What is ReferenceStak?

Reference Stak is a resource for StakUp customers to find relevant information on any related EPI (Essential Performance Indicator) they may need. On a monthly basis when data is submitted by the trucking company representative to StakUp, the customer will immediately receive a report in the form of a dashboard that will reveal the company’s ranking in any given number of EPI categories.

After a review of the EPI dashboard the customer may find that they are in acceptable quartiles in the majority of the measurable EPI’s, which will offer a level of confidence. Where they are likely to focus is on EPI’s that they are not in the upper quartile of, in this case StakUp will show them where they are weak, and what the margin capture opportunity is if they were to be come best in class in the EPI.

After the report has been digested the customer may feel the need to open Reference Stak to look for help and guidance on how to move up in the EPI they have decided to concentrate on. For instance if your company was to find out that your cost of fuel was in a lower percentile you may wish to concentrate on improving that number. You might start by looking up relevant documents through Knowledge Stak, in this case you might find that the document below is one that from all available resource on the topic of fuel cost that will help you on your path to being best in class in this EPI.

FUEL MANAGEMENT INITIATIVE

The industry-operating environment is characterized by rate pressure because of the fragmented nature of the trucking industry, increased rail competition, the availability of low-priced late model equipment.

As expected, the single most important reason for developing and instituting a FMI is that fuel price increases that has been imposed on the trucking industry and has been on a steady incline since the 2001 period. The price of diesel for the trucking industry is a very volatile variable to manage. Moreover, fuel price increases have an impact on margins since carriers cannot always pass on such increased to customers in the form of fuel surcharges.

Because of the intense competitive conditions in the North American trucking industry, the company chose to develop and implement a FMI project and plan. The overall objective of the FMI is to facilitate the lowest overall cost of fuel purchasing and use.

Once the project team has been put in place a fuel management-planning document was developed for implementation. The expected results of the FMI are the following:

• The lowest possible purchasing cost of fuel
• The lowest possible per mile running cost of fuel
• Selection of preferred on-road fuel suppliers
• Selection of preferred yard fuel suppliers
• Efficient administration of fuel purchasing and payment transactions
• An effective training program for drivers, owner-operators and associated staff
• An effective performance management process for fuel purchasing and consumption

To ensure that the FMI plan and its goals are well understood throughout the company, a communications plan should be developed with frequent updates given to all employees of the company. Various communications tools are used to ensure the FMI is embraced including newsletters, training sessions and one-on-one management/employee meetings.

Key Components of the FMI

Senior Management Buy-in

The FMI must have senior management buy-in and sponsorship at the highest levels. For example, the Chief Operating Officer (COO) is the FMI’s sponsor, while the Chief Executive Officer (CEO) is the executive sponsor. (EXAMPLE)

In addition to the COO and CEO, the FMI project team includes representatives from every area in the company including finance, maintenance, human resources, and operations. As part of the FMI, ____________ might consider creating a new position to be the company’s resource on all aspects concerning the fuel procurement and management. This resource designated as a fuel clerk is also a member of the FMI project team.

A Focus on the Driver

A cornerstone of the FMI at ____________ is driver training and development. The company believes that a human resources management policy that emphasizes professionalism and provides drivers with a career path will result in better driver retention, and lower fuel consumption and costs. In addition, every manager within the company is linked to the issue of driver retention in terms of their own performance measurement and evaluation.

Integral to proactive human resource management approach is driver training. ___________ Pays for both the training and wages while on training for drivers, which results in high buy-in and participation rates by drivers. The company has company trainer, which will be responsible for all training including fuel management training.

Training in such areas as defensive driving along with idling, speed and progressive shifting policies will keep drivers current and help reduce fuel costs. The company also should have the drivers go through Natural Resources Canada FleetSmart program to give additional insights into the their role in fuel management and reducing fuel consumption.

A behaviour change amongst drivers towards fuel is necessary and should take place once the company announces that it will be instituting a FMI. This should also result in less wear and tear maintenance costs, better breaking along with more accident-free drivers. Drivers will be less complacent and more aware when it comes to fuel consumption after receiving the training.

Before receiving the training drivers will wait within the yard and at customer yards with the engines idling. Post-training, the drivers will turn their trucks off since they have made a linkage between their wages and the amounts of fuel that is saved.

