (rather than looking in a map book to find the location and guessing about the shortest and easiest way to get there). The more automated those kinds of decisions are, the more efficient the dispatcher does the job.
Dispatchers are made aware of trucks that need mechanical attention from the information provided in the software. That data shows up on the computer screen (with the problem identified), so they are not driven unsafely to the next job.
The software package makes the dispatcher's job not only easier but allows faster and more accurate and efficient dispatching. One dispatcher can accomplish more.
Cost-EffectivenessCertainly these software/GPS packages sound like miracle machines, providing data that we could have only wished for several years ago. However, where are the cost savings? How do they pay off for a service and repair business?
The key is maximizing the use of the company's most valuable assets: the people on the job. If we can reduce down time, we increase the revenue we get for each hour we pay a technician. If we make sure he goes to the right location and that he gets to the job by the most direct route, we have made substantial progress.
Let's look at the numbers. Figure about $300 per truck with a $15 per month monitoring fee (company charges vary depending upon the level of service and software used). Then compare that to one or even two calls a week that are due to more effective dispatching (though you may find the numbers are better than that), and it is easy to calculate the financial advantage you will enjoy.
There are some intangible benefits, too, which may include the peace of mind you get in knowing where your trucks are, the headaches eliminated from the dispatch section, fewer mechanical problems from trucks, and fewer customer complaints from technicians arriving late or getting lost.
From the data you receive with these systems, owners and managers can construct reasonable procedures for technicians and provide the assistance to help them do their jobs better and faster. Of course, the gripes from technicians hearing and attempting to second-guess job assignments delivered by verbal dispatching over a companywide open frequency will be history forever.
Using these management systems will, essentially, accomplish the one thing that will reduce our costs these days: cutting nonbillable hours from our payroll expenses. The billable-hour efficiency factor is a critical one if you, like most shops, pay employees by the hour. Do you know how many nonbillable hours your people accumulate monthly? Check it out. The cost of a good, integrated GPS-based software system will seem like a minor expense if you can reduce those unproductive hours.
More Sophisticated SystemsAs the years go by it seems more and more sophisticated systems are required to maintain the business efficiency necessary to compete as a market leader in our respective locations. First word processors, then PCs, then fancy accounting programs, dispatching systems, now GPS. It keeps going. More and more systems to help us do our jobs more effectively, faster, more accurately and with fewer personnel. Where does it end? Will we someday depend on super computers with as many software people as technicians? Probably not.
I think we have come a long way since the service and repair business was just mom-and-pop, one-truck shops with time and materials billing. To run a business today, you need to have available the resources of proven practices and the business systems that reflect a successful, competitive business.
Customers expect more. Your company has to be available to meet customer needs on a moment's notice and your technicians need to arrive when they are expected. More and more it is the companies that have adopted the latest techniques and technologically advanced management systems - like GPS - that are succeeding and growing in their markets. Stay tuned.