Trucks & Inventory: Fuel For Thought
Those summer gasoline price hikes are finally starting to fall back. Unfortunately they are far from stable. For service contractors with trucks on the road, this means continued uncertainty as to how to effectively get their techs to and from the job without breaking the bank or frightening customers with additional charges.
To remain profitable, contractors today are concentrating on billing efficiency, which includes not leaving the jobsite, running to and from the supplier to finish a ticket. However, according to companies like The Fulton Group, an inventory and supply-chain management services company for the plumbing, electrical and HVAC industries based in South Easton, Mass., this sometimes requires a tradeoff.
“On the one hand, you want the luxury of stocking your service vehicles with the correct levels of inventory based upon the individual application,” says Joe Piro, Fulton’s president. “On the other, you run the risk of less fuel economy with a larger, heavier truck.”
In a new survey on fuel savings by Supply House Times magazine, 73 percent of respondents said the run-up in fuel prices had a “moderate negative impact” to their business. Nearly 85 percent said they were experiencing hardships because of fuel costs, and were implementing various ways to combat these costs:
- Reducing travel and service area.
- Utilizing the four-day, 10-hour work week.
- Switching to more fuel-efficient work vehicles.
- Adding GPS to vehicles and setting gas card limits.
“Through systematic monitoring of material usage and sales, it could be found that perhaps you don’t need 10 of a certain item on a truck. Maybe you only need six,” says Piro. “Static orderpoints and min/max replenishment systems are good first steps, I suppose, but these methods generally disregard dynamic variables such as material demand, price changes and even fuel costs.
“Additionally, most organizations don’t have the resources or the software to consistently review and refine min/max levels. The best long-term solution is an automated, demand-based replenishment system that considers all of these factors.”
But even this process has undergone changes. In the past, before fuel prices got out of hand, a full year’s worth of usage data was studied in order to develop a client’s initial load plan. But with gas prices in flux and contractors looking for a more immediate solution, Fulton has gone to a quarterly review, adjusting for seasonality. “This can be done per truck, per technician,” he notes.
Piro has seen some trends in vehicle choice over the past year. More of his customers are requesting load plans for Sprinter models, which are known for a higher fuel efficiency without a loss of inventory space. This decommissioning of older, box-type trucks means the “carry everything” philosophy of the past may be an outdated way to stock service vehicles.
He also urges contractors to develop their technicians’ abilities to up-sell. “We can clearly see from the material usage data which technicians are proficient in salesmanship and which technicians might need some additional coaching. In these times, you need to maximize the sales opportunity with every work order, and examining the usage data to identify the strengths and weaknesses of individual technicians is a huge strategic advantage for our clients.”
The obstacle now, though, is that gas and fuel prices are a wildcard. “Though we do consider fuel costs when formulating our load plans, there isn’t yet any set formula we can look to for a one-size-fits-all solution.”
While Piro anticipates a gradual return to stable gas prices, he doesn’t expect them to drop to the levels they were a few years ago. “Contractors are definitely more concerned today than they were six months ago about how gas prices are influencing the way they conduct business.”
Special StorageDoing more with less? Maximize your truck’s cargo space with some of these unique storage options.
Organize your work truck and warehouse by storing extension cords, high-pressure air hose, rope, etc., inside a 5-gallon plastic paint bucket. This keeps your equipment clean, as well as tangle- and damage-free. Transport items easily from your work truck to the jobsite and back.
With a 3.5- or 5-gallon pail, store all your smaller fittings, tools and repair parts easily with storage tray inserts that fit snugly inside. Options include coffee-can sorters, tray dividers, deep-storage inserts and easy-on/easy-off lids.
Stores and organizes small parts. Take trays anywhere on the jobsite. Attached restraining bar keeps trays in place while vehicle is moving. Available with four or six trays, with adjustable dividers and fold-down handles.