This is the third of a 5-part series driving operational efficiencies in fuels, lubricants, and chemicals distribution. This is based on our 15 years of work in fuels, lubricants, and chemicals logistics.
Target 70% tank delivery efficiency
Increasing tank delivery efficiency is one of the keys to reducing your distribution costs.
Liquid tanks have a 90% max fill capacity, and most customers target a 20% safety stock. That creates a target fill rate of 70%.
Best in class distributors forecast all tanks, not just monitored tanks. Tank forecasting can improve delivery efficiency 30% by increasing drop and order sizes to fill your truck.
A different way to view delivery efficiency is by asking:
“How much product do my trucks return to the depot?”
Improving drop size and orders across tanks and trucks can increase truck utilization 30%. If your trucks return with 10-20% retained product, you’re not optimizing orders. Best-in-class distributors with more than 90% of tanks monitored get 30% better truck utilization and return with zero retained product.
Tanks without monitors can be challenging to forecast, especially if they’re slow moving or have variable usage. Nobody wants to risk a runout by not having enough product on the truck to replenish the tank. However, always repeating the same order quantity without adjusting for delivery history and transportation costs, lowers your efficiency.
Here is a snapshot of tank delivery efficiency across:
- All tanks
- Keep-full tanks
- Monitored tanks
- Non-monitored tanks
Tank delivery efficiency is the percent of tank capacity you deliver. A 500 gal. tank can take 450 gallons and has a 100-gal safety stock. The target delivery quantity is 350 gals (70%). An average delivery quantity of 250 gallons is a delivery efficiency of only 50%. The best-in-class distributors target 70%.
Bulk distributors face a series of challenges that are not easy to answer without a mobile solution:
- What’s my tank delivery efficiency across all tanks?
- How many tanks do I deliver to (including customers managed)?
- What’s the capacity of each CMI/VMI tank (customer/vendor managed inventory)?
- Which tanks should be monitored based on data?
- Should I replace a tank with a larger/smaller tank for better efficiency?
To address these challenges, a best-in-class tank forecasting solution combines data gathered through a mobile delivery application. By adding tanks at the time of delivery, confirming capacity, if the tank was delivered full, if not full then what % and why, delivery history, stick readings, related tanks with monitors, and related products, you can quickly and accurately build an accurate tank database for forecasting ALL tanks.
Tank forecasting utilizes data analytics to incorporate a tank’s delivery history and key metrics, including:
- Smoothing to weight recent deliveries more than older ones
- Related tanks
- Avg. delivery qty last 12 months
- Avg. delivery qty last 40 days
- Min/Max delivery qty last 12 months and 40 days
- Standard deviation (variance) in delivery quantity in the last 12 months.
Combining tank attributes and data analytics with machine learning provides a significantly better prediction of usage trends.
Smarter tank forecasting increases drop size, reduces miles driven, and increases the truck’s utilized capacity. The statistics shown are a sample from before and after with forecasting:
|Before Tank Forecasting|
• Stops per day = 5.2
• Avg drop size = 180 gal
• Avg delivery days = 17
• Miles driven = 57,994
|After Tank Forecasting|
• Stops per day = 3.8
• Avg drop size = 245 gal
• Avg delivery days = 12
• Miles driven = 41,016
Tank forecasting optimizes delivery frequency and volume, resulting in increased profits on tanks with recurring deliveries. Tank delivery optimization benefits the entire operation by allowing distributors to deliver more orders with your existing fleet.
A 15% increase in delivered volume on 500k/gal. per month saves 200 stops per month and $275k per year.
Implementing tank forecasting is the third step to best-in-class bulk logistics. Tank forecasting enables the other components in our 5-part series to drive logistics efficiency and customer service:
- Route optimization – better routes, centralized dispatch (click for part 1)
- Driver delivery app – paperless, route compliance, driver efficiency, consistent workflows (click for part 2)
- Tank forecasting – order generation for ALL tanks (monitored and non-monitored)
- Inventory control and visibility – track truck inventory, prevent cross fills
- Customer service – email advanced ship notifications, proof of delivery, driver on the way
To improve your delivery efficiency, you need tools to make data-driven logistics decisions.