Dumping money into delivery

But to Dan the driver's boss, the meter on his truck was running long before he ventured out with route sheet in hand. In fact, when his boss looks out the window, he sometimes thinks he's watching a dump truck full of money leave the loading dock instead of a lightweight pickup carrying a few parts.

Gas for the vehicle, regular and preventive maintenance, insurance and a salary for the driver combine to run up the price of driving that part down the road. But passing this price onto customers is a dangerous task. Charge them too much and they will call the competing WD on the other side of town. Even in more rural areas where there is little, if any, competition, tacking on surcharges is a no-no, according to WDs.

Compton isn't alone. WD and jobber owners and presidents constantly are watching what they're taking in, trying to lower the overhead that comes with delivery. Steve Hoellein, president of Felt Auto Parts Co., a two-stepper in Ogden, Utah, says that "ego accounts," what he calls shops that will call multiple WDs and jobbers and buy from the first to deliver, make watching overhead even trickier and force WDs and jobbers to evaluate whom they deal with.

Delivery hot shots

While some WDs and jobbers are moving away from delivering parts hot shot, most still offer this service. Decker Auto Supply Inc., a two-stepper in Fresno, Calif., is 95 percent hot shot, offering delivery to its service center customer base in 30 minutes or less.

"I think in the case of a two-stepper, we have no choice but to get (delivery) done," says the company's president, Ron Decker. "If you're going to sell that service dealer, you've got to give them the kind of service we give, because competition is fierce."

Decker faces the problem of getting the parts on the road each day and recognizes that not doing so will be a detriment to his business.

"We look at (delivery) as an intricate part of our business, so we treat it that way in that we've got to continually figure out how to do it the best we can and in the most efficient way we can," Decker offers. "A lot of people look at it as an expense and say, 'Oh, let's hold that truck.' But you can't. You're either in it or you're not. At our level, you've got to be in it 120 percent."

Being in it means swallowing the impacts of gas and insurance, two of the most common complaints when looking at the delivery department. Weldon Tidwell, general manager of Auto Parts Co. in Cartersville, Ga., has seen a big hit in his gas budget and knows more is on the way.

"My fuel costs for January were $8,218.46. For March, it was $9,851.91, and that's in three months," he reveals. "Realistically, the first three months of the year are normally slow because of taxes and spring breaks and that stuff. Actually, this summer, I anticipate a $3,000 a month increase over January."

Hoellein says he spent $15,000 more on his fuel bill last year than in the past, which makes him think about delivery on a daily basis. Compton says keeping an eye on prices helps, but is not always the final solution.

"We just try to watch it. We try to organize things in the same direction if possible," he says. "Sometimes that's difficult to do with hot shots."

Ron Cannon, president of CAP Warehouse, a traditional distributor in North Las Vegas, avoids the difficulties of hot shots by delivering to 21 jobbers and some municipal locations. With the majority of deliveries intercompany, little has been changed when it comes to delivery. But he still faces problems others do — namely gas and traffic. By timing the driver's leave time, traffic can be avoided.

"He's out of here probably around 7:30 (a.m.). He's probably on his way back from his last run around 4 or 5 (p.m.), so he might hit a little traffic," Cannon says.

Tracking delivery also means facing costs like inventory efficiency and employee training, either of which can make or break delivery services. Hoellein says a good counter staff is key to trimming costs. He offers the example of one member of his counter staff who has worked his way up from a driver while attending an automotive program at Weber State University. When this man was a newcomer to the industry and learning to deliver parts, according to Hoellein, he never realized the number of questions counterpeople ask just to get the part right the first time.

"That's the difference between a good counterperson in knowing to get the information to get the right part there the first time," Hoellein sums up. "We have to become more efficient internally in order to cut that overhead externally, on our delivery system."

Locating a delivery fix

Companies around the country are applying innovative means to cut down delivery times and distances traveled in an effort to save money. From implementing global positioning system (GPS) units to pulling from secondary education institutions and utilizing training videos, a little bit of research can save costs in the long run. But part of the responsibility does fall on the customers' shoulders.

"I look at our customer base every month, and I look at the dollar purchases of that customer, the new return rate of that customer, my gross profit on that customer," Tidwell explains. " I actually break that down in the new return rate in what it costs me in delivery dollars, and if it gets to the point where I'm not making any money, I just can't deal with that customer any more."

