5 Tips to Minimize the Impact of Rising Fuel Costs in Field Service. Copyright

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1 5 Tips to Minimize the Impact of Rising Fuel Costs in Field Service Copyright Copyright 2013 No part of this re Technologies Ltd. All rights reserved. may be copied without the express permission of: The infor contained herein does not a warranty of any kind. assumes no liability for losses incurred as a result of infor contained herein. re Technologies Ltd. re Technologies Ltd. reserves the right to revise this and make changes without re Technologies Ltd.

2 Content 1. Burning less gas on your planned routes Planning your routes to burn less gas Driving less, doing more Changing the rules of the game

3 1. Burning less gas on your planned routes Since early 2009 the cost of fuel has doubled, with no reprieve in sight. For a typical service organization, this could result in additional annual costs of $2,500 per vehicle; bringing today s cost to $5,000 per vehicle per year. This has made service managers acutely aware of the need to control the service fleet s fuel costs, and many ideas on how to reduce fuel consumption, as well as get fuel at lower costs, have emerged. Reducing fuel consumption involves strategies such as regular servicing of the vehicle engine and tires; training drivers to avoid fuel-wasting behaviors (e.g., excessive idling, aggressive driving); minimizing vehicle aerodynamic drag; and, if the financial analysis justifies it, switching to more energy-efficient vehicles. The United States Department of Energy has dedicated a Web site ( to describing these strategies and their benefits. The benefits may be surprising to some: replacing a clogged air filter can improve gas mileage by as much as 10 percent, not to mention extend engine life; and aggressive driving (speeding, rapid acceleration and braking) can lower gas mileage by 33 percent at highway speeds and by 5 percent around town. Reducing fuel costs involves buying gas where it is cheaper. For the individual consumer, numerous Web sites have sprung up to help find the nearest cheap gas station. In the United States, drivers can locate some of these sites on the site. For corporations, it is possible to negotiate with specific gas station chains and instruct drivers to fill up only at those stations. Managers of commercial fleets are also interested in finding out whether their drivers use the vehicles in the most fuel-efficient manner: Do they take efficient routes between their assigned stops? Do they make unauthorized side trips? Some commercial fleets have installed location-tracking systems to answer these questions, typically based on global positioning system (GPS) receivers in the vehicle or in the driver s handset that report the vehicle s location via cellular communications. Such solutions, often listed under the categories of Automatic Vehicle Location (AVL) and fleet management, also have additional benefits: They create incentives for efficient driving behaviors (e.g., avoiding speeding and excessive engine idling), thereby contributing to workforce security, achieving better visibility of workforce location and using it to increase responsiveness to urgent customer calls and more. They can also help drivers take the best routes by delivering turn-by-turn driving guidance, as well as maps, to the mobile worker. 2. Planning your routes to burn less gas All of the above approaches to minimizing fuel usage are practical and beneficial. However, they all assume that the actual route for the mobile worker is a given. We are told that the driver must stop at a specific list of locations in a specified sequence, and we look for a way to use as little fuel as possible while doing so. This brings up the question of whether we could plan each individual route in such a way that minimal fuel usage is the first priority, not merely an ancillary consideration. What if we were to decide which vehicle should take which tasks, in which order,using fuel economy as the guideline? This wider perspective would ask whether we can move from managing fuel costs to managing overall travel by doing the right things, with the right people, at the right time. The value of this plan can be much higher than any of the previously mentioned strategies. It not only reduces cost per mile driven, it actually reduces the number of miles driven. While it s true that the total mileage may be reduced by a few percentage points by reducing unauthorized trips and by helping drivers pick short routes, making a better assignment of tasks to mobile workers can reduce travel by much more than that often 20 percent or more. The rest of this article will describe some of the opportunities created by the shift from burning less gas on your planned routes to planning your routes to burn less gas. 3. Creating an efficient schedule Imagine that you re in charge of a team of several hundred mobile workers. To make this more concrete, let s say these are technicians installing and maintaining telecommunications equipment, including cellular towers, long-distance cables, office telephony and home connections (if you prefer, replace this scenario with workforces of insurance adjusters, field service engineers for office equipment, mobile sales persons, etc.) At any given moment, you have a long 3

