roi synopsis

8/19/2019 Roi Synopsis

1/17

Delivery Management

Technology & Services

for

Retail PetroleumPropane, Fuel Oil Delivery

The Value PropositionDriving your Bottom ine

This !ocument !escri"es ho# Vertra$%s current customersare realiing the real value of SmartDrops an! actually

recogniing true return on their investment

'o


2/17

Value Proposition( Driving your Bottomine

March 2006

Mar 2006 Strictly Confidential – do not distribute without prior permission from Vertrax Management 2 of 1


3/17


Ta"le of )ontent

1! Vertrax!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!"1!1 #ur $ocused %ndustry& 'etail (etroleum!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!"1!2 )he *enefits +e #ffer!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!"

2! ,n %ndustry in Change!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!-

"! .ri/ing the *ottom ine!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!6! %ncreased (rofits through %mpro/ed .eli/ery fficiencies!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

!1 'eduction in .eli/ery Costs due to 'educed Miles and 'educed .ri/ing )ime!!!!!!!!!!!!!!!!!!!!!!!!!2 %ncreased 3ross Margin from %ncreased 3allons .eli/ered to the Same ,ccount *ase!!!!!!!!! !!!

-! %ncreased (rofits through %mpro/ed #perations!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!4-!1 %ncreased 3ross Margin due to %ncreased 3allons .eli/ered to an xpanded ,ccount *ase!!!! !4-!2 'educed .eli/ery Costs due to .eli/ering to the ,ccount *ase with a 'educed $leet!!!!!!!!! !!!10

6! %ncremental Value .ri/en by #ther *enefits!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!11! Case Study!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!12

!1 Summary!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!12!2 'eduction in .eli/ery Costs due to 'educed Miles and 'educed .ri/ing )ime!!!!!!!!!!!!!!!!!!!!!!1"!" %ncreased 3ross Margin from %ncreased 3allons deli/ered to the same account base!!!!!!!!!!!!1

Mar 2006 Strictly Confidential – do not distribute without prior permission from Vertrax Management " of 1


4/17


*+ Vertra$

Vertrax, headquartered in New Haven, CT, is the leading provider of uniqueDelivery Management solutions to the Retail Petroleum industr!"ar#eters of propane $ ho"e heating oil%& Vertrax's custo"ers reportsigni(cant incre"ental )otto" line pro(ts !*+,000 to *0,000- per delivervehicle per ear% as a result of reducing the costs per deliver ) "ore than.0/& This custo"er proven and co"pelling Value roposition is derived )1

perational savings largel fro" less "iles driven !reduced gas3diesel,"aintenance $ repair% and reduced driver hours !reducing regular andoverti"e hourl pa%4 and

2& 5ncreasing the nu")er of deliveries and their volu"e !driving increased

gross pro(t%&

eliver Manage"ent is the logistical planning, intelligent sequencing, opti"alrouting, scheduling and "onitoring of propane and heating oil residentialdeliveries& SmartDrops is our 7agship product for propane and heating oilresidential deliver, and soon for service technicians& rders are auto"aticalldownloaded fro" the )ac# o8ce 9: sste" and visuall displaed on digital"aps& These "aps allow the end;user to "anipulate the views ) ordercharacteristics !volu"e, urgenc, deliver date, tpe, etc% and geograph!street level, certain locations,


5/17


dna"ics such as volatile co""odit prices !e&g& heating oil and propane%causing varia)le "argins, higher deliver costs !vehicle fuel, etc% and risinginsurance and health care costs are also driving strong interest in Vertrax'sproducts&

*+- The Bene.ts /e O0er

Vertrax's custo"ers (nd a variet of co"pelling )ene(ts1 % fewer "iles drivenresulting in reduced "aintenance and repair, decreased fuel costs anddecreased driver overti"e4 2% increased gallons delivered and incre"entalgross pro(t with


