Five Myths of Logistics

1 - My drivers are best used when focused in an area

Geography based services or "zones" do provide a level of economy and local knowledge. This method, however, does not consider traffic patterns, customer needs or workload volume. The only geography that really matters is the area around the current point being serviced. Our experience shows that this method, though logical on the surface, adds miles, labor and expense.

2 - My dispatchers and drivers know best

There are always highly experienced and knowing driven and dispatchers. These individuals are the primary experts in day-to-day knowledge of what's happening on the road. The trick is to provide them the tools to use that experience and knowledge to make the bigger and more difficult decisions. Experienced drivers are typically good at adding stops to current routes. However, when looking at 300 stops across 10 drivers, the human mind just has a more difficult time.

3 - Straight line estimates are good enough

In some circumstances straight-line estimates work fine, such as between cities. When operating a fleet in a metropolitan area or midsize city, road patterns and local restrictions, such as no left or right turns, have a major impact on route structure planning. In many cases, it might be best to have different drivers service different sides of an intersection. A great example found throughout Michigan is the "Michigan left." In this case two stops that look next to each other are potentially a quarter of a mile apart when you consider the necessity to turn right, do a U-turn and go through the light just to make a left turn.

4 - Outsourcing is cheaper

Outside service providers are an excellent resource to provide specialized and overflow services. In most cases, however, the work can be done more cost effectively and provide more flexibility when done with internal resources. A good rule of thumb is to evaluate services when outsourcing reaches 5-20 percent of budget, depending on industry. Another item to consider is that you've just handed a relationship-building opportunity to an outsider who may not properly represent your company.

5 - But UPS only charges $6.95

UPS and other parcel companies do a terrific service at a great price - for a single package. When considering the "great price" remember that it is a "piece price." If I am delivering supply products to an office building, and I have eight packages to deliver, UPS might cost me around $50-55. Compared to my own driver spending one and one half hours making those same deliveries, my cost might be around $40. And once again, you may have lost an opportunity to build a relationship with that customer.

EXPERIENCE MATTERS
"The program that has rung the loudest for me and is blowing my competition away when it comes to efficiencies in routing is the one that is offered by SaTech Logistics.
"...after better than two years of experience with SaTech, the benefits have been ten fold at a miniumum."
Director of Operations
Midwest Dairy Distributor
"A 14% reduction in just 6 months..."
"Efficiencies aside, we have also taken a manual task that used to take up to 90 minutes to perform down to a task of no more than 5-10 minutes."
Director, Materials Distribution
East Coast Utility Company