HIGHER FUEL COSTS:  10 WAYS TO KEEP YOUR BOTTOM LINE UP!

by Sam Boyer

1.      Review (not necessarily cut) the service level for every account.  Start with the establishment of a retailer service policy that sets service levels based on average cases per week for each on-premise and off-premise segment. 

2.      Implement or expand a tel-sell system.  An analysis of your on-premise account segment will reveal that between 5 to 10 percent of your case sales are generated by 40 to 50 percent of your on-premise accounts.  These accounts typically produce less than 5 cases of sales per week.  Consider tel-sell and/or every other week service for these accounts. 

3.      Consider a program that requires all accounts to order a minimum number of cases or pay a small service charge.  This approach eliminates chain stores (those that refuse to pay a service charge) since they should always be able to order more than the minimum.  Where this has been implemented distributors have found that retailers “choose” to order additional product versus paying the service charge.  Downside:  Be on guard for dated product.  Upside:  Retailers tend to go to every other week service; and it’s their decision! 

4.      Review your administrative staffing.  With the automation of previously routine and time consuming tasks the staff needed in today’s environment is not what was needed a few years ago.  A $35,000 investment in new technology/software is a one-time expense, as opposed to having an ongoing expense of a staff member performing the same functions.  

5.      Review your warehouse staffing.  The introduction of shrink wrap machines, step-off forklifts, carts, and information technology enhancements should be indicators that staff levels may need to be reviewed in depth and possibly reduced. 

6.      Do you have too many supervisors?  Review this relationship.  Your suppliers “recommend” certain levels; however, I have found that these “recommendations” do not necessarily increase sales.  They do impact bottom lines.  Other industries have used technology to increase the “direct reports” and reduce the number of supervisors.  Why can’t the beer industry do this? 

7.      Delivery truck loading is one of the most expensive operations in your distributorship.  It is also one of the most ignored since most of it takes place after normal work hours.  Review the staffing and operations.  Are improvements possible?  Are you individually picking and loading each order?  Software programs allow the picking of large individual orders and the “bulk” picking of small orders.  Investigate this; it’s a good opportunity to reduce workload and staffing costs. 

8.      When focusing on fuel costs don’t ignore the cost of gasoline.  If you reduce some low volume account servicing and/or implement tel-sell you should see a reduction in the gasoline expense.  Also, reducing the number of supervisors will reduce the need for vehicles; another opportunity for a reduction in expenses. 

9.      Protect your inventory.  Inventory shrinkage is a totally controllable expense.  Reduce this expense along with controlling out-of-date product and put these precious dollars on your bottom line.