Pitco Foods, a San Jose, Calif.-based wholesale food distributor, is always looking for new ways to meet its customers’ needs more efficiently and more cost effectively.
“We’re a pretty competitive company despite strong competition from all the other local and national wholesale distributors,” said Phil Hernandiz, corporate transportation manager for Pitco.
Pitco Looks for Solution
When Pitco found it was spending a lot of its resources on managing an aging truck fleet several years ago, it started looking at full-service leasing as a way to upgrade to new equipment and avoid the costs associated with operating old trucks. Hernandiz said company officials didn’t want to focus on maintenance and emergency road service so that they could concentrate on delivering groceries and other supplies to independent grocery and convenience stores.
“Since we had a considerable number of older power units in our fleet, our manager’s were spending a lot of their valuable time resolving defects on vehicle condition reports and coordinating maintenance schedules and deliveries,” Hernandiz said.
The company also experienced a number of service calls, occasionally requiring the company to arrange for a tow truck to pick up a truck that broke down while making deliveries.
“Each time we have a road call, depending on what the problem is, we can easily spend $325 to $350 just for the tow truck alone, plus the cost of parts and labor: another couple hundred dollars,” he added. “Then figure in lost productivity, and it all adds up.”
But even more costly to the company are the customer service issues when the company misses a scheduled delivery as a result of a truck going down due to maintenance issues, Hernandiz said.
What is Pitco Foods
Pitco delivers groceries and other supplies to independent grocery stores within a 100-mile radius of San Jose, Sacramento and Central California areas. The company delivers mostly dry goods. Frozen products or refrigerated perishables, such as cheese, produce, and meats, represent about 2 percent of the company’s deliveries.
The company also operates four cash and carry warehouse stores, one in Oakland, one in San Francisco, one in San Jose and one in Sacramento. The stores are only open to customers who hold resale licenses. Generally, Pitco’s customers are owner-operators of small grocery stores, convenience stores and other similar retail locations.
PacLease Fulfils Pitco’s Needs With New Plan
Pitco leased two power units from a leading national company, but it found the service to be unsatisfactory. So, Pitco met with representatives from the local PacLease franchise, Coast Counties Peterbilt PacLease, to develop a new game plan.
“They asked questions to determine our needs and then developed a leasing plan that made more sense,” Hernandiz said.
The plan recommended the company eventually sell the trucks it owned, and let Coast Counties provide new Peterbilt medium-duty trucks with its full-service lease. As part of its analysis, PacLease arranged for representatives from Caterpillar to meet with company officials and drivers. After those meetings, the Caterpillar representatives recommended the company spec its Peterbilt 335s with 250-hp Caterpillar engines with a torque rating of 660, not the 235-hp engines the company had been contemplating. The Caterpillar reps said with the steep hills Pitco trucks and drivers must navigate, higher horsepower
engines would make a difference in driver productivity.
The PacLease Solution
PacLease leases Pitco Foods 16 custom-spec’d Peterbilt Model 335s with 26-foot van bodies and 250-hp Caterpillar engines. PacLease also provides Pitco five Class 8 tractors: two Kenworth T800s, two Peterbilt Model 386s, and one Peterbilt Model 385. Pitco still owns and operates eight Class 8 tractors, which it will eventually sell and replace with leased trucks. Pitco uses the medium-duty 335s to deliver food to customers and the Class 8 tractors to move goods from company location to company location and to pick up supplies from vendors.
Pitco’s trucks operate from its warehouse stores in San Jose and Sacramento. It also has a drop and hook operation in Fresno at the Central California Kenworth facility.
The higher horsepower engines on the Peterbilt 335s make the medium-duty trucks more responsive, so Pitco’s trucks can climb steep hills more quickly. PacLease also added lift gates to the list of specs for Pitco’s leased trucks. Since the company’s trucks didn’t have lift gates, drivers had to break down pallets inside the truck at each stop and bring out several boxes at a time on a hand truck using a ramp. As their workday wore on, the drivers became fatigued.
“The lift gates offer our drivers the ability to be more efficient with their time and that’s meant each of them have the time and energy to make one more delivery,” Hernandiz said.
The PacLease plan also called for routine maintenance to be done on-site using a remote service truck to help Pitco avoid conflicts with its tight delivery schedule.
Productivity Increases 20 Percent
By adding higher horsepower engines and the lift gates, Pitco experienced a 20 percent increase in driver productivity.
“Even though the higher horsepower engines increased the price of the trucks and the lease payment went up slightly, it was well worth it given the operating efficiencies we gained,” Hernandiz said.
The 20 percent increase in driver productivity encouraged the company’s sales team to add additional sales people to its sales staff to increase business. Hernandiz said by leasing trucks from PacLease, his company can concentrate its resources and attention on serving customers and growing the business, and not on truck maintenance.
Premium Trucks Attract Drivers, Improves Image
“We’ve found that our leased trucks from PacLease also attract more qualified driver candidates, since they get to drive premium quality Peterbilt trucks, custom spec’d with equipment that will make their work environments comfortable and their jobs easier and more efficient,” he added. “These new trucks also improve the image of our company among our customers.”