Decker says his group has implemented GPS systems on its fleet of 30 trucks that make roughly 600 deliveries daily and has aligned operations internally.

"In my dispatch area, I have four parts (pullers) and all they do is pull the parts for the tickets printed. Then I have three dispatchers who take the parts once they're pulled and put them into geographic areas so we're not running all over town," Decker says. "We try to limit our stops to no more than four stops per run. Ideally, I'd like it to be three (stops). The faster I can turn a truck, the more parts I can get out. Because if the parts are out too long, then pretty soon I've got 30 trucks out too long."

Compton hasn't gone to using GPS, but he has shaved costs, especially in fuel, by simply organizing trips and communicating with customers.

"We do try to ask our customers, 'How big of a hurry are you in?' right up front," he says. "'Do you need it this second, or can you wait a few minutes?' All of our customers have been really cooperative. Everybody's aware of this fuel cost, and the good people are (understanding)."

Both Decker and Tidwell, with Auto Parts Co., have taken their fleets in new directions, with Decker's fleet composed of Toyota trucks, and compact and energy-efficient vehicles comprising Tidwell's fleet of 44 vehicles.

Finding the good drivers to put behind the wheels of those vehicles is a big undertaking. Hoellein, with Felt Auto Parts, says this is one of the biggest ways to lowering delivery overhead. He draws his drivers from two pools — retirees and students in local high school, secondary and post-secondary automotive programs.

"When you have close to 3,000 students in your area taking an automotive class with the high school, you will have five to 10 that are going to get into the market," he elaborates. "If I can catch them when they're 18, graduating, getting into the market, and offer them a part-time job until they can get into the industry, it gets them learning what and how we operate, which is an advantage to a student in an automotive program."

The students also benefit from the exposure by delivering to service centers and seeing both the parts and repair sides of the business, Hoellein adds. He also has meetings with drivers to discuss their vehicles and the impact of gas prices. Compton has his new drivers go through a video training program NAPA offers before putting them out on the road.

"It covers everything very well, what's expected of the driver, how to take care of the vehicle and so forth," says Compton, who adds he also looks for older drivers to hire. "It's an expense. We find the older drivers take care of the vehicles. We're going away from using deliverymen first and then moving them up to inside salespeople."

Customer relations

And if all these efforts to trim prices aren't enough to lower delivery overhead, surcharges still are an option — albeit one that should be handled with great caution and that few people are taking on. CAP Warehouse has fuel surcharges it uses with drivers heading out of its warehouse into Arizona, Utah and northern Nevada.

"We use the AAA Web site. When it moves, then we move and we have a fuel surcharge that we pay them," Cannon says. "We have not done one with our stores because they're our customers."

Before tacking on any extra costs, WDs and jobbers recommend evaluating customers and making sure you're making the most out of deliveries.

"I think the people pushing it so far and (delivering hot shot) long distances are going to realize the downfall of that eventually," Compton says. "And I think those of us who are very careful about to whom and how we deliver will survive. It's just that simple. You simply can't (deliver hot shot) over long distances."

Hoellein says watching volume delivered also will boost a company. And while Decker considers volume delivered, he also looks at streamlining volume inside as a way to save money, especially since more volume is stored at WDs and jobbers.

"(Delivery is) going to get more intense before it's going to back off. Bottom line, this is all about service to this guy," he says. "They want to stock less and they depend on us more to have it. They want to stock less, so I've got to have a bigger inventory to get it to them in the 30 minutes they want. It's just part of the game. If you want to be a good two-stepper, you've got to be there big time."

Hoellein stresses the importance of working with customers through experienced counter personnel. At his location, every delivery starts with a phone call to his company, and the person on the phone assesses who the caller is and what they want. They look at if it is a good customer, one who isn't just calling all of the distributors in the area to see who will get the part out first.

"We do not need the practice in the industry after all these years. I don't need the practice to deliver you parts. I realize time is of the essence, but we're the old tradition," he notes. "We understand their situation. I think the account is what determines a lot of your overhead and what determines if you deliver to them or not."

But delivery will be around for the long term, these leaders all surmise. At what price, however, will be the variable.

"I think it'll always be around," Tidwell says. "But at some point in time, everybody's going to decide that if we keep our doors open, we're going to have to pass more of the increases on."