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' FORMULATE A DELIVERY POLICY
with the information provided by your budget.
(A) Define profit areas of delivery on a wall map with three l0 mile circles outward.
(l) Budgeted profitability can be determined by dividing budgeted cost per mile driven by the budgeted delivery cost ratio. (Example: $2 divided by 6.50/o or $30.77 in inventory value per mile driven.)
(a) nt the l0 mile circle, this is 20 driven miles or 20 times $30.77 or $615.40 must be on the load or the company loses money.
(b) At the 20 mile circle the profitable load is 40 times $30.77 or $1230.80 or the company loses money.
(2) With this simple method you can determine budgeted profit and loss before delivery is made. It can be set up in a chart for dispatcher's review and use before each and every delivery is made.
Story at a Glance
Five steps for managing delivery costs easily. ways to identify costs, set up budget, establish a delivery policy. free sample trip ticket and delivery P&L statement offer.
(A) You'll need a trip ticket for this purpose to show you how many miles were driven and the value of loads handled per trip. (This has several other benehts which are too numerous to list here.)
(B) Have whoever dispatches your truck(s) make up a daily P & L on delivered sales following these steps:
(l) Total the miles driven.
(2) Multiply this figure by the cost per mile driven ($2).
(3) Total the sales value of all deliveries made less taxes.
(B) Determining number of delivery trucks needed.
(l) One 2 to 2-l/2 ton 16' flat bed truck should easily provide for the delivery of $ 1.000.000 worth of material annually.
(a) A normal 40 hour week is 2080 hours annually which means a delivered sales average of $480.76 per hour per truck, which in practical terms is one delivery in the a.m. of $961.52 and another one in the p.m. of the same amount daily.
(b) Another way to look at it is by miles driven at a maintained speed of 15 MPH. Traveling 20,000 miles per year, the truck is on the road 800 hours of the 2080 hour work year.
(4) Combine the budgeted pretax profit percent on delivered sales (2.50/o) with the budgeted delivery cost ratio (6.50/o) and multiply this combined figure (9.00/o) by the total sales value.
(5) The difference between the cost developed in step 2 above and the recovery determined in step 4 above is the profit or loss against the budget for the day.
(6) The process will take less than 5 minutes to accomplish.
(7) Management can immediately do something about losses with such decision making information.
Managing delivery costs is just like managing anything else. Identify the problems. Explain the solutions and monitor implementation.
The five simple steps outlined will be helpful in moving your company from reacting to the customer's delivery demands to managing a cost effective service to these same customers.
(For a free sample trip ticket and a copy of a delivery P & L statement, send a stamped, self-addressed envelope to Wally Lynch at Paid Associates, P.O. Box 741623, Dallas, Tx. 75243-ed.) by evaluating what's happening around you daily.
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