4 list of tasks for your workforce to accomplish. Each of these tasks needs to be performed at a certain location, requires some specific skills (since not every technician is trained or authorized to perform every type of task) and may require some parts and tools. Maybe most important, each task has a specified time window within which it must be performed. Some tasks are urgent: someone must be present and on location within at most a couple of hours from the time the issue is reported. At the other extreme, some tasks may be set for any time in the next 30 days or more periodic inspections and maintenance, for example. In between these extremes, we may find tasks for which appointments have been set for example, committing to the end-customer that the technician will arrive on site between, say, eight o clock and noon. Taking these into account, a correct schedule is one in which all tasks are performed within the required time window by technicians with the right skills, spare parts and tools. In most real-life situations there are still more aspects to a correct schedule, such as the dependency of some tasks on others ( we must do A before we do B ), the need to assign more than one technician to some tasks, matching the assigned technician to the needs of a specific location (entry authorization) and more. However, for the purposes of this discussion, let s focus on the meaning of getting there within the required time window. Obviously, to comply with this requirement we must take travel time into account: if I finish my first task by nine thirty and my next task is at ten o clock, I must be able to drive between these locations in under 30 minutes. A correct schedule is only the beginning: some correct schedules are much better than others. The quality of a schedule depends on many factors, but very often a major factor is the total drive distance dictated by the schedule. If we can create an efficient schedule where total mileage is minimized, we ll be making substantial savings on fuel costs. Let s also remember that creating an efficient schedule is not enough: various unplanned events will occur throughout the day, such as the addition or cancellation of tasks, technicians having to stop working before their shifts are done and tasks taking more time than anticipated. To keep the schedule both correct and efficient, it must be continually maintained and adjusted as these events occur. Efficient schedules have many benefits. Some of these are increased customer satisfaction, reduced costs and reduced effort wasted on battling unexpected events and customer complaints. Given today s oil prices, one of these benefits has received increasing attention: savings on fuel consumption. These savings affect a company s bottom line directly and significantly. It s also encouraging to consider the reduction of emissions and environmental impact, which is always beneficial to the planet and is sometimes required by government regulations. There s yet another financial aspect to cutting down on to total travel. When you travel less, you have more time for actual work what some technicians call wrench time. The adoption of efficient scheduling often creates opportunities to squeeze more tasks into each technician s day. If we assume that the completion of each such task is worth $100, then an organization with 1000 engineers will gain about $2 million in one year if each engineer can get even one more task done each day. Following are some examples of how such savings may be achieved. 4. Driving less, doing more Industrial-strength automated schedule and dispatch solutions use complex business considerations and have sophisticated mathematical optimization engines. While these are necessary to leverage the full power of efficient scheduling, the following simple examples will serve to show how such optimization reduces fuel costs. Technician B Customer Technician A Figure 1. Linear distances: which technician is closer? Consider Figure 1. All else being equal, which technician should we dispatch to the customer? It seems clear that Technician A is closest. 4

5 However, Figure 1 does not tell the whole story. Figure 2 shows the same locations on a map. Technician A would have to drive a long way to the northwest in order to get on the M5 going northeast, then cross the bridge and drive southeast to the point that seemed in Figure 1 to be just a short drive to the north. Technician B Judging by Figure 3, it seems reasonable to assign task 2 to Technician 1 and task 1 to Technician 2. This way, the load is shared across the available workforce and the total travel distance is low. Figure 4 shows the routes both technicians would need to travel to reach the location of the required tasks. Now it becomes clear that if Technician 1 is assigned to task 2, it costs us almost no extra travel to assign task 1 to the same technician. The solution that previously seemed attractive is now revealed to require substantially more travel. In this case, we re better off assigning Technician 1 to both tasks and finding other tasks for Technician 2 to perform. Customer Technician A HB2 Figure 2. Street-Level Routing: which technician is closer? Granted, not all points have a river flowing between them. But there are many types of such geographic obstacles, including slow-traffic urban areas and the necessity to cross a fast highway by traveling to the nearest overpass. This implies that most schedules created without considering street-level routing (SLR) will have quite a few such significant obstacles within them. Each obstacle translates into missed appointments for the customer waiting beyond that obstacle and probably for all other customers scheduled on this technician s route for the remainder of the day. In the next example, shown in Figure 3, we have two technicians, imaginatively named Technician 1 and Technician 2, starting the day at home bases HB1 and HB2 respectively. HB2 2 HB1 Figure 3. Linear Distance: how to assign tasks 1 and 2? 1 2 HB1 Figure 4. Street-Level Routing: how to assign tasks 1 and 2? The opportunities for such travel improvements don t stop at planning a single day at a time. For example, suppose that the task load has a large proportion of long-term tasks such as periodic maintenance and inspection tasks, which can be scheduled any time within a 30-day period. In that case, a good schedule could have each technician concentrate on completing long-term tasks in a specific neighborhood for each day (leading to short travel) and could switch the technicians to another area each day. While the above examples are necessarily simplified, they serve to demonstrate both the value of deciding which technician should be assigned to which tasks and the value of accurate routing using street-level information. This explains the reasoning behind a recent Aberdeen Group report, which stated: Mapping and route optimization functionality should incorporate street-level routing and GIS (geographic information system) or GPS (global positioning system) data when routing technicians to job sites in order to minimize 1 5

