PacLease Telematics Solution Helps Huttig's Phoenix DC Slash Costs

Drivers at the Huttig distribution center in Phoenix can hardly wait to see their latest monthly performance report.

Each month, Erik Nagli, general manager of Huttig’s distribution center in Phoenix, posts the report on a bulletin board in the employee breakroom. And the drivers hover around it like college students outside a lecture hall after their professor posts mid-term or final exam grades. The report shows each of their performances in several categories including miles per gallon, over-engine revving, and long-term idling.

Huttig Building Products Inc. is a national wholesale distributor of millwork and other building products. The company operates 42 distribution centers across the United States, including the Phoenix location, which supplies millwork and building products to professional dealers, home improvement centers and manufacturing facilities throughout Arizona.

The Phoenix center operates a fleet of 16 Class 8 Peterbilt trucks - eight new Peterbilt Model 386s and eight Peterbilt Model 387s, and one Class 7 Peterbilt Model 340. Huttig leases the trucks through the local PacLease franchise, Rush Enterprises. Drivers leave the distribution center around 2 or 3 a.m. to deliver products to the centers and facilities at the start of their business days.

Nagli’s driver performance report is a product of a new fleet management tool called PacTrac, which Huttig had installed late last year in its leased trucks. The PacTrac System is an innovative telematics system powered by PeopleNet Communications of Chaska, Minn. PacTrac, available through PacLease, uses GPS technology, a reliable network of more than 100 wireless carriers and an Internet connection to deliver real-time data from customers’ vehicles.

Nagli says the report helps drivers recognize how their driving habits compare to company expectations. It offers him a way to reward those drivers who achieve the best results and to encourage improvement from those drivers who don’t perform as well.

“In the first month, we had five drivers who got better than 6 mpg,” Nagli says. “In the month of December, we had 11 drivers north of 6 mpg.”

Nagli says the installation of PacTrac was part of several changes that the Phoenix distribution center made last year to reduce operating costs, improve productivity and provide better service to customers. Starting in October of 2006, the distribution center implemented routing software that could track invoices and products and assign them to individual trailers in order to optimize payloads and distribution schedules. After implementing the routing software, the distribution center turned on the PacTrac system in its PacLease tractors. The center also started using a fleet safety program developed by San Francisco-based LandSonar, Inc., called SpeedGauge. It monitors how fast drivers are driving and compares that to actual posted speed limits. If drivers go over the posted speed limit, the program records the incident and at the end of the day sends an e-mail report of all speeding incidents to Nagli.

“The experience from all of these changes has been absolutely incredible,” Nagli says. “Our fleet has slowed down, which is huge from a safety standpoint since it will result in fewer accidents.”

By implementing PacTrac, the routing software, and the speed reporting program, as well as making other operational changes, the Phoenix center witnessed a 20 percent drop in delivery costs to $115,000 per month at the beginning of 2007.

“We like to measure our business on transportation costs as a percentage of sales,” he says. “Historically, those costs have been about 4 percent of sales. Our goal is to operate into around the high 2s and with the kind of results we’re seeing so far, I think we’re well on our way.”

Nagli says the savings came about from four different results PacTrac provided. Drivers got live access in the cab to engine performance. They reduced their rates of speeding. They operated their trucks so that their engine RPMs stayed below 1,800 more often, he adds. And perhaps, most importantly, the drivers reduced their rates of long-term idling.

Since the PacTrac system keeps track of when the truck is started and when and where it stops, among other things, Nagli knows when and where his drivers’ delivery schedules are delayed.

“Before we implemented PacTrac, there was really no way for us to show our customers that delaying our drivers means a reduction in our ability to provide them timely deliveries,” he says.

Also, PacTrac allows the center to automate the process of filling out driver logs. Each driver no longer has to spend an average of a half hour each day filling one out since the PacTrac system can do that automatically, Nagli adds. That’s a savings of about eight hours each day. The results of the PacTrac system have convinced the company to install a GPS telematics system in every company truck in 2007.

Nagli says as impressive as all of those results may sound, what really pleases him is that the Phoenix center can lease and operate a fleet of trucks that offer his drivers first-class comfort, safety and reliability, and lend his company a first-class image.

Huttig’s Phoenix center leases its trucks from PacLease so that it doesn’t have to deal with maintenance issues and can concentrate on delivering customers quality building materials at a good price, Nagli says. Before the Phoenix center started leasing all of its trucks from PacLease, its fleet comprised a mix of trucks it owned and trucks it leased from PacLease. The Phoenix center also relied heavily on a third-party carrier to help make deliveries, which hampered its ability to control the quality of service customers received.

“Now we have a fleet of Peterbilts that are top-of-the-line models and top-of-the-line equipment, we’ve increased driver pay and have new driver uniforms,” Nagli says. “As a result, our turnover rate for the last six months has dropped to 15 percent. The savings and the driver productivity and satisfaction we’ve realized with PacLease are outstanding, but the ultimate payoff of these new efficiencies is that they allow us to offer our customers a better overall service experience.”