Written on: March 8, 2019 by Phillip J. Baratz
To accomplish anything in the business world, you need a mixture of know-how, foresight and tools. The battle between know-how (sometimes referred to as “experience,” other times referred to as being “old school”), and forward-thinking (sometimes referred to as “next generation thinking,” sometimes as “these kids don’t know anything”), is challenging. The choice presumes that you need to be either completely retrospective (why innovate when everything seems to be working?) or completely prospective (look at all the new technology that is available, to heck with the old school thinking).
I prefer to have the conversation start with the notion of being introspective. In our digital world, choices are usually presented as either/or rather than as a balance of perspectives. Simply because something is “old school” doesn’t mean it is bad or even outdated, it may well have become common practice because it was and still is the best way to do things. On the other hand, just because something looks futuristic but may not be guaranteed to succeed doesn’t mean it is not worth exploring.
The best tools
Over time, all industries use the best tools that are available to them at that time. Toll collectors were replaced by EZ-Pass systems, on-site server rooms were replaced by “in the cloud” services and beepers were replaced with Smart phones. While your parents or grandparents may have struggled with moving from file folders and index cards for customer accounts and K-factor deliveries, they eventually moved to a back-office accounting system. That change didn’t mean that index cards were ever bad, but over time, they simply were not the best tool.
Every time there is an improvement in the available tools, lengthy discussions ensue as to their benefits and value of changing “the way we’ve always done it.” Never lose sight of the fact that change is not easy for many people or for companies. All change, as simple and logical as it may seem, will raise challenges. It is almost always easier not to change, yet it is also almost always a mistake to push off beneficial changes.
Although we take pride in the fact that our industry is very hands-on and customer-facing, not nameless, faceless and algorithmic, we have always embraced change—from back-office systems to on-board computers, from email communication to on-line customer enrollments, and so on.
Did your grandfather ever imagine his customers would receive a “push notification” alerting him that there was a service tech arriving in the next 30 minutes? Yes, we take our time, we wait for other industries to lead the way, but the windows of adoption are shrinking. For those who embrace new tools, the competitive advantage and positive impact are growing more quickly than ever before.
Finding the right balance
When quality drivers are hard to find, you can either spend more money to retain and attract them (while likely lowering your standards) or you can find a way to deliver the same number of gallons with fewer drivers. If the price of gasoline and diesel fuel for your fleet is both expensive and unpredictable, you can just “pay whatever it costs” or you can look to hedge your fuel costs and do a better job of routing than just letting the driver decide on the order of deliveries.
Your biggest delivery expense is the cost of a truck—whether used all year long or just for a few routes in the winter. However, the argument that you needed to buy those three trucks otherwise the acquisition wouldn’t have gone through is not an excuse to keep those trucks in your fleet if they are no longer needed.
Delivering 150 gallons in January to customers whether they have a K-factor of three or 13 is going to require more trucks, drivers and wages than if you pushed or pulled back the “13” into a shoulder month. Also, if 150 gallons is the right delivery size in January, is the same true in May?
The biggest changes in technology are not changes in philosophy. There was always a desire to make the biggest deliveries with the fewest trucks, lowest wage costs and least amount of fuel—all with the absolute requirement of have little or no run-outs. None of that is new. What has changed is that the tools to accomplish that have become far better and more affordable.
If you knew what was in a tank, your deliveries would be far more predictable. If you knew the best route, you would make more stops per hour at a lower cost per delivery. If you knew the best times to make deliveries to customers—not based on when there was enough room in the tank, but based on using the data you already have to spend the least amount of money, while not increasing the run-out risk—would you change the way you operate?
It is already happening and it will happen to your company. The question is whether you will “lead” and look to do it or “follow” because you must. Bridging the past and future requires introspection. Introspection requires the ability to identify the benefits of having a better, more profitable, more valuable business, not the excuses of why you should just keep waiting. ICM