6 travel time. 5. Changing the rules of the game Saving on mileage is not only about planning efficient routes. Once you start examining service processes and looking for the impact of these processes on travel and on fuel consumption, you may find opportunities for changing the rules. Sometimes the greatest factors in travel and fuel waste are not related to planning routes but to making sure that the task can be completed by the technician dispatched to it. Whenever a task isn t completed, the result is the dreaded repeat visit. Customers dread it because they have to wait that much longer for their problem to be solved and must wait at home yet again for the technician. Managers dread it because such visits increase the mileage well beyond the expected costs. The calculation is brutally simple: If 5 percent of your tasks aren t completed on the first site visit and therefore generate repeat visits, you re driving 5 percent more miles than you should. And, much worse, you re now completing 5 percent fewer new tasks than you could have accomplished. We have to accept that repeat visits cannot be completely abolished, but given this calculation, a gain of just one percentage point would translate into substantial improvements in customer satisfaction and your bottom line. How do you avoid repeat visits? By paying close attention to their causes and changing your organization s processes to reduce the impact of common sources. Using the Pareto analysis process, you may find that 80 percent of repeat visits are due to only a few types of causes. You can then devise measures to address these. Common problems include dispatching a technician with the wrong skills (possibly because the types of equipment at the site weren t considered by the dispatch process); lack of spare parts or tools required for the job (which might be addressed by improved planning of on-van inventory, better last-mile logistics and/or inserting a diagnostics step computer-assisted or not before the dispatch); the customer not being at home at the time the technician arrives (which may be your fault caused by late arrival due to inefficient scheduling or may be customer s fault, which may be reduced by calling ahead); etc. The combination of AVL (Automatic Vehicle Location) and route optimization creates new ways of saving on travel. If AVL by itself tells you where each member of your workforce is, the combination of AVL and efficient real-time routing lets you know, with unprecedented accuracy, where each member should go next. As new information comes in traffic delays, canceled jobs, emergency calls, technician availability using accurate location information can save the day. What would otherwise have devolved into an incident involving wasted fuel and dissatisfied customers now becomes a smooth, all in a day s work handling of unforeseen situations. Looking beyond the tactical planning angle, we find a rich source of mileage savings. Imagine that as a regional manager you wake up one day to discover that you have too much work to be completed today for your stable of technicians. What do you do? Often you ll call managers of neighboring regions to check if they have excess capacity. If so, they may assign some of your region s workload to their technicians. Problem solved? Yes, since meeting customer expectations is a top goal of most service organizations. But driving from other regions surely leads to more mileage than your normal average. What if you could predict this situation days or weeks in advance, using forecasting based on statistical models, seasonal fluctuations and input from marketing and sales (e.g., a new deal offered on some products will lead to a higher rate of installations)? You could then apply these predictions to make sure you have just enough capacity in each region for each task type, preventing costly discrepancies. Actions you could take to fit capacity to demand include managing overtime, training and vacations; training and certification; temporary relocations; and negotiating with subcontractors to take up excess demand. There are also measures that may be taken to fit demand to capacity. You do not need to passively wait for work orders to come in. Demand may be controlled through measures such as managing appointment-booking preferences (so that you don t book more appointments for a day that s predicted to be busy), scheduling of periodic and preventive maintenance tasks to less-busy days and negotiating with your marketing and sales department to avoid unmanageable spikes in demand. These capacity-management and demand-management measures result in many benefits, including customer satisfaction, workforce satisfaction, reduction in work-intensive and error-prone crisis management and of course reduction of total travel. Another innovative opportunity to change the rules in order to cut on travel time is the idea Richard Bach wrote about in Jonathan Livingston Seagull: Perfect speed is being there. In today s world of increasing connectivity, there are opportunities for remote monitoring creating 6

7 a communications link between the equipment being serviced and the service center in order to transmit equipment status and diagnostic measures. Such monitoring may be able to prevent problems or remotely guide people in how to resolve problems that do occur. In these cases, the dispatch may be avoided. No driving means no fuel consumption, after all. In other cases, remote monitoring may detect an evolving situation that might cause a problem if allowed to develop. This replaces an urgent call with a task that may be scheduled any time within the next few days, when technicians are working on nearby tasks. This solution requires minimal travel. Even when the problem gives no prior warning, remote diagnosis may determine the required parts, thus reducing the probability of a repeat visit. determined the least expensive source, as described above, combine this information with efficient scheduling, so that when your vehicle needs more gas, the planned route includes a stop at a station that s not only cheap, it adds almost no extra mileage. Again, this saves not just money but also its equivalent time. All in all, when you embark on a journey toward saving fuel costs, you may find yourself contemplating many potential improvements that contribute to additional key performance indicators (KPIs). This should not be surprising: time spent driving is time spent away from the sites where the work gets done. Any measure taken towards reducing drive time will not only affect your gas expenses, it will also increase time spent on real work. After exploiting all the savings created by efficient scheduling, you will still need to drive, and you will still need to fill up at the gas station. Once you ve 7

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