Lumberyards are basically in the business of distribution and shipping. It’s not only the greatest value we offer, it’s also our biggest variable expense. We only make money when our trucks are out making deliveries. We can’t make deliveries without accruing miles on our trucks, and we aren’t accruing miles on our trucks when they aren’t moving.
Current market conditions mean an increased opportunity for growth, and delivery has become our industry’s major bottleneck. A knee-jerk response is often to buy/rent more trucks and hire more drivers without the real awareness of how often our current fleet is underutilized. I learned this firsthand at my time with Zeeland Lumber and Supply in Zeeland, Michigan. We experienced rapid growth and all the challenges associated with it, including meeting an increasing order log demand. We had multiple yards with different types of logistical challenges, and we knew we had an untapped potential to get more out of our fleet. Other companies had taken on this challenge, and we heard of them dropping average turnarounds to a tight 18-23 minutes. We didn’t know what our average turnaround was back then, but we struggled to find any single turnaround to clock that fast, so we embarked on our own journey of improvement.
We consistently heard that the “truck turnaround guru” in our industry was Scott Morrison, so we hired him to get us started. During his first visit we immediately learned just how much opportunity we had to gain by doing time studies with our current fleet. We knew that our yard with the most revenue was also the one with the biggest logistical challenge of being spread across multiple city blocks. It was averaging 88 minutes of turnaround time. We measured that as time in the yard from the time the truck returned to the time it left for the next journey. Scott had us create a “truck turnaround team” that set a quarterly goal to improve our processes around improving this metric. Within 3 months we dropped our turnaround time from 88 minutes down to an average of 49 minutes.
This yard had 18 semi-trucks with an average of two turns a day, so we saved 23.4 hours a day and 117 hours a week. If you do the math, that equated to adding almost three drivers and three truck/trailer combos! Over time, we got this turnaround time down even further into the mid 30s, and since I know they continue to work on this, it may even be in the 20s by now. The company’s other (less spread out) yards got their turnaround times into the mid 20s, and that represented more than a 50% improvement. Where should you begin? Here are some things to focus on as you get started.
- Create a focus team: As with any lean project, if you don’t assign people and processes to focus on improvement, you will not see improvement. Assign a dispatcher, a yard lead, an operational leader, AND A SALES REP. Yes, a sales rep too, and they all meet regularly to create and monitor an improvement action
- Measure your average turns: If you are a smaller yard, you can do this by having drivers text in-and-out times for manual tracking in an excel sheet. If you are a larger yard and have GPS units and software, you can automate this through your geofence hits and have them upload into your journey software to create smartviews for
- Set goals and celebrate your improvements: It’s important to recognize marginal improvements along the way because there will ALWAYS be more improvements to strive for. Small wins add up to big value, especially when there’s a big fleet involved. The 39-minute improvement (created in 90 days) in my example equated to approximately $15,000 a week!
The ROI on improving your turnaround metric has a tangible and proven payback model. Start small with the three steps above and grab all the low hanging fruit first. Then when you hit a plateau, bring in a lean consultant like Scott Morrison to take you to the next level. Investing in this before you invest in new equipment and people keeps your tires turning.
Shane Soule consults with LBM and component companies to increase productivity and profits, and improve the experience for both customers and team members. Reach Shane at email@example.com