6/17




7/17


-+ 2n n!ustry in )hange

The retail propane and oil industr is undergoing considera)le change due tovolatile co""odit pricing leading to unpredicta)le gross "argin andincreased co"plexities in running the )usiness& These new challenges arecoupled with the historical issues that have plagued the industr for "anears, na"el low productivit and e8cienc and escalating deliver costs&

The general lac# of technolog to i"prove e8cienc has caused anunfavora)le environ"ent in which1

Kar too "an assets are used to co"plete dail wor# resulting in

ver low :?9 !:eturn on ?ssets 9"ploed%& ue to ine8ciencies,"ost co"panies are forced to over;forecast their vehicle capacit todeal with seasonal Fworst caseG scenarios, there) Fover )uildingG

(xed expenses against varia)le revenues&

5t is di8cult to hold speci(c e"ploees accounta)le for

productivit&

Measuring perfor"ance )ench"ar#s on assets or e"ploees is

nonexistent&

Vehicles drive far too "an "iles in the context of actual

deliveries&

There is an overa)undance of paper )eing pushed ) clerical

sta@ers and an overa)undance of )ac# o8ce wor# )eing done to"igrate (eld data to the host 9: sste"&

Co""unication )etween the vehicles and the dispatcher is

unrelia)le&

There is no Freal ti"eG "onitoring or control of deliver and

service vehicles&

Theft of ti"e is a "aJor concern&

This re"ainder of this docu"ent descri)es how Vertrax's current custo"ers arereali


8/17


3+ Driving the Bottom ine

The Value roposition of Vertrax's eliver Manage"ent products is derived intwo pri"ar was, na"el1

*+ ncrease! Pro.ts through mprove! Delivery45ciencies, namely1

:eduction in eliver Costs due to reduced "iles and driving

ti"e, driven ) reduced Truc# Costs such as diesel, gas, "aintenance$ repair and reduced river Costs with reduced overti"e hours&

5ncreased Lross Margin fro" increased gallons delivered to the

sa"e account )ase4 reali


9/17


=+ ncrease! Pro.ts through mprove! Delivery

45ciencies

=+* Re!uction in Delivery )osts !ue to Re!uce! Miles an!Re!uce! Driving Time

>ogicall ) driving tighter routes, drivers should drive less "iles and, all)eing equal, will spend less ti"e )ehind the wheel& rivers will alsospend less ti"e !approxi"atel .0 "inutes a da% ) )eing providedpre;)uilt ="artrops routes rather than spending ti"e )uilding theirown route fro" a non;sequenced set of tic#ets si"pl pulled fro" the)ac# o8ce 3 degree da sste" and divided into driver tic#et piles )the dispatcher& 5n this case, the cost of deliver would decrease since

there is less fuel $ diesel truc# costs and less "aintenance $ repaircosts, and less driver hours cost, etc&

Clearl, the industr accepted productivit "etric of 1allons per Mile#ill increase and the industr accepted cost "etrics of )ost perDrop, )ost per 1allon Delivere! or )ost per Mile Driven #ill!ecrease&

The actual reporting of the "ileage and hours driven nu")ers "a notshow an overall decrease if as a result of "ore ti"e, drivers are )eingas#ed to do extra drops per da "eaning additional gallons are )eingdelivered& 5n fact this is "ore li#el a scenario and the )ene(t of this is

detailed )elow& ?nother wa of saing it is that depending on what"anage"ent does with reduced driving ti"e will actuall dictate actualreported "iles and driver hours& 5f incre"ental drops are given to thedrivers, "iles and hours driven "an increase, )ut these costs would )e"ore than o@set ) the "argin on the additional gallons delivered&

=+- ncrease! 1ross Margin from ncrease! 1allons Delivere! tothe Same 2ccount Base

="artrops can greatl i"prove eliveries per a ) providing "ore

e8cient and intelligent routing& ?s descri)ed a)ove, this leads to lessFwindshieldG ti"e and less "iles driven& D logical extension, "oredeliveries can )e "ade in the sa"e ti"e interval& The "ore deliveriesthat are "ade per "ile, the lower the relative cost per deliver&