As part of its FMI strategy, __________________ should also review the whole area of Driver Incentive programs at the company. As part of this review and policy development the company should formulate a driver incentive program that links compensation and bonuses to accident prevention/records, safety, maintenance and fuel consumption. The driver incentive policy should be a performance-based tool that clearly outlines expectations and accountabilities.

Company Speed Policy

To ensure efficient engine performance and minimal fuel burn, __________________ should institute a speed policy to be followed by all drivers. The speed policy is 62-mph maximum speed for cruise with a maximum of 65 mph with drivers permitted to drive between 62 and 65 mph only 10% of the time.

Company Idling Policy

Another key element and fuel saving component of the FMI is the company’s idling policy. The company’s objective should be to have a maximum of 10% of the fleet’s total operating time to be idling. The company has two idling categories – controllable and non-controllable. Controllable idling is where a truck is stopped at a shipper. Non-controllable is where for example the truck is stopped at a red light in city traffic.

Using electronic control module (ECM) downloads the company can monitor excessive vehicle idling along with which drivers are involved. The information is then used to change daily habits of the driver and recommend corrective measures.

Fuel Purchasing Policy

As part of managing the on-road fuel process better the company should institute a fuel purchasing policy. The fuel management policy covers the bulk purchase of fuel on-site at the company’s yard and on the road purchasing.

By having a yard or terminal fuel purchasing system, ___________________ will have an effective cost-saving strategy for its fleet. Buying yard fuel permits a carrier to save a fuel retailer’s pumping fee and negotiate volume-based discounts. In general, a trucking company can purchase terminal fuel a lower rate than at truck stop.

On the road, ________________ should try to reap additional fuel volume buying discounts by pooling its fuel purchases at select truck stops. For example, at independently owned truck stops a carrier can negotiate discounts or cost-plus agreements in exchange for volume guarantees.

By reducing the number of fuel suppliers with which the company deals, fuel costs can be better managed and integrated into the accounting system.

Minimize Out-of-Route Miles

Another fuel management strategy at ____________________ should include implementing and out of route miles policy for drivers. This entails driver-load-matching optimization, which minimizes empty miles while protecting the need for a driver to get home on a regular basis.

Technology: Fuel Smart ECM Downloads

With a standardized fleet of electronic engines ___________________ is able to use the ECM during the preventative maintenance process. How this works is that when a regular preventative maintenance check is performed on a tractor, the technician performing the service will download the ECM to the computer located in the service area. One hard copy will be printed and placed in the tractor for the driver’s review.

The fuel clerk will also review the down loads daily and report any exceptions to the company’s policies. The appropriate manager is informed of the exceptions and will be required to follow-up. The fuel clerk also retains a file on each tractor and produces quarterly a report showing the year-to-date performance of each power unit.

In general, there are six key measures that will be tracked and reported on:

• Total maximum idle time 15% (annual average)
• Stop idle time 10% (annual average)
• Maximum road speed – 65 mph
• Road speeds between 63 – 65 mph, a maximum 10% of total drive per down load
• Coasting time 0%
• Hard break counts – 0 per down load
• RPM above 1800 rpm

FMI – Performance Measures and Monitoring

FMI is characterized by continuous measuring and monitoring of the key variables that make up the initiative. This includes the measures of idling, RPM, maintenance, speed, miles/gallon (fuel economy), and driver habits. The monitoring is closely linked to corrective action such as additional driver training and coaching to help in fuel savings.

All measures should be compared to the baseline variables established in a baseline quarter of analysis – ___ Quarter 201_. For example, the FMI has had a direct investment of $? In terms of managers’ time and the hiring of the fuel management clerk (including benefits).

The return on this investment (ROI) for example, can be measured in terms of the number of liters of fuel saved as well as maintenance savings. Guidelines for the measurements and monitoring come from the ECM downloads and the cost center managers from fuel and maintenance.

Acceptance of the FMI Program

Drivers at _______________ should embrace the FMI program with great interest. This level of high interest and commitment on the part of drivers is a result of their need for a tool to enhance and improve their performance while driving.

The Maintenance area at _________________ should also believe that the company FMI is a worthwhile initiative since it gives them an additional analytical tool with which to work.

Management has played a role in ensuring acceptance to the _______________ FMI with continuous communications with all FMI team members and undertaking a “management by walking around

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