For more than 65 years, Americans have relied on Ferrellgas for their residential, industrial/ commercial, and agricultural propane needs. Ferrellgas has grown from humble beginnings, as a family-owned propane supplier, to a publicly-traded, Fortune 1,000 company and market leader with 150 field service centers serving more than 1 million customers in all 50 states, the District of Columbia and Puerto Rico. Through its Blue Rhino operation, Ferrellgas is also the nation’s largest provider of propane by portable tank exchange. To meet its customer’s needs, Ferrellgas relies on a fleet of approximately 2,600 delivery vehicles each making on average 20 to 25 stops per day.
After more than six decades in business, Ferrellgas began evaluating its decentralized operating structure. At the time, Ferrellgas had 600 retail offices, with each one using its own standalone system for tracking customer deliveries, billing, creating statements and producing demand reports. Since the systems did not provide routing and scheduling functionality, the manual process began with reports from a crude forecasting system that would predict which customers needed deliveries and when. The delivery schedule was open to interpretation by drivers who would review weekly reports, hand pick orders and then come up with delivery dates.
According to Steve Ferro, IT Director, Application Development at Ferrellgas, “We needed to redefine our business processes and apply technology where it made sense to help us deliver in a more efficient way and serve our customers more effectively.”
Ferrellgas embarked on a project to overhaul equipment, employee training and technology integration. The company’s goal was to identify areas where software could be used to improve operational efficiencies. Through this project, Ferrellgas identified areas where it could reduce operating expenses and improve customer satisfaction leading to the development of new technology to improve the routing and scheduling of propane deliveries, customer administration, and operational workflow.
After evaluating approximately 15 routing applications, the project team determined that the Descartes routing and scheduling solution best addressed the unique and flexible needs of the propane market. “Descartes provided a routing solution that supported the flexibility we required and would allow for ad-hoc, unplanned stops to handle urgent calls for same-day deliveries,” explains Ferro.
With Descartes' dynamic routing solution, delivery managers can view delivery schedules for the week ahead, and do pre-planning of routes as required. In addition, the route execution solution enables activity to be managed on a daily basis. “When an order is received in our CRM system, the delivery manager sees it in the Descartes system and can take action,” says Ferro. “They can see where vehicles are in real time, and can either make a manual decision as to which driver should handle an order, or they can ask the system to suggest a cost-effective alternative on an existing route. Decisions are then pushed out to the appropriate driver’s handheld computer.”
While Ferrellgas began with 600 retail locations at the start of Project Renaissance, they were able to consolidate these locations into just 150 Service Centers. According to Ferro, “The technology we applied enabled us to manage larger geographic areas with fewer people.”
Ferrellgas’ new business model showcases an unprecedented level of integration for the propane industry. The company has experienced improved bottom line results through reduced delivery and administration expenses, more accurate prediction of customer demand and the ability to provide 24/7/365 customer service through centralized service center operations.
Industry observers are also touting Project Renaissance as the competitive model of the future. Among other achievements, Ferrellgas is the first major propane retailer to fully apply technology used by leading supply chain companies to link bobtail routing, customer data management, inventory management, forecasting, billing and accounts receivable to reduce operating costs and boost shareholder value.
As a result of the consolidation, customer service staffing needs were reduced by 30%. All delivery vehicles have been set up with new onboard wireless computers that utilize Descartes’ route planning and scheduling software to determine efficient route sequences for delivery vehicles; enable real-time adjustments, monitoring and management of daily routes; and balance priorities with delivery costs. Better forecasting, tighter control and more efficient routing have allowed the company to reduce driver hours and the number of trucks required. To date, this initiative has resulted in an 11% reduction in fleet requirements. In addition, over the past two years the company has also skipped its annual purchase of new bobtails, which normally accounts for 10 percent of the fleet.
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