D focusing on urgenc, geograph, truc# inventor, and"apping3routing logistics, a dispatcher can )uild signi(cantl "oree8cient routes& ="artrops uses street level "apping which opti"i


10/17


)oundaries i"posed ) F


11/17


:educing run outs is also a factor, if there is "ore ti"e to "a#edeliveries, again possi)l raising overall volu"e delivered&



12/17


>+ ncrease! Pro.ts through mprove! Operations

>+* ncrease! 1ross Margin !ue to ncrease! 1allons Delivere!to an 4$pan!e! 2ccount Base

The Value roposition "odel shows that the average custo"er deploingVertrax's eliver Manage"ent products will increase deliver capacit!i&e& volu"e of product delivered% ) at least ./& This expectation is)ased on the historical experience of our custo"er )ase related toe"ergenc calls, will;call "anage"ent, targeted "ar#eting, andcusto"er service&

:etail ropane and Heating il distri)utors see# to grow ) ./ to +/ per

ear& This is acco"plished through "ar#eting to new custo"ers andservicing new custo"er prospects that are converted to long;ter"custo"ers& The pri"ar )arriers to this strateg are usuall through aretailer distri)utor's ina)ilit to stretch their existing capacit toacco""odate incre"ental custo"ers and their ina)ilit to provide alevel of custo"er service that "itigates account attrition& ?side fro" thepro)le"s resulting fro" integrating new custo"ers, retailers havehistoricall su@ered signi(cant custo"er attrition during the pea#season due to inept handling of run;outs, earl3late deliveries, ande"ergenc service calls& ?pproxi"atel 0/ of this attrition results fro"poor service qualit& ?t a custo"er acquisition cost of *00, retailersstrive to (nd was to #eep their custo"ers&

Vertrax's eliver Manage"ent products ena)le our custo"ers to growtheir )usiness and retain custo"ers as follows1 Smart Mar7eting1 Bsing ="artrops, focused "ar#eting plans

)ased on geo;coded routes ena)le retailers to target households andco""ercial esta)lish"ents that can )e easil integrated into existingroutes& This "eans that new custo"ers can )e serviced e8cientlwithout diluting overall service qualit& The net result is that a retailercan avoid the attrition that results when the expanded custo"er)ase, while not stretching capacit, still causes ine8cient routing andreduced service qualit& ?dditionall, increasing custo"er densitwithin a routes drives down the deliver cost of a co"pan's current

)usiness ) increasing the overall stops per "ile&

/ill?)all Management1 uring the pea# season, retailers receive

calls that require i""ediate deliveries or e"ergenc service&Decause capacit is alread stretched and the retailer lac#s the toolsto handle will;call situations on a dna"ic )asis during the da, anchanges in routing can have a signi(cant cascading e@ect on theexisting custo"er )ase& =ince retailers are operating defensivelduring the pea# season to service and retain existing custo"ers, theoften turn down call;in custo"ers that could otherwise )e converted



13/17


into long;ter" custo"ers& eploing SmartDrops allows retailers torespond "ore quic#l to these situations without i"pacting overallqualit of service&

mprove! Service @uality( uring the pea# season when deliver

resources are stretched, retailers tpicall experience run;outs ande"ergenc service calls the cannot handle, resulting in custo"erattrition& Through the deplo"ent of ="artrops and ="artTrax "oree8cient routes and the a)ilit to handle dna"ic routing during theda for )oth product deliver and service calls, these Fred alertGsituations can )e handled pro;activel or su)stantiall eli"inated&?dditionall, ="artrops and ="artTrax can )e networ#ed to all"e")ers of a client's Custo"er =ervice tea" there) ena)ling the"to "ore precisel predict arrival ti"es for custo"ers waiting for

deliver or service&

Dased on industr experience, Vertrax "anage"ent )elieves that eachone of these )ene(ts alone can help our custo"ers reali


14/17


A+ ncremental Value Driven "y Other Bene.ts

Kro" an overall operational perspective, additional :5 can )e reali


15/17



16/17



17/17


roi synopsis

Documents