For the past three years, building products distributor BlueLinx has relied on onboard computers to track the whereabouts of two-fifths of its 850 delivery vehicles that handle 70% of its shipments. At first, the purpose of the Qualcomm-supplied GPS devices was to improve driver safety by monitoring speeds and using that information to help train its drivers. But Atlanta-based BlueLinx, which operates from 70-plus locations nationwide, soon realized that this fleet management system also can be a valuable customer service tool. "It allows our salespeople to respond to customers' questions about their deliveries quickly," says Kim Goodrich, BlueLinx's director of supply chain. In about a year it will be even easier for customers to learn about shipments, when BlueLinx opens an Internet portal through which customers will be able to see for themselves the status of their orders.
Upgrading customer service–along with saving time and reducing costs–is driving the application of technologies like GPS (short for global positioning system) to manage dealers' and distributors' fleets and drivers. While some companies are still taking baby steps in this direction, a growing number are embracing fleet management technology as a competitive necessity, especially those with growth ambitions. "Six months ago, we weren't using technology for fleet management that much; now, a lot more so," says John Fox, general manager for Oso Lumber in Arlington, Wash., which started putting Nextel GPS devices into its trucks in January. Oso plans to double its locations, to 14, within five years.
There's still some wariness about whether tracking technology is too expensive or will work with building products
Tracking trucks and drivers isn't a new concept. Parr Lumber in Hillsboro, Ore., has used tracking software since 1984 and conducted its first GPS pilot program a decade ago, says fleet manager Rich Schnell. In 2005, Parr installed a system supplied by CES that includes Motorola equipment that piggybacks off of a truck's two-way radio and allows the yard to stay in touch with the vehicle via radio-tower or satellite signals. Parr installed GPS on 25 of its 100 vehicles; the rest are tracked through dispatch software that, Schnell says, stops at the gate of this dealer's yards.
Bogdan Pavlic, Telargo's CEO, says more companies are being drawn to fleet management hardware and software as costs come down–and as the effectiveness of these systems becomes more apparent. He notes that, by monitoring driver habits–and providing training when bad habits are detected–as well as by tracking truck maintenance, Telargo's GPS tracking system has helped several clients in Europe reduce their drivers' accident rates by up to 30%.
Broader application of this technology in the United States, though, faces obstacles. Some dealers and distributors worry that their drivers will perceive more sophisticated fleet management as spying. For example, Bradco Supply used to track deliveries via a Nextel system called etrace, which transmitted via Java- and GPS-enabled cell phones. But Bradco recently dropped that system, in favor of installing GPS devices directly onto its vehicles, because the old system "was tracking the movement of our drivers more than our trucks," says Tremmel. On the other hand, BlueLinx uses its GPS to monitor whether its drivers are following or violating the company's strict 65-mph limit–even when a road's speed limit is higher. That system also detects drivers' patterns, such as how often they decelerate rapidly. Consequently, "this helps us to train them on safety," says Goodrich.
Some dealers also remain skeptical about fleet management technology because they aren't sure what the payoff will be. "It comes down to return on investment," observes Jim Heitzenrater, equipment manager for Kent, Ohio?based Carter Lumber, which has 650 vehicles on the road serving 200-plus yards and its distribution center. "Would we be more efficient if we used GPS? Yes. Can we do the job without it? Yes." He notes that most of the systems he's seen include text-message alerts, "which would leave us exactly where we are today with cell phones."
Dealers and distributors must choose from an array of fleet management systems whose features, notes Tremmel, can seem awfully alike. Parr Lumber, for one, looked at products from 25 suppliers before going with CES, says Schnell. "This stuff is coming out faster than we can evaluate it," observes Bill McCarthy, fleet manager for ABC Supply, a Beloit, Wis.?based distributor with more than 330 locations nationwide and 4,500-plus vehicles. ABC is testing some tracking programs, but nothing is in use yet, McCarthy says.
The relative costs of these management tools also can be befuddling. Some suppliers charge for their equipment, while others let customers test it for free. Airtime and maintenance fees can run from $20 to $70 per truck per month. Early this year, Robert Bowden, a Marietta, Ga.?based pro dealer, evaluated three competing systems–from Nextel, Skybitz, and GPS Fleet Solutions–whose upfront and long-term costs vary markedly, according to branch manager Mark Cole. (On their Web sites, Skybitz says it charges $450 per truck for its global locating system, plus $10 a month per truck for maintenance; GPS Fleet Solutions promoted a $64.95 a month per truck leasing deal and a tracking system that can be purchased for under $500.)
Selecting the right tracking system is tough enough; getting employees to buy into using it is another matter altogether. A few years ago, Ft. Lauderdale, Fla.?based Causeway Lumber, with four yards and 55 trucks, experimented with GPS, "but we found that it wasn't being used enough," recalls its CFO Dennis Grubbs. Despite that experience, Causeway isn't giving up on this technology and recently began installing dispatch/delivery software that can work with GPS chips installed into drivers' cell phones. That software interfaces with Causeway's order-entry system (Enterprise, now owned by Activant, supplied both), and automates dispatch scheduling that previously was done manually.
R.P. Lumber, of Edwardsville, Ill., depends primarily on the managers of its 42 yards "doing their jobs" to keep its 500-truck fleet rolling. In other words, concedes R.P.'s fleet manager Dan Klopfer, "We're light years behind where we should be" in terms of using fleet management technology. He points out, though, that R.P. must address other priorities first, such as developing a perpetual inventory management system, which Klopfer and others acknowledge is a critical step for any company that wants to combine the management of products and their delivery.
Many dealers, it would seem, are drifting in the same boat as R.P. At BlueLinx, Goodrich observes that the data capture of inbound deliveries by dealers is still in its infancy. And it was only after it had installed a $750,000 operating system in March 2006 that Oso Lumber felt confident enough to begin testing GPS equipment in 30 of its 70 delivery vehicles in January. That operating system, explains Fox, allows his company to log in to any of its seven stores and see the status of an order. A shipping program within that system can link electronically to Nextel